The Impact of Political Instability on the Budget Deficit: Evidence from the MENA Region

Zeineb Gouasmi and Riadh El Ferktaji

MPRA Paper from University Library of Munich, Germany

Abstract: The revolutions in the MENA region countries were experienced as a negative economic shock. This led to popular demands and, at the same time, a worsening of public finances in a climate of political instability. It is therefore relevant to address the question: Is the reduction of the budget deficit dependent on explanatory political variables such as democracy and political stability? In this article, we examined the relationship between the budget deficit and political instability/democracy while using other macroeconomic control variables, such as GDP growth, the consumer price index, and oil prices. This relationship was estimated for a sample of MENA region countries using a dynamic panel data econometric model over the period 2008-2019. The results of this article show that political instability and democracy have a significant impact on the budget deficit in the selected group of MENA region countries. Specifically, the model's estimation found that the democratic political regime positively impacts the budget balance.

Keywords: Budget; Deficit.; Political; instability.; MENA; Region (search for similar items in EconPapers)
JEL-codes: C4 D72 H62 (search for similar items in EconPapers)
Date: 2025-06, Revised 2025-07
References: Add references at CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/127249/1/MPRA_paper_127249.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:127249

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().