The effects of oil shocks on government expenditures and government revenues nexus (with an application to Iran's sanctions)

Dizaji, Sajjad Faraji

doi:10.1016/j.econmod.2014.04.012

Cited by 71 publications

(51 citation statements)

References 33 publications

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“…This way of operationalizing is in line with recent VAR models on the Iranian economy in the context of economic sanctions (Dizaji, 2012;Farzanegan, 2011). We expect that significant shocks in oil revenues and rents affect contemporaneously the other key macroeconomic variables and the political variable.…”

Section: Choice and Sequence Of Variablesmentioning

confidence: 52%

“…The common practice in recent VAR modelling of the Iranian economy (Dizaji, 2012;Farzanegan, 2011;Farzanegan & Markwardt, 2009) is to use government consumption expenditures (including current consumption, rents and depreciation) as a shock variable. Current expenditures (government salaries, subsidies, etc.)…”

Section: Choice and Sequence Of Variablesmentioning

confidence: 99%

“…Three factors motivate the choice of the country application. Firstly, recent autoregressive models are available for the main sectorial target of sanctions, namely Iranian oil exports (Dizaji, 2012;Dizaji et al, 2013;Esfahani, Mohaddes & Pesaran, 2012;Farzanegan, 2011;Farzanegan & Markwardt, 2009) so that the economic impact is well understood and less prone to discussion. Secondly, the current debate appears to be mainly qualitative and based on the interpretation of selected events (e.g.…”

Section: Introductionmentioning

confidence: 99%

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Potential early phase success and ultimate failure of economic sanctions

Dizaji

Bergeijk

2013

Journal of Peace Research

Self Cite

116

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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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Section: Choice and Sequence Of Variablesmentioning

confidence: 52%

Section: Choice and Sequence Of Variablesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Potential early phase success and ultimate failure of economic sanctions

Dizaji

Bergeijk

2013

Journal of Peace Research

Self Cite

116

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“…The authors find that oil revenues remain the principal source for growth and the main channel through which government spending is financed. Dizaji (2014) examines the effects of oil shocks on government expenditures and government revenues in Iran. The author finds that causality runs from oil revenues to government total expenditures.…”

Section: Literature Reviewmentioning

confidence: 99%

Asymmetric Impacts of Oil Price Shocks on Government Expenditures: Evidence from Saudi Arabia

2017

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This paper investigates the effect of oil price shocks on government expenditures on the health and education sectors in Saudi Arabia. Using a quarterly dataset 1990Q1-2017Q2 and employing a non-linear autoregressive distributed lag (NARDL) model, our research shows evidence of a non-linear relationship between oil prices and government expenditures in Saudi Arabia, where a negative oil price shock would have a statistically significant different impact in the long run compared to a positive shock. We build upon our empirical findings and draw some policy recommendations for Vision 2030 of Saudi Arabia.

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“…Oil, natural gas, and mineral revenues are solely because they are finite, volatile and can depressingly distress other activities if they are mismanaged. They also generate large economic payments and are unique location, which can cause misunderstandings or shocks over their control (Dizaji, 2014;Emami & Adibpour, 2012;Farzanegan, 2011). As a result, they may require being succeeded and distributed differently from other types of government revenue.…”

Section: Introductionmentioning

confidence: 99%

An overview of the oil and natural gas revenue management in Tanzania. A mini review

Bishoge

Zhang

Mushi³

et al. 2018

jaar

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Management of oil and gas resources or revenues from trans-boundary or disputes areas has always been an issue of controversy in most oil and gas resource-rich countries. Tanzania is among the developing countries which rise with rich in oil and gas resources. It requires more attention on how the revenues generated from these resources should be utilized sustainably. This paper, therefore, provides the current overview of the tools and institutions that offer the guidelines on oil and gas revenue management and distribution.

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The effects of oil shocks on government expenditures and government revenues nexus (with an application to Iran's sanctions)

Cited by 71 publications

References 33 publications

Potential early phase success and ultimate failure of economic sanctions

Potential early phase success and ultimate failure of economic sanctions

Asymmetric Impacts of Oil Price Shocks on Government Expenditures: Evidence from Saudi Arabia

An overview of the oil and natural gas revenue management in Tanzania. A mini review

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