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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Freddy Ronalde Camacho-Villagomez & Yanina Shegia Bajaña-Villagomez & Andrea Johanna Rodríguez-Bustos, 2024. "Estimating the Impact of Oil Price Volatility on the Ecuadorian Economy: A MIDAS Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 14(4), pages 371-376, July.
    • Handle: RePEc:eco:journ2:2024-04-34
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    More about this item

    Keywords

    MIDAS; Ecuador; Volatility; Oil Price; Fiscal Policy;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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