The Effect of Copper Price Shock on the Relationship between Government Revenue and Expenditure: Testing the Fiscal Stability Law of Mongolia
This study empirically investigates the relationship between government revenue, government expenditure and the copper price in Mongolia, a resource abundant country. Using quarterly data of government revenue, expenditure and international copper price from 2000 to 2015, the results of auto regress...
| Main Author: | |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Mongolian Academy of Sciences
2020-03-01
|
| Series: | Proceedings of the Mongolian Academy of Sciences |
| Subjects: | |
| Online Access: | https://www.mongoliajol.info/index.php/PMAS/article/view/1294 |
| Summary: | This study empirically investigates the relationship between government revenue, government expenditure and the copper price in Mongolia, a resource abundant country. Using quarterly data of government revenue, expenditure and international copper price from 2000 to 2015, the results of auto regression (VAR) show that there is a strong causality from revenue to expenditure, while increase in expenditure, most likely, is not accompanied by rises in revenue. This result is consistent with the revenue-spent hypothesis. Moreover, the result also indicates that copper price shock increases revenue, but decreases expenditure. This finding supports the assumption that the Mongolian government follows its Fiscal Stability Law, a strategy that intends to maintain the stability and sustainability of the government budget. |
|---|---|
| ISSN: | 2310-4716 2312-2994 |