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Reverse Causality between Oil Policy and Fiscal Policy?: The Venezuelan Experience

Osmel Manzano Mazzali () and José Luis Saboin

No 11294, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: This paper uses a model of intergenerational accounting to simulate the intergenerational distribution of oil wealth in Venezuela. Venezuelan oil production does not seem to follow an optimal extraction path. Nevertheless, this is true if we do not consider what the government does with the resources received from the oil sector. In this paper we explored the interaction of oil policy and fiscal policy using an intergeneration accounting model. We found that these interactions could explain certain outcomes. In particular, the model could explain why the sector was open for investment in 1991 and then “re-nationalized” in 2001. Results suggest that when fiscal policy could leave an important burden to future generations, voters seem to favor a more tax oriented oil policy, leaving the oil in the subsoil.

Keywords: Fiscal policy; Venezuela; Oil policy; Intergenerational accounting; Fiscal voracity; Oil expropriation cycles (search for similar items in EconPapers)
JEL-codes: E21 E22 E24 E32 E62 E65 H13 H21 H50 L71 N16 N56 O13 P16 Q38 (search for similar items in EconPapers)
Date: 2021-05
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