Fiscal sustainability in the GCC countries

Cosimo Magazzino ()

International Journal of Economic Policy Studies, 2022, vol. 16, issue 2, No 3, 389-408

Abstract: Abstract We explore the fiscal sustainability in the six Gulf Cooperation Council (GCC) countries over the period 1990–2017. Panel unit root tests in presence of cross-sectional dependence for government revenues, expenditures, the primary balance, and debt reach mixed results. However, cointegration tests reveal that a long-run relationship exists between government revenues and expenditures, while the relationship between government primary deficit and debt is controversial. Panel estimates of the cointegrating relationship indicate that Saudi Arabia is in a condition of risk, having to keep the debt under control. Yet, Bahrain and Qatar seem to face the toughest challenges. The results of causality tests support the hypothesis of fiscal synchronization, implying that the GCC governments take decisions on their revenues and expenditures simultaneously.

Keywords: Fiscal sustainability; Government expenditures; Revenues; Primary balance; Government debt; GCC countries; Panel data (search for similar items in EconPapers)
JEL-codes: C23 E62 H63 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s42495-022-00082-9

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