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The Impact of the Volatility in Oil Prices on Saudi Arabia s and Algeria s Military Expenditure: A Comparative Study

Author

Listed:
  • Mohamed Noureldin Sayed

    (Applied Studies and Community Services College, Imam Abdulrahman Bin Faisal University, Saudi Arabia,)

  • Ghada H. Ashour

    (Department of Economics, Faculty of Business and Economics; Badr University in Cairo, Egypt.)

  • Nesrin A. Abbas

    (Department of Economics, Faculty of Business and Economics; Badr University in Cairo, Egypt.)

Abstract

By using time-series data in respect of the period from 1985 to 2019, this study aims to compare how the changes in Yearly Oil Prices (YOP) affect both Saudi Arabia s and Algeria s military expenditure. This study applies the Vector Error Correction Model (VECM) to measure the relationships between the variables. On the one hand, this study s findings indicate that changes in YOP have had a great causal impact on both countries military expenditure, On the other hand, the link to Growth Fixed Capital (GFC) has had an insignificant effect on Saudi Arabia s military expenditure. However, in the case of Algeria, the causal effect has been significant but, nevertheless, at a particularly low level (? = 10%). In conclusion, the two countries should pay closer attention to the dominant YOP when formulating their policies to maintain their much-needed security systems and protection umbrellas.

Suggested Citation

  • Mohamed Noureldin Sayed & Ghada H. Ashour & Nesrin A. Abbas, 2021. "The Impact of the Volatility in Oil Prices on Saudi Arabia s and Algeria s Military Expenditure: A Comparative Study," International Journal of Energy Economics and Policy, Econjournals, vol. 11(6), pages 180-190.
    • Handle: RePEc:eco:journ2:2021-06-21
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    More about this item

    Keywords

    Military Expenditure; Gross Fixed Capital; Yearly Oil Price; Vector Error Correction Model; Saudi Arabia; Algeria.;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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