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This paper examines the conduct of fiscal policy in the Trinidad and Tobago economy over the period 1970 to 2014, with the main focus being on the cyclical patterns of government expenditure with respect to output and natural gas rents. We find evidence that fiscal policy in Trinidad and Tobago is procyclical with output and natural gas rents. Lastly, policy recommendations are suggested and general conclusions are made.
Arman, A. and M. Moradi (2015), “Procyclical Fiscal Policy: Is OPEC an Exception?”, European Journal of Business and Management, 7(22), 129-134.
Aslanli, K. (2015), “Fiscal Sustainability and the State Oil Fund in Azerbaijan”, Journal of Eurasian Studies, 6(2), 114-121.
Blanchard, O. and R. Perotti (2002), “An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output”, Quarterly Journal of Economics, 117(4), 1329-1368.
Central Bank of Trinidad and Tobago (2017), Data Centre, at: <http://www.central-bank.org.tt/content/data-centre>.
Central Bank of Trinidad and Tobago (2015), Annual Economic Survey, retreived from <https://www.central-bank.org.tt/sites/default/files/Annual%20Economic%20Survey%202015.pdf>.
Chian, K.W. (2016), “Fiscal Cyclicality in Brunei Darussalam”, Journal of Southeast Asian Economies, 33(1), 83-94.
Harding, T. and F.v.d. Ploeg (2009), “Is Norway’s Bird-in-Hand Stabilization Fund Prudent Enough? Fiscal Reactions to Hydrocarbon Windfalls and Graying Populations”, Department of Economics, OxCarre (Oxford Centre for the Analysis of Resource Rich Economies) Research Paper No. 27.
Heritage and Stabilisation Fund Act (2007), Act No.6 of 2007, §§ 1-22, Republic of Trinidad and Tobago.
Ilzetzki, E. and C.A. Vegh (2008), “Procyclical Fiscal Policy in Developing Countries: Truth or Fiction?”, NBER Working Paper No. 14191.
Jaimovich, D. and U. Panizza (2007), “Procyclicality or Reverse Causality?”, Inter-American Development Bank, Research Department Working Paper #599.
McManus, R. and F.G. Ozkan (2015), “On the Consequences of Pro-cyclical Fiscal Policy”, Fiscal Studies, 36(1), 29-50.
Talvi, E. and C.A. Végh (2005), “Tax Base Variability and procyclical fiscal policy in Developing Countries”, Journal of Development Economics, 78(1), 156-190.
The World Bank (2017), World Development Indicators, at: <http://data.worldbank.org/data-catalog/world-development-indicators>.
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