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Dynamic relationships between oil revenues, government spending and economic growth in an oil-dependent economy

Helmi Hamdi () and Rashid Sbia ()

Economic Modelling, 2013, vol. 35, issue C, 118-125

Abstract: The aim of this paper is to empirically examine the dynamic relationships between oil revenues, government spending and economic growth in the Kingdom of Bahrain. Oil revenues are the main source of financing government expenditures and imports of good and services. Increasing oil prices in the recent years have boosted public expenditures on social and economic infrastructure. In this paper, we investigate whether the huge government spending has enhanced the pace of economic growth or not. To this end, we use a multivariate cointegration analysis and error-correction model and data for 1960–2010. Overall results suggest that oil revenues remain the principal source for growth and the main channel which finance the government spending.

Keywords: Oil revenues; Government expenditures; Growth; Bahrain; ECM (search for similar items in EconPapers)
JEL-codes: E62 H50 H54 N15 (search for similar items in EconPapers)
Date: 2013
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Working Paper: Dynamic relationships between oil revenues, government spending and economic growth in an oil-dependent economy (2013)
Working Paper: Dynamic relationships between oil revenues, government spending and economic growth in an oil-dependent economy (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:35:y:2013:i:c:p:118-125

DOI: 10.1016/j.econmod.2013.06.043

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