Impacts of oil price shocks on budget variables in Vietnam

Abstract

 This paper applies Vector Autoregression model to explore the affects of oil price shocks on main budget variables of Vietnam using quarterly data between 1990Q1 and 2019Q4. The empirical results indicate that the shocks of oil price have a weakly positive impact on oil revenues and budget revenues with lag of 1 quarter and 2 quarters respectively. The relationship between budget deficit and fluctuation of oil price are negative. This means when having an increase in oil price can improve the budget deficit after 1 quarter. By contrast, there is not statistical evidence of impact of oil price on budget expenditure.