EconPapers    
Economics at your fingertips  
 

Effects of Saudi Arabia’s economic reforms: Insights from a DSGE model

Jorge Blazquez (), Marzio Galeotti (), Baltasar Manzano (), Axel Pierru () and Shreekar Pradhan

Economic Modelling, 2021, vol. 95, issue C, 145-169

Abstract: Saudi Arabia’s Vision 2030 includes the creation of a value-added tax (VAT), the enactment of domestic energy price reforms, and the deployment of renewable energy. We assess these policy measures’ effects on macroeconomic variables using a dynamic general equilibrium model of the Saudi economy. We find that energy price reforms deliver long-run welfare gains that are more than 20% of current consumption, the greatest among the three measures. Introducing a VAT generates welfare gains of up to 4.3% of current consumption. The welfare effects of renewable energy deployment are sensitive to the selected financing scheme. If financing for renewables comes from a reduction in government consumption or transfers to households, no welfare gains are realized. Jointly implementing all three policies increases real gross domestic product (GDP) by 5%, reduces real non-oil GDP by up to 1.8%, and increases welfare by 23.5%–32.4%.

Keywords: Saudi Arabia; Dynamic stochastic general equilibrium model; Vision 2030; Value added tax; Energy price reform; Renewable energy (search for similar items in EconPapers)
JEL-codes: D58 E13 E62 E65 H30 H50 Q43 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999320312657
Full text for ScienceDirect subscribers only

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:eee:ecmode:v:95:y:2021:i:c:p:145-169

DOI: 10.1016/j.econmod.2020.12.004

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2022-11-28
Handle: RePEc:eee:ecmode:v:95:y:2021:i:c:p:145-169