Dindar Rostami, M., Shirinbakhsh, S., Afshari, Z. (2019). The Effects of Oil Price Shocks on Discretionary Fiscal Policy in Selected OPEC Countries: Panel Structural Vector Autoregressive. Iranian Journal of Economic Studies, 8(1), 7-25. doi: 10.22099/ijes.2018.30257.1470
Marzieh Dindar Rostami; Shamsollah Shirinbakhsh; Zahra Afshari. "The Effects of Oil Price Shocks on Discretionary Fiscal Policy in Selected OPEC Countries: Panel Structural Vector Autoregressive". Iranian Journal of Economic Studies, 8, 1, 2019, 7-25. doi: 10.22099/ijes.2018.30257.1470
Dindar Rostami, M., Shirinbakhsh, S., Afshari, Z. (2019). 'The Effects of Oil Price Shocks on Discretionary Fiscal Policy in Selected OPEC Countries: Panel Structural Vector Autoregressive', Iranian Journal of Economic Studies, 8(1), pp. 7-25. doi: 10.22099/ijes.2018.30257.1470
Dindar Rostami, M., Shirinbakhsh, S., Afshari, Z. The Effects of Oil Price Shocks on Discretionary Fiscal Policy in Selected OPEC Countries: Panel Structural Vector Autoregressive. Iranian Journal of Economic Studies, 2019; 8(1): 7-25. doi: 10.22099/ijes.2018.30257.1470
The Effects of Oil Price Shocks on Discretionary Fiscal Policy in Selected OPEC Countries: Panel Structural Vector Autoregressive
2Associate Professor in economics, Faculty of social and Economic, Alzahra University, Tehran, Iran.
3Professor in Economics, Faculty of social and Economic, Alzahra University.
Receive Date: 28 July 2018,
Revise Date: 13 October 2018,
Accept Date: 21 November 2018
Abstract
The present study was aimed to investigate the effects of oil price shocks on discretionary fiscal policies in selected OPEC countries during 1980-2015. In this regard, the heterogeneous dynamic reaction to structural shock was examined using Panel Structural Vector Autoregressive (PSVAR) technique. Based on the findings, the effect of oil price shocks on discretionary fiscal policy was positive in short-run but ineffective in long-run. In addition, the oil price shocks caused an increase in inflation and government expenditure and a decrease in the economic growth in selected OPEC countries according to the Resource Curse phenomenon. Moreover, as variance decomposition showed, the government expenditure and economic growth have the most effect on discretionary policy changes. The effect of discretionary fiscal policy on economic growth in selected OPEC countries was negative, contrary to the Keynesian theory and the results of some other studies. Because discretionary fiscal policies play a major role in decisions of the countries mentioned above, the results also showed that a limitation in the government authority in OPEC countries would come into conflict with the decrease in economic growth and production fluctuation.
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