Estimating the Impact of Oil Price Volatility on the Ecuadorian Economy: A MIDAS Approach

Freddy Ronalde Camacho-Villagomez, Yanina Shegia Bajaña-Villagomez and Andrea Johanna Rodríguez-Bustos
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Freddy Ronalde Camacho-Villagomez: Catholic University of Santiago de Guayaquil, Faculty of Economics and Business, Ecuador
Yanina Shegia Bajaña-Villagomez: Catholic University of Santiago de Guayaquil, Faculty of Economics and Business, Ecuador
Andrea Johanna Rodríguez-Bustos: Catholic University of Santiago de Guayaquil, Faculty of Economics and Business, Ecuador

International Journal of Energy Economics and Policy, 2024, vol. 14, issue 4, 371-376

Abstract: This paper provides empirical evidence about the impact of oil price volatility on government spending, tax revenues, and economic growth for Ecuador. The effects are estimated via a MIDAS regression using quarterly and monthly data for the period 2004 to 2019. The results show that oil price volatility has a positive impact on government spending and tax revenues which is an indicative of a non-prudence behavior in fiscal policy. The impact of GDP is non-significant, contrary to economic intuition and previous studies. These findings have several policy implications that are consistent with the literature of fiscal policy in oil-exporting countries.

Keywords: MIDAS; Ecuador; Volatility; Oil Price; Fiscal Policy (search for similar items in EconPapers)
JEL-codes: C32 E62 H50 (search for similar items in EconPapers)
Date: 2024
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