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The dynamic impact among oil dependence volatility, the quality of political institutions, and government spending

  • Azadeh Pazouki
    ,
  • Xiaoxian Zhu
Research Output: Contribution to journal Article Peer-review

Open access

Abstract

This paper empirically examines the direct and indirect effect of the role of democracy, and, in turn, the effect of oil dependence volatility on governmental expenditure in oil exporting countries. To achieve this aim, we apply a panel Vector Auto-Regressive (PVAR) model along with panel impulse response functions from the period 1983 to 2016. The findings show that the quality of political institutions, it is observed that in democratic countries an increase in oil volatility leads to an increase in government expenditure. In contrast, in non-democratic countries, governments respond to oil volatility fluctuating between the positive and negative depending on the quality of political institutions; the more some attributes of democracy are seen, the greater the expenditure. This difference in response between them can be attributed to a variation in institutional quality. Therefore, an improvement in strategic risk planning together with greater government transparency could lead to institutional quality improvement.

Publication Information

Output type

Research Output: Contribution to journal Article Peer-review

Original language

English

Article number

106383

Journal (Volume, Issue Number)

Energy Economics (Volume 115)

Publication milestones

  • Accepted/In press - 16/10/2022
  • Published - 20/10/2022

Publication status

Published - 20/10/2022

ISSN

0140-9883

External Publication IDs

  • handle.net: 10547/625580
  • Scopus: 85142455986

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