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Budgetary Institutions, Fiscal Policy, and Economic Growth: the Case of Saudi Arabia

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  • Ashraf Galal Eid

    (Qatar University)

Abstract

This paper investigates budgetary and fiscal institutions in Saudi Arabia during the period 1969-2014. In addition, the study examines the impact of government expenditure on non-oil private GDP per capita using Autoregressive Distributive Lag (ARDL) approach. The study finds that although the Saudi government uses a conservative oil price when estimating oil revenues, government expenditure in general, and capital expenditure in specific, is still procyclical. Also, the budget institutions index developed by Dabla-Norris et al (2010) shows that because of the limited power of the Saudi Consultative Assembly in the budgetary cycle, Saudi Arabia scored 0.42 out of 1 in the overall stage Index. On the other hand, the estimation of the long run relationship between government expenditure and GDP per capita illustrates that lagged real government consumption expenditure has a positive and significant impact on real non-oil private GDP per capita while its contemporaneous effect is found to be negative.

Suggested Citation

  • Ashraf Galal Eid, 2015. "Budgetary Institutions, Fiscal Policy, and Economic Growth: the Case of Saudi Arabia," Working Papers 967, Economic Research Forum, revised Nov 2015.
    • Handle: RePEc:erg:wpaper:967
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    Cited by:

    1. Kamiar Mohaddes & Jeffrey B. Nugent & Hoda Selim, 2018. "Reforming fiscal institutions in resource-rich Arab economies: Policy proposals," CAMA Working Papers 2018-41, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    2. Sarah El-Khishin & Jailan El-Saeed, 2021. "The Twin Deficit Hypothesis in the MENA Region: Do Geopolitics Matter?," Economies, MDPI, vol. 9(3), pages 1-17, September.
    3. Mohammad Imdadul Haque, 2019. "Growth Accounting for Saudi Arabia," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(6), pages 691-701, June.
    4. Vugar Ahmadov & Ulvi Sarkarli & Ramiz Rahmanov, 2017. "Structural Budget Balances in Oil-rich Countries: The Cases of Azerbaijan, Kazakhstan, and Russia," Working Papers 1704, Central Bank of Azerbaijan Republic.

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