Abstract
Taxation as a fiscal policy measure can influence investment and production decisions in the natural gas industry. Using state-level data from 2007 to 2020, this paper examines the impact of tax policies on natural gas and shale gas production, as well as investments in terms of new producing wells in seven of the largest shale gas-producing states. Using panel vector autoregressions, we find that increases in tax revenues have limited effects on total natural gas production and new wells, but a much stronger impact on shale gas production. In turn, tax revenues are significantly influenced by natural gas production. These findings are expected to inform policymakers regarding the interdependencies between fiscal policies, production, and investment in the industry.