Oil prices and fiscal policy in an oil-exporter country: Empirical evidence from Oman

Salwa Al Jabri, Mala Raghavan*, Joaquin Vespignani

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    13 Citations (Scopus)

    Abstract

    This paper studies the impact of oil price shocks on fiscal policy and real GDP in Oman using new unexplored data. We find that an oil price shock explains around 22% and 46% of the government revenue and GDP variation, respectively. Decomposing the government revenue and GDP further into petroleum and non-petroleum related components, we find that an oil price shock explains around 26% of the variation in petroleum revenue and 90% of the petroleum-GDP. Though petroleum and non-petroleum GDP respond positively to oil price shocks, government expenditure is not directly affected by oil prices but is affected by government revenue. The results suggest that the Omani government uses its reserve fund and local and international debt to smooth and reduce the impact of oil price fluctuations.

    Original languageEnglish
    Article number106103
    JournalEnergy Economics
    Volume111
    DOIs
    Publication statusPublished - Jul 2022

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