Fiscal policy shocks in OPEC countries impact budget balance strategies.
The article examines how fiscal policy impacts budget balances in OPEC countries from 1980 to 2015. By analyzing different types of budget balances and separating structural and cyclical factors, the researchers found that government spending increases tend to improve budget balances, while tax policy changes have a negative effect. The study suggests that focusing on automatic stabilization and using monetary policy may be more effective than discretionary fiscal policy in managing economic challenges.