Government Spending, Taxation, and Oil Revenues in Mexico

Tijerina-Guajardo, José A.; Pagán, José A.

doi:10.1111/1467-9361.00182

Cited by 27 publications

(9 citation statements)

References 13 publications

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“…Specifically, increases in GDP may stimulate oil output and revenue most likely as a result of increasing investments in the oil sector. Similar results have been found for other oilproducing economies such as documented for the case of Mexico by Tijerina-Guajardo and Paga´n (2003) and for the case of Russia by Rautava (2004).…”

Section: Empirical Analysissupporting

confidence: 88%

“…The null of nonGrangercausality from oil revenues to real expenditures attracted a p-value of 0.003, while the null of nonGranger-causality from real expenditures to oil revenues could only be rejected with a very high level of significance (p-value of 0.211). 6 A result which has also been found for the case of Mexico (Tijerina-Guajardo and Paga´n, 2003).…”

Section: Empirical Analysismentioning

confidence: 56%

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The oil cycle and the tax-spend hypothesis: the case of Angola

Carneiro

2007

Applied Economics Letters

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The intertemporal relationship between oil revenues, real government spending and real output over the oil cycle is investigated for the case of Angola, the second largest oil producer in Sub-Saharan Africa. The results of a trivariate VAR, impulse response functions and variance decomposition analysis provide empirical support for the tax-spend hypothesis. In addition, the Angolan economy is found victim of the resource curse, as real output does not respond to aggregate demand shocks such as changes in real government spending. The policy implications for Angola are 2-fold. First, to alleviate the constraints associated with the resource curse, Angola needs to find ways to diversify its economy. Second, given the direction of causality found between government expenditures and oil revenues, in order to avoid fiscal disequilibria, efficient management of oil revenues is as important as controlling public spending.

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Section: Empirical Analysissupporting

confidence: 88%

Section: Empirical Analysismentioning

confidence: 56%

The oil cycle and the tax-spend hypothesis: the case of Angola

Carneiro

2007

Applied Economics Letters

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“…We define the vector of exogenous variables as We opt for an unrestricted VAR models in levels. Firstly, structural VAR models are 'very often misspecified' (Tijerina-Guajardo & Pagán, 2003). Secondly, the Phillips-Perron unit root test indicates that all variables are I(1).…”

Section: Econometric Issuesmentioning

confidence: 99%

Potential early phase success and ultimate failure of economic sanctions

Dizaji

Bergeijk

2013

Journal of Peace Research

117

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In order to explain why successes of economic sanctions predominantly occur in the first two years of a sanction episode, we analyse the dynamic economic and political impact of an economic sanction. Our theoretical analysis of the dynamics of adjustment gives us two important results: firstly, the strongest impact in terms of utility forgone occurs in the initial phase of the sanction episode and, secondly, the long-term gain of compliance decreases during a sanction episode and is lower in the long run than acknowledged by the usual comparative static analysis. On both accounts we expect that sanctions have a higher probability of success in the early phase and a lower probability of success in the long run. Next we build a comprehensive set of vector autoregressive (VAR) models that we apply to the case of a boycott of Iranian oil. An important innovation is that we include both economic and political factors in a VAR model of economic sanctions. Our VAR models find significant impacts of economic sanctions both on key economic variables (government consumption, imports, investment, income) and on two indicators of the political system (the Polity variable that describes shifts in the autocracy-democracy dimension and the Vanhanen Index of Democratization that describes political competition and participation). The impact of an oil boycott on the Iranian economy is considerable: oil and gas rents are important drivers of the Iranian key macroeconomic variables and ultimately of its political system. A reduction of oil and gas rents creates economic costs that act as incentives to move towards a more democratic setting. However, this effect is only significant in the first two years and turns negative after six to seven years, as adjustment of economic structures mitigates the economic and political impact of the sanctions.

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“…Mexico, like other oil-dependent countries, cannot compensate negative oil-price shocks with increases in tax revenues in the short run (Tijerina-Guajardo and Pagán, 2003). They also find evidence supporting the tax-spend hypothesis; in other words, tax revenues determine government spending (Friedman, 1978).…”

Section: The Apparent Paradox Of Oil Abundancementioning

confidence: 99%

“…As a direct result, the company lacks sufficient resources to invest in technological improvements, expansion, or even proper maintenance. The government usually retains most of PEMEX's revenue instead of taxing its operating income like other companies (Tijerina-Guajardo and Pagán, 2003;Shields, 2003). Fiscal contributions from PEMEX comprise a wide array of taxes and fees.…”

Section: Introductionmentioning

confidence: 99%

Measuring the importance of oil-related revenues in total fiscal income for Mexico

Reyes-Loya

Blanco

2008

Energy Economics

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Revenues from oil exports are an important part of government budgets in Mexico. A time-series analysis is conducted using monthly data from 1990 to 2005 examining three different specifications to determine how international oil price fluctuations and government income generated from oil exports influence fiscal policy in Mexico. The behavior of government spending and taxation is consistent with the spend-tax hypothesis. The results show that there is an inverse relationship between oil-related revenues and tax revenue from non-oil sources. Fiscal policy reform is urgently needed in order to improve tax collection as oil reserves in Mexico become more and more depleted.

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Government Spending, Taxation, and Oil Revenues in Mexico

Cited by 27 publications

References 13 publications

The oil cycle and the tax-spend hypothesis: the case of Angola

The oil cycle and the tax-spend hypothesis: the case of Angola

Potential early phase success and ultimate failure of economic sanctions

Measuring the importance of oil-related revenues in total fiscal income for Mexico

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