Volatile Mining Revenues and State Government Budget Decisions

Mining royalties provide a volatile source of revenue for state governments in Australia. We explore the effects changes royalty received by government on current-year budget decisions about expenditure, tax and surplus. The literature postulates different models how lower-level respond to windfall from higher level government. Empirical evidence these over 1998–2019 provides strong that half becomes change expenditure. Estimates revenues surplus are not definitive nor robust.