Sensitivity of Fiscal Balances to Oil Price Shocks: Short and Long Term Effects in the Context of Oman

Authors

  • Omer Ali Ibrahim College of Banking and Financial Studies- Oman
  • Sonal Devesh College of Banking and Financial Studies
  • Hisham Mohamed Hassan

Abstract

This paper examines the fiscal balances in Oman and their sensitivity to oil price shocks in the short and long term, using annual data for the period 1980–2016, and employing the vector auto regression model. Results of the study indicated that oil prices Granger cause gross domestic product (GDP) growth, capital formation and inflation. Impulse response analysis showed that an innovation in the oil prices and consequent oil revenues have a similar effect on most of the macroeconomic variables in Oman. Most of these variables show an increase in the first four quarters except for government expenditure and inflation. However, in many cases, this increase has quickly shifted to decrease over the successive quarters except for inflation, which showed a steady increase over time. Variance decomposition analysis, on the other hand, indicated that net oil price shock appears to be a key factor contributing to the volatility of GDP growth over time in Oman.Keywords: Fiscal Balances, Oil Price Shocks, OmanJEL Classification: H30, C320, Q430, O503DOI: https://doi.org/10.32479/ijeep.7351

Downloads

Download data is not yet available.

Author Biography

Sonal Devesh, College of Banking and Financial Studies

Post Graduate studies and Research Department

Downloads

Published

2019-02-14

How to Cite

Ibrahim, O. A., Devesh, S., & Hassan, H. M. (2019). Sensitivity of Fiscal Balances to Oil Price Shocks: Short and Long Term Effects in the Context of Oman. International Journal of Energy Economics and Policy, 9(2), 146–155. Retrieved from https://econjournals.com/index.php/ijeep/article/view/7351

Issue

Vol. 9 No. 2 (2019)

Section

Articles

License

Submission of an article implies that the work described has not been published previously , that it is not under consideration for publication elsewhere, that its publication is approved by all authors and tacitly or explicitly by the responsible authorities where the work was carried out, and that, if accepted, will not be published elsewhere in the same form, without the written consent of the Publisher. The Editors reserve the right to edit or otherwise alter all contributions, but authors will receive proofs for approval before publication.