Assessing government expenditures multipliers under oil price swings

El Mostafa Bentour

Journal of Commodity Markets, 2025, vol. 38, issue C

Abstract: This paper evaluates the impact of government expenditure on output under oil price swings using an SVAR model on a sample of 18 MENA countries. We found that, under an oil price decrease, expenditure multipliers are higher than under an oil price increase and could attain more than one in the short run while going beyond the value of two in the long run. Moreover, on average, spending multiples in oil-exporting countries are higher than those in oil-importing countries at times of decreasing oil prices, while the opposite is noticed at times of increasing oil prices. These results are in line with the recent literature on fiscal multipliers, being large in times of recessions while being weak in times of expansions. Accordingly, some policy recommendations arise from this study as follows.

Keywords: Expansion; Fiscal policy; Oil-exporting; MENA; SVAR (search for similar items in EconPapers)
JEL-codes: C22 E3 E62 Q48 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocoma:v:38:y:2025:i:c:s2405851325000212

DOI: 10.1016/j.jcomm.2025.100477

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