Next Article in Journal
Private Sector Credit and Inflation Volatility
Previous Article in Journal
Shaking up the Firm Survival: Evidence from Yogyakarta (Indonesia)
Article Menu

Export Article

Open AccessArticle
Economies 2018, 6(2), 27; https://doi.org/10.3390/economies6020027

The Effects of Fiscal Policy on Non-Oil Economic Growth

1
King Abdullah Petroleum Studies and Research Center, Riyadh 11672, Saudi Arabia
2
Department of Socio-Economic Modeling, Institute of Control Systems, Baku AZ1141, Azerbaijan
3
Research Program on Forecasting, Department of Economics, George Washington University, Washington, DC 20052, USA
4
Center for Research and Development, Central Bank of Azerbaijan, Baku AZ1014, Azerbaijan
*
Author to whom correspondence should be addressed.
Received: 23 January 2018 / Revised: 23 March 2018 / Accepted: 29 March 2018 / Published: 17 April 2018
Full-Text   |   PDF [1011 KB, uploaded 3 May 2018]   |  

Abstract

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. View Full-Text
Keywords: Azerbaijan economy; fiscal policy; non-oil sector; cointegration; error-correction modeling; Johansen approach; autoregressive distributed lags bounds testing approach Azerbaijan economy; fiscal policy; non-oil sector; cointegration; error-correction modeling; Johansen approach; autoregressive distributed lags bounds testing approach
Figures

Figure 1

This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).
SciFeed

Share & Cite This Article

MDPI and ACS Style

Hasanov, F.; Mammadov, F.; Al-Musehel, N. The Effects of Fiscal Policy on Non-Oil Economic Growth. Economies 2018, 6, 27.

Show more citation formats Show less citations formats

Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Related Articles

Article Metrics

Article Access Statistics

1

Comments

[Return to top]
Economies EISSN 2227-7099 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top