Assessing the Macroeconomic Implications of Oil Price Fluctuations in Saudi Arabia: An SVAR-based Study

Shahzeb Syed Mohd () and Khushwaha Himanshu
Additional contact information
Shahzeb Syed Mohd: School of Management, IGSM Building, IILM University, Greater Noida, 201306, India.
Khushwaha Himanshu: TERI School of Advanced studies, New Delhi, India.

Zagreb International Review of Economics and Business, 2025, vol. 28, issue 1, 7-29

Abstract: This study aims to analyse the impact of oil price fluctuations on the major macroeconomic indicators of the Saudi Arabian economy, including gross domestic product, total revenue, inflation, money supply, and real exchange rate. This study utilises Structural Vector Auto-Regression (SVAR) analysis to investigate the influence of oil price shocks on macroeconomic indicators. This research validates the previous findings indicating an increase in oil prices positively impacts GDP and total revenue. This study provides evidence that inflation exhibits minimal responsiveness to fluctuations in oil prices. Regarding the variable of interest, namely the Real Effective Exchange Rate (REER) and money supply, it was observed that these variables had a substantial effect on the shock in oil prices. The results have important policy implications, providing an understanding of how Saudi Arabia’s macroeconomic factors respond to changes in oil prices, and highlighting the importance of strengthening and expanding the financial sector per the diversification objectives of Vision 2030.

Keywords: Money Supply; Oil Price Shock; Saudi Arabia; SVAR (search for similar items in EconPapers)
JEL-codes: Q31 (search for similar items in EconPapers)
Date: 2025
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.2478/zireb-2025-0001 (text/html)

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:vrs:zirebs:v:28:y:2025:i:1:p:7-29:n:1001

DOI: 10.2478/zireb-2025-0001

Access Statistics for this article

Zagreb International Review of Economics and Business is currently edited by Jurica Šimurina

More articles in Zagreb International Review of Economics and Business from Sciendo
Bibliographic data for series maintained by Peter Golla ().