On September 23rd, the 118th edition of the GPEARI/DGE Seminars cycle took place, featuring the presentation of the study “Did fiscal mitigation measures stabilize fuel markets? Evidence from Portugal's 2022 fiscal intervention through econometrics and complexity theory”. The author is Rui Vigário Rodrigues, an economist and researcher.
The study's main objective was to analyze the extent to which the reduction of the Tax on Petroleum Products (ISP) altered the trajectory and volatility of fuel prices in Portugal. It also sought to understand how variations in brent oil prices were reflected in retail sales and to analyze temporal complexity and the relationship between the Portuguese fuel market and the international market.
To achieve these objectives, five analytical instruments were employed: Interrupted Time Series Analysis (ITSA) for the effect of fiscal intervention; a Nonlinear Autorregressive Distributed Lag (NARDL) model for the transmission of international oil prices; EGARCH for volatility evolution; and Multifractal Detrended Fluctuation Analysis (MF-DFA) and the cross-correlation coefficient (DCCA) to examine temporal complexity and multi-scale dependence.
The results indicate that the fiscal intervention led to an immediate and statistically significant decrease in fuel prices in the short term, without impacting their long-term trajectory. It also contributed to reducing conditional volatility. Furthermore, the policy altered the functioning of the Portuguese market by slowing down the transmission of international shocks to the national reality. The findings also reveal that persistence and interdependence between markets changed over different time periods.
