Government resource revenues, fiscal policy and precautionary saving

Øystein Thøgersen

The Journal of International Trade & Economic Development, 1997, vol. 6, issue 3, 377-391

Abstract: This paper explains counterintuitive effects of a tax cut on current consumption in a small open economy where the government is endowed with an uncertain resource wealth. Depending on fiscal policy and the extraction path of the resource, different generations face different risks regarding their tax burden, and this affects private saving. The effect of a one-period tax cut followed by tax increases in order to stabilize the expected government wealth depends on whether the tax cut is financed by intensified resource extraction. This triggers increased precautionary saving which may offset the wealth effect of the tax policy on the consumption of present generations.

Keywords: Fiscal policy; precautionary saving; resource price uncertainty (search for similar items in EconPapers)
Date: 1997
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/09638199700000022 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jitecd:v:6:y:1997:i:3:p:377-391

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RJTE20

DOI: 10.1080/09638199700000022

Access Statistics for this article

The Journal of International Trade & Economic Development is currently edited by Pasquale Sgro, David E.A. Giles and Charles van Marrewijk

More articles in The Journal of International Trade & Economic Development from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().