Commodity Price Shocks and Fiscal Outcomes

Issouf Samaké, Nicola Spatafora
2012 IMF Working Papers  
The experience of developing countries over 1990-2010 indicates that commodity prices have a significant impact on fiscal outcomes. Both revenue and expenditure rise in response to commodity (import or export) price increases; the response of the fiscal deficit is ambiguous. A floating exchange rate regime only partially offsets the impact; foreign-exchange reserves do not dampen the effects. Hence, there is a strong case for fiscal hedging against commodity price shocks. Hedging instruments
more » ... ed on a limited set of benchmark world prices for a narrow set of commodities may suffice to realize most of the potential benefits. JEL Classification Numbers: E62, F40
doi:10.5089/9781475503333.001 fatcat:be6ffpjhtjd3zdiwv7jizhuhs4