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

Ashraf Eid ()

No 967, Working Papers from Economic Research Forum

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.

Pages: 35
Date: 2015-11, Revised 2015-11
New Economics Papers: this item is included in nep-ara, nep-ene and nep-mac
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Citations: View citations in EconPapers (5)

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