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The economic impact of phasing out energy consumption subsidies in GCC countries

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  • Al Iriani, Mahmoud A.
  • Trabelsi, Mohamed

Abstract

This paper investigates the impact of phasing out energy consumption subsidies on the Gulf Cooperation Council (GCC) economies using causality analysis between GDP and energy consumption. The included empirical tests reveal strong support to the feedback hypothesis between the two variables for Qatar and Saudi Arabia, beyond the sample period. The same tests support the conservation hypothesis for Bahrain and Kuwait within and beyond the sample period, respectively. Furthermore, the growth hypothesis is supported for Oman beyond the sample period. Finally, the analysis of GDP-Energy causality relationship in the UAE supports the neutrality hypothesis. These results suggest that appropriate energy policies geared at phasing out subsidies, hence inducing a more efficient use of energy in this region, should be studied carefully and implemented with caution as the impacts of these policies are expected to differ among individual countries in the region.

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  • Al Iriani, Mahmoud A. & Trabelsi, Mohamed, 2016. "The economic impact of phasing out energy consumption subsidies in GCC countries," Journal of Economics and Business, Elsevier, vol. 87(C), pages 35-49.
    • Handle: RePEc:eee:jebusi:v:87:y:2016:i:c:p:35-49
    DOI: 10.1016/j.jeconbus.2016.04.004
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    3. Nusair, Salah A., 2019. "Oil price and inflation dynamics in the Gulf Cooperation Council countries," Energy, Elsevier, vol. 181(C), pages 997-1011.
    4. Sovacool, Benjamin K., 2017. "Reviewing, Reforming, and Rethinking Global Energy Subsidies: Towards a Political Economy Research Agenda," Ecological Economics, Elsevier, vol. 135(C), pages 150-163.
    5. Abbas, Shujaat, 2020. "Impact of oil prices on remittances to Pakistan from GCC countries: evidence from panel asymmetric analysis," MPRA Paper 107246, University Library of Munich, Germany.
    6. Lee, Chien-Chiang & Hussain, Jafar & Chen, Yongxiu, 2022. "The optimal behavior of renewable energy resources and government's energy consumption subsidy design from the perspective of green technology implementation," Renewable Energy, Elsevier, vol. 195(C), pages 670-680.
    7. Aiman Albatayneh & Adel Juaidi & Francisco Manzano-Agugliaro, 2023. "The Negative Impact of Electrical Energy Subsidies on the Energy Consumption—Case Study from Jordan," Energies, MDPI, vol. 16(2), pages 1-17, January.
    8. Mohammed AlKhars & Fazlul Miah & Hassan Qudrat-Ullah & Aymen Kayal, 2020. "A Systematic Review of the Relationship Between Energy Consumption and Economic Growth in GCC Countries," Sustainability, MDPI, vol. 12(9), pages 1-43, May.
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    More about this item

    Keywords

    Energy; Subsidies; Causality; GCC;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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