Fiscal Policy and Economic Growth: A Study Relating to the United Arab Emirates

Khalifa H. Ghali () and Fatima Al - Shamsi ()
Additional contact information
Khalifa H. Ghali: Kuwait University - Department of Economics, Postal: PO Box 5486 Safat Kuwait 13055 Kuwait, http://www.kuniv.edu.kw/
Fatima Al - Shamsi: United Arab Emirates University, Postal: P.O.Box 15551, Al-Ain, United Arab Emirates, http://www.uaeu.ac.ae/

Economia Internazionale / International Economics, 1997, vol. 50, issue 4, 519-533

Abstract: The aim of this paper is to study and hence establish stylized facts for the effects of fiscal policy on long-run economic growth for the small oil producing economy of the United Arab Emirates. Using multivariate cointegration techniques, this is done by decomposing total government spending into investment and consumption expenditures and assessing their intertemporal causal effects on output growth. Robust evidence from the analysis shows that government investment has a positive and significant effect on growth, while the effect of government consumption is negative and insignificant. Since in recent years the United Arab Emirates’ government is facing a substantially growing budget deficit, the paper recommends reducing the share of government consumption expenditures.

JEL-codes: E62 (search for similar items in EconPapers)
Date: 1997
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