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The value of fiscal discipline for oil-exporting countries

  • Pieschacón, Anamaría

The value of fiscal discipline is assessed by analyzing the role of fiscal policy as a transmission mechanism of oil price shocks in oil-exporting small open economies. Fiscal policy is an important propagation channel. Taking policy as given by the data, the model can successfully explain the responses of key macroeconomic variables, but it is unable to explain these responses under counterfactual fiscal frameworks. Interestingly, fiscal policy also seems capable of regulating the size of pass-through. Furthermore, fiscal policies that insulate the economy from oil price shocks seem to be welfare improving over procyclical ones.

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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 59 (2012)
Issue (Month): 3 ()
Pages: 250-268

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Handle: RePEc:eee:moneco:v:59:y:2012:i:3:p:250-268
DOI: 10.1016/j.jmoneco.2012.03.001
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