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Bi-Demographic Changes and Current Account using SVAR Modeling: Evidence from Saudi Economy

Hassan Ghassan (), Hassan Al-Hajhoj () and Faruk Balli ()
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Hassan Al-Hajhoj: King Faisal University- Saudi Arabia

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Abstract: The paper aims to explore the impacts of bi-demographic structure on the current account and growth. We use a Structural VAR modeling to track the dynamic impacts between the underlying variables of Saudi economy. New insights have been developed to study the interrelations between population growth, current account and economic growth inside the neoclassical theory of population. The long-run net impact on economic growth of the bi-population growth is negative, due to the typically lower skill sets of the immigrant labor population. Besides, the negative long-run contribution of immigrant workers to the current account growth largely exceeds that of contributions from the native population, because of the increasing levels of remittance outflows from the country. We find that a positive shock in the immigration leads to a negative impact on native active age ratio. Thus, the immigrants appear to be more substitutes than complements for native workers.

Keywords: Saudi Arabia; Structural modeling; J15; J23; F41; F22; JEL Class C51; Current Account Balance; SVAR Model; Bi-population; Hybrid population; Growth; 2; Current account (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ara, nep-lma and nep-mig
Date: 2019-03-28
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