Volatile Mining Revenues and State Government Budget Decisions |
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Authors: | John Freebairn William Griffiths |
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Institution: | Department of Economics, University of Melbourne, Parkville, Victoria, Australia |
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Abstract: | Mining royalties provide a volatile source of revenue for state governments in Australia. We explore the effects of changes in royalty revenue received by a state government on current-year budget decisions about expenditure, tax revenue and the budget surplus. The literature postulates different models for how lower-level government budget decisions respond to a revenue windfall from a higher level of government. Empirical evidence on these models over 1998–2019 provides strong evidence that over a half of a royalty windfall becomes a change in budget expenditure. Estimates of changes to tax revenues and the surplus are not definitive nor robust. |
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Keywords: | mining royalties state budgets |
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