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Government Spending and Non-Oil Economic Growth in the UAE

Author

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  • Ibrahim Carole

    (Saint Joseph University, Dubai, United Arab Emirates; American University in Dubai, Dubai, United Arab Emirates)

Abstract

The present paper studies empirically the relationship between government spending and non-oil economic growth in the UAE for the last four decades by using the vector autoregression (VAR) approach. The findings of the study suggest that the implementation of expansionary policy, through the intensification of current and development public expenditures, induces an increase in the non-oil economic growth during the subsequent periods of the government spending shock. Thus, the implementation of expansionary government spending stimulates the UAE economy, especially during recession periods. The study suggests that policymakers should concentrate their spending on the right projects, as well as on research and development. Moreover, they should channel their transfers and subsidies to the productive sectors, and they should ensure that higher productivity in public institutions is in conjunction with the rise in wages and salaries to achieve sustainable economic growth.

Suggested Citation

  • Ibrahim Carole, 2019. "Government Spending and Non-Oil Economic Growth in the UAE," Economics and Business, Sciendo, vol. 33(1), pages 82-93, January.
    • Handle: RePEc:vrs:ecobus:v:33:y:2019:i:1:p:82-93:n:6
    DOI: 10.2478/eb-2019-0006
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    References listed on IDEAS

    as
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    3. Strulik, Holger & Trimborn, Timo, 2009. "Fiscal Stimulus: A Neoclassical Perspective," Hannover Economic Papers (HEP) dp-421, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
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    5. Mr. Saad A. Alshahrani & Mr. Ali J Al-Sadiq, 2014. "Economic Growth and Government Spending in Saudi Arabia: an Empirical Investigation," IMF Working Papers 2014/003, International Monetary Fund.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Current Expenditures; Development Expenditures; Government Spending; Non-Oil Economic Growth; United Arab Emirates (UAE); Vector Autoregression (VAR);
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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