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This paper examines the cyclicality of fiscal behavior in 28 developing oil-producing countries (OPCs) during 1990-2009. After testing five fiscal measures - government expenditure, consumption, investment, non-oil revenue, and non-oil primary balance - and correcting for reverse causality between non-oil output and fiscal variables, the results suggest that all of the five fiscal variables are strongly procyclical in the full sample. Also, the results are not uniform across income groups: expenditure is procyclical in the low and middle-income countries, while it is countercyclical in the high-income countries. Fiscal policy tends to be affected by the external financing constraints in the middle- and high-income groups. However, the quality of institutions and political structure appear to be more significant for the low-income group.

Fiscal policy --- Business cycles --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Econometric models. --- Government policy --- Macroeconomics --- Public Finance --- Business Fluctuations --- Cycles --- Fiscal Policies and Behavior of Economic Agents: General --- Institutions and the Macroeconomy --- Fiscal Policy --- National Government Expenditures and Related Policies: General --- Personal Income, Wealth, and Their Distributions --- Business Taxes and Subsidies --- Comparative or Joint Analysis of Fiscal and Monetary Policy --- Stabilization --- Treasury Policy --- Public finance & taxation --- Expenditure --- Personal income --- Oil, gas and mining taxes --- Procyclical fiscal policy --- National accounts --- Taxes --- Expenditures, Public --- Income --- Mexico