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The impact of fiscal policy on non-oil GDP in Saudi Arabia

Author

Listed:
  • Fakhri J. Hasanov
  • Nader Alkathiri
  • Saad A. Alshahrani
  • Ryan Alyamani

Abstract

This paper examined the impact of fiscal policy on non-oil GDP in Saudi Arabia, the world’s largest oil exporter, over the annual period 1989–2018. We employed various cointegration methods within the framework of the augmented production function and estimated that government current and capital expenditure, in addition to non-oil labour and capital, have statistically significant positive effects on non-oil GDP. We tested whether the recent oil price decline and the implemented economic reforms caused a break in the relationship that non-oil GDP establishes with the mentioned variables and found that there was no break in either the long-run or the short-run relationship. The study concluded with some policy insights that could be useful for fiscal authorities to promote non-oil economic development.

Suggested Citation

  • Fakhri J. Hasanov & Nader Alkathiri & Saad A. Alshahrani & Ryan Alyamani, 2022. "The impact of fiscal policy on non-oil GDP in Saudi Arabia," Applied Economics, Taylor & Francis Journals, vol. 54(7), pages 793-806, February.
    • Handle: RePEc:taf:applec:v:54:y:2022:i:7:p:793-806
    DOI: 10.1080/00036846.2021.1966370
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    Cited by:

    1. Fakhre Alam & Harman Preet Singh & Ajay Singh, 2022. "Economic Growth in Saudi Arabia through Sectoral Reallocation of Government Expenditures," SAGE Open, , vol. 12(4), pages 21582440221, October.
    2. Fakhri J. Hasanov & Muhammad Javid & Frederick L. Joutz, 2022. "Saudi Non-Oil Exports before and after COVID-19: Historical Impacts of Determinants and Scenario Analysis," Sustainability, MDPI, vol. 14(4), pages 1-38, February.
    3. Hasanov, Fakhri J. & Aliyev, Ruslan & Taskin, Dilvin & Suleymanov, Elchin, 2023. "Oil rents and non-oil economic growth in CIS oil exporters. The role of financial development," Resources Policy, Elsevier, vol. 82(C).

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