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Dynamic relationships between oil revenues, government spending and economic growth in an oil-dependent economy

Rashid Sbia () and Helmi Hamdi ()

MPRA Paper from University Library of Munich, Germany

Abstract: The aim of this paper is to empirically examine the relationship between Oil revenues, government spending and GDP growth in the kingdom of Bahrain. Oil revenues are the main source of financing government expenditures and imports of products. Increasing oil prices in the recent years have boosted public expenditures on social and economic infrastructure. In this paper we will investigate whether the huge government spending has enhanced the pace of economic growth or not. To this end we use a trivariate cointegration analysis and error-correction model and data for 1960-2010. Overall results suggest that oil revenues remain the principal source for growth and the main channel which finance the government spending.

Keywords: Oil revenues; Government expenditures; Economic Growth; Bahrain; ECM (search for similar items in EconPapers)
JEL-codes: C3 C32 E62 H50 H54 N1 N15 (search for similar items in EconPapers)
Date: 2013, Revised 2013
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Related works:
Journal Article: Dynamic relationships between oil revenues, government spending and economic growth in an oil-dependent economy (2013) Downloads
Working Paper: Dynamic relationships between oil revenues, government spending and economic growth in an oil-dependent economy (2013)
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