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Commodity Price Shocks and the Oddson Fiscal Performance


  • Francis Y Kumah
  • John J Matovu


Unanticipated changes in commodity prices can generate significant movements in fiscal aggregates. This paper seeks to understand the dynamics of these fiscal movements in the context of transitory commodity price shocks using sample data from four CIS countries- two oil-producing and two non-oil commodity-intensive countries. It adopts a structural VAR approach and identifies the dynamic effects of commodity price shocks on fiscal performance under two broad tax regimes. Stochastic simulations indicate high probabilities of fiscal overperformance in the short term when commodity prices are high. These probabilities deteriorate significantly, however, in the long term after the transitory positive commodity price shock has dissipated, particularly when lax fiscal policy is adopted during the period of the price boom.

Suggested Citation

  • Francis Y Kumah & John J Matovu, 2005. "Commodity Price Shocks and the Oddson Fiscal Performance," IMF Working Papers 05/171, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:05/171

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    References listed on IDEAS

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    Cited by:

    1. Kamilya Tazhibayeva & Aasim M. Husain & Anna Ter-Martirosyan, 2008. "Fiscal Policy and Economic Cycles in Oil-Exporting Countries," IMF Working Papers 08/253, International Monetary Fund.


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