Comparative Assessment of the Response of Current and Capital Budget Expenditures under Oil Price Volatility
Ravan Gafarov 
Abstract. The article compares the transmission of oil-price changes to current and capital expenditures of Azerbaijan’s state budget during 2015–2024. The dataset combines official materials of the State Statistical Committee, the Chamber of Accounts and the State Oil Fund with monthly Brent prices from the U.S. Energy Information Administration. Nominal fiscal indicators are converted to 2024 prices. Because the annual sample is too small for reliable multiparameter dynamic models, the empirical strategy uses descriptive statistics, Spearman correlations, single-factor regressions with HC3 standard errors, classification of years by the direction of the oil-price shock, and 20,000 paired bootstrap replications. The coefficient of variation is 24.1% for real capital expenditure and 11.0% for real current expenditure. In years of rising oil prices, real capital expenditure increased by 21.1% on average, while it declined by 14.7% in years of falling prices. Current expenditure displayed a more rigid and broadly opposite profile. The paired bootstrap indicates a meaningful difference between the oil-price sensitivities of the two expenditure categories. Realized volatility and the buffering role of SOFAZ transfers, however, do not produce stable causal evidence. The findings suggest that short-run fiscal adjustment is concentrated mainly in capital expenditure.
Keywords: oil price volatility, current expenditure, capital expenditure, fiscal procyclicality, State Oil Fund, budget sustainability