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

Mohamed Noureldin Sayed, Ghada H. Ashour and Nesrin A. Abbas
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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.

International Journal of Energy Economics and Policy, 2021, vol. 11, issue 6, 180-190

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.

Keywords: Military Expenditure; Gross Fixed Capital; Yearly Oil Price; Vector Error Correction Model; Saudi Arabia; Algeria. (search for similar items in EconPapers)
JEL-codes: Q4 Q43 Q48 (search for similar items in EconPapers)
Date: 2021
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