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dc.titleFiscal Adjustments and the Asymmetric Effect of Oil Shocks
dc.contributor.authorValencia, Oscar
dc.contributor.authorGamboa-Arbeláez, Juliana
dc.contributor.authorSánchez, Gustavo
dc.contributor.orgunitFiscal Management Division
dc.contributor.orgunitInstitutions for Development Sector
dc.coverageLatin America
dc.date.available2025-02-06T00:02:00
dc.date.issue2025-02-06T00:02:00
dc.description.abstractThis research employs a quadratic exponential model to examine the dynamics of fiscal adjustments in the context of oil shocks. The findings suggest significant state dependence, with past fiscal adjustments increasing the likelihood of future adjustments and an asymmetry in oil shock effects. Supply shocks reduce the probability of fiscal adjustments, while demand shocks increase it. Furthermore, the impact of these shocks depends on several factors. Oil demand shocks positively impact fiscal adjustment even during downturns, providing a stabilizing effect. Net oil exporters are more affected by oil shocks than importers, experiencing more significant negative effects from supply shocks and more benefits from demand shocks. Fiscal institutions play a critical role in mitigating the volatility induced by oil shocks, with fiscal rules targeting primary or structural balances proving particularly effective.
dc.format.extent49
dc.identifier.doihttp://dx.doi.org/10.18235/0013403
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Fiscal-Adjustments-and-the-Asymmetric-Effect-of-Oil-Shocks.pdf
dc.language.isoen
dc.publisherInter-American Development Bank
dc.subjectFiscal Policy
dc.subjectOil Price
dc.subjectPetroleum
dc.subjectOil Production
dc.subjectFiscal Rule
dc.subjectDemand Shock
dc.subjectEmerging Market
dc.subjectOil Reserve
dc.subjectPublic Expenditure
dc.subjectGross Domestic Product
dc.subjectCommodity Price
dc.subject.jelcodeC25 - Discrete Regression and Qualitative Choice Models • Discrete Regressors • Proportions • Probabilities
dc.subject.jelcodeE62 - Fiscal Policy
dc.subject.jelcodeF41 - Open Economy Macroeconomics
dc.subject.jelcodeH62 - Deficit • Surplus
dc.subject.jelcodeQ43 - Energy and the Macroeconomy
dc.subject.keywordsFiscal Adjustment;oil shocks;Fiscal Rules;asymmetric effects
idb.identifier.pubnumberIDB-WP-01638
idb.operationRG-E1902
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