The Effects of Oil and Mineral Taxation on Non-commodity Fiscal Revenues
AbstractThis paper shows, first, that non-commodity revenues are more volatile in oil- and mineral-rich countries and that quality of institutions is associated with lower volatility. We investigate the channels through which oil and mineral revenue volatility lead to non-commodity revenues volatility, and find that when oil and fiscal revenues increase (decrease), non-commodity revenues are reduced (increased) discretionally, and that this substitution effect is larger and faster than an indirect positive income effect through increased public expenditures and GDP. Latin American oil- and mineral-rich countries appear, though, to behave differently. In particular, most of them show increased non-commodity revenues pari passu with increased oil and mineral revenues during the last decade. These findings have consequences for the overall volatility of public expenditures and the effectiveness of automatic tax stabilizers in oil- and mineral-rich countries.
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Bibliographic InfoPaper provided by Inter-American Development Bank in its series IDB Publications with number 76318.
Date of creation: Sep 2012
Date of revision:
Monetary Policy; Research & Development; Renewable Energy; Economic Development & Growth; Natural resources; Windfall public revenues; Natural resource curse; Optimal fiscal policy;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-17 (All new papers)
- NEP-ENE-2012-11-17 (Energy Economics)
- NEP-MAC-2012-11-17 (Macroeconomics)
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