The Effects of Fiscal Policy on Non-Oil Economic Growth
We investigate non-oil sector effects of fiscal policy in Azerbaijan over a long time period in which a recent low oil prices sample is incorporated. To obtain robust empirical findings, we use different test and estimation methods as well as address small-sample bias issues in the extended producti...
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| Format: | Article |
| Language: | English |
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MDPI AG
2018-04-01
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| Series: | Economies |
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| Online Access: | http://www.mdpi.com/2227-7099/6/2/27 |
| _version_ | 1828151526337544192 |
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| author | Fakhri Hasanov Fuad Mammadov Nayef Al-Musehel |
| author_facet | Fakhri Hasanov Fuad Mammadov Nayef Al-Musehel |
| author_sort | Fakhri Hasanov |
| collection | DOAJ |
| description | We investigate non-oil sector effects of fiscal policy in Azerbaijan over a long time period in which a recent low oil prices sample is incorporated. To obtain robust empirical findings, we use different test and estimation methods as well as address small-sample bias issues in the extended production function framework. Results show that fiscal policy has a statistically significant positive impact on the non-oil sector both in the long and short run. However, the size of the impact is small compared to the findings of earlier studies due to, we believe, the low oil-price environment and different specifications used. Azerbaijani policymakers should take measures to compensate for the declining share of oil revenues in government revenues. They may consider increasing tax rates, import and export fees, energy and other tariffs as rapid remedies to fill the budget but these measures might hurt economic development. Alternative and less harmful remedies would be optimizing government spending, strongly monitoring ongoing projects, and phasing out social and infrastructure projects, which make lower contributions to growth. Our research opens the way for further investigation of this topic for the oil exporting economies in the future. |
| first_indexed | 2024-04-11T21:58:03Z |
| format | Article |
| id | doaj.art-e71bebddfc294418b6ba0019bcd29d01 |
| institution | Directory Open Access Journal |
| issn | 2227-7099 |
| language | English |
| last_indexed | 2024-04-11T21:58:03Z |
| publishDate | 2018-04-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Economies |
| spelling | doaj.art-e71bebddfc294418b6ba0019bcd29d012022-12-22T04:01:02ZengMDPI AGEconomies2227-70992018-04-01622710.3390/economies6020027economies6020027The Effects of Fiscal Policy on Non-Oil Economic GrowthFakhri Hasanov0Fuad Mammadov1Nayef Al-Musehel2King Abdullah Petroleum Studies and Research Center, Riyadh 11672, Saudi ArabiaCenter for Research and Development, Central Bank of Azerbaijan, Baku AZ1014, AzerbaijanKing Abdullah Petroleum Studies and Research Center, Riyadh 11672, Saudi ArabiaWe investigate non-oil sector effects of fiscal policy in Azerbaijan over a long time period in which a recent low oil prices sample is incorporated. To obtain robust empirical findings, we use different test and estimation methods as well as address small-sample bias issues in the extended production function framework. Results show that fiscal policy has a statistically significant positive impact on the non-oil sector both in the long and short run. However, the size of the impact is small compared to the findings of earlier studies due to, we believe, the low oil-price environment and different specifications used. Azerbaijani policymakers should take measures to compensate for the declining share of oil revenues in government revenues. They may consider increasing tax rates, import and export fees, energy and other tariffs as rapid remedies to fill the budget but these measures might hurt economic development. Alternative and less harmful remedies would be optimizing government spending, strongly monitoring ongoing projects, and phasing out social and infrastructure projects, which make lower contributions to growth. Our research opens the way for further investigation of this topic for the oil exporting economies in the future.http://www.mdpi.com/2227-7099/6/2/27Azerbaijan economyfiscal policynon-oil sectorcointegrationerror-correction modelingJohansen approachautoregressive distributed lags bounds testing approach |
| spellingShingle | Fakhri Hasanov Fuad Mammadov Nayef Al-Musehel The Effects of Fiscal Policy on Non-Oil Economic Growth Economies Azerbaijan economy fiscal policy non-oil sector cointegration error-correction modeling Johansen approach autoregressive distributed lags bounds testing approach |
| title | The Effects of Fiscal Policy on Non-Oil Economic Growth |
| title_full | The Effects of Fiscal Policy on Non-Oil Economic Growth |
| title_fullStr | The Effects of Fiscal Policy on Non-Oil Economic Growth |
| title_full_unstemmed | The Effects of Fiscal Policy on Non-Oil Economic Growth |
| title_short | The Effects of Fiscal Policy on Non-Oil Economic Growth |
| title_sort | effects of fiscal policy on non oil economic growth |
| topic | Azerbaijan economy fiscal policy non-oil sector cointegration error-correction modeling Johansen approach autoregressive distributed lags bounds testing approach |
| url | http://www.mdpi.com/2227-7099/6/2/27 |
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