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Fiscal Policy and Economic Growth: A Study Relating to the United Arab Emirates

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Abstract

The aim of this paper is to study and hence establish stylized facts for the effects of fiscal policy on long-run economic growth for the small oil producing economy of the United Arab Emirates. Using multivariate cointegration techniques, this is done by decomposing total government spending into investment and consumption expenditures and assessing their intertemporal causal effects on output growth. Robust evidence from the analysis shows that government investment has a positive and significant effect on growth, while the effect of government consumption is negative and insignificant. Since in recent years the United Arab Emirates’ government is facing a substantially growing budget deficit, the paper recommends reducing the share of government consumption expenditures.

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  • Ghali , Khalifa H. & Al - Shamsi, Fatima, 1997. "Fiscal Policy and Economic Growth: A Study Relating to the United Arab Emirates," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 50(4), pages 519-533.
    • Handle: RePEc:ris:ecoint:0321
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    Cited by:

    1. Ekundayo P. Mesagan & Ismaila A. Yusuf, 2019. "Economic Stabilisation and Performance in West Africa: The Role of Fiscal and Monetary Policy," Working Papers of the African Governance and Development Institute. 19/097, African Governance and Development Institute..
    2. Cosimo Magazzino, 2022. "Fiscal sustainability in the GCC countries," International Journal of Economic Policy Studies, Springer, vol. 16(2), pages 389-408, August.
    3. Emmanuel Dodzi K. Havi & Patrick Enu, 2014. "The Effect of Fiscal Policy and Monetary Policy on Ghana’s Economic Growth: Which Policy Is More Potent?," International Journal of Empirical Finance, Research Academy of Social Sciences, vol. 3(2), pages 61-75.
    4. Uche Boniface Ugwuanyi & Okelue David Ugwunta, 2017. "Fiscal Policy and Economic Growth: An Examination of Selected Countries in Sub-Saharan Africa," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 7(1), pages 117-130, January.
    5. Magda Kandil & Assil El Mahmah, 2017. "Fiscal Consolidation and UAE Vision 2021: A Small Scale Macroeconomic Model Approach," Working Papers 1151, Economic Research Forum, revised 11 Jan 2003.
    6. Ramanathan, Ramakrishnan, 2006. "Evaluating the comparative performance of countries of the Middle East and North Africa: A DEA application," Socio-Economic Planning Sciences, Elsevier, vol. 40(2), pages 156-167, June.
    7. Tarek Bouazizi & Zouhaier Hadhek & Mongi Lassoued, 2020. "General Government Balance Shocks and Their Impact on Some Tunisian Macroeconomics Variables: Evidence from a VAR Model," International Journal of Economics and Financial Issues, Econjournals, vol. 10(6), pages 69-83.
    8. Mr. Qing Wang & Mr. Ugo Fasano-Filho, 2001. "Fiscal Expenditure Policy and Non-Oil Economic Growth: Evidence from GCC Countries," IMF Working Papers 2001/195, International Monetary Fund.
    9. Samad, Esma & Masih, Mansur, 2018. "Effects of fiscal components on economic growth: evidence from Malaysia," MPRA Paper 110224, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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