Fiscal Policy Regimes in Resource‐Rich Economies

Bibliographic Data

ID21653297
AuthorsHilde C Bjørnland (0000-0002-3126-0193, BI Norwegian Business School Oslo Norway), Roberto Casarin (0000-0003-1746-9190, Ca' Foscari University Venice Venice Italy), Marco Lorusso (0000-0002-9971-6847, Department of Political Science University of Perugia Perugia Italy, corresponding author), Francesco Ravazzolo (0000-0003-0645-1788, BI Norwegian Business School Oslo Norway)
Year2026
Publication date2026-06-19
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueJournal of Applied Econometrics (JOURNAL)
Journal identifiersISSN: 1099-1255 • E-ISSN: 0883-7252
PublisherWiley (PUBLISHER • GB)
DOI10.1002/jae.70074
OpenAlexW7165199630
LanguageEN
References cited32

We analyse fiscal policy in resource‐rich economies using a novel Bayesian regime‐switching panel model. The identified regimes capture pro‐ or countercyclical fiscal behaviour by allowing regime‐specific shifts in the average fiscal stance, while the switches between the regimes have the interpretation of changes in fiscal policy. Applying the model to a panel of sixteen oil‐producing economies, we show that fiscal policy has alternated between a procyclical and countercyclical regime multiple times over the sample. Furthermore, we find that fiscal policy is more volatile in the procyclical regime and that the probability of being in the procyclical regime is higher for OPEC countries than for non‐OPEC countries. We also show that following either an increase or decrease in oil revenues, the growth in government expenditures is mostly increasing, suggesting an upward bias in expenditures in oil‐producing countries. These are new findings in the literature

Bayesian probability · Business cycle · Fiscal policy · Fiscal union · Panel data · Economic Growth and Productivity · Economic Policies and Impacts · Natural Resources and Economic Development

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