Influence of fiscal policy on GDP: an empirical study of GCC countries


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The Gulf Cooperation Council (GCC) countries of late have made considerable attempts to achieve financial consolidation. However, this was limited to cuts in government expenditures. While scholars suggest the need for overall fiscal policy adjustments, countries should pay particular attention to efficient revenue generation and public debt management. In this paper, an attempt has been made to examine public finance of the GCC countries. The study has taken into account four significant components of public finance: public revenue, inflation, government expenditure and public debt. The co-integration rank test using the vector auto-regression method is employed to determine whether the chosen variables play any influential role in the GDP of the GCC economies. The results suggest that the effect of the consumer price inflation, total government revenue, revenue (percent of non-oil), and total government gross debt have a strong influence on the GDP of these economies. Thus, this means that the countries in the GCC region should focus on inflation, revenue, and public debt to have robust, viable and comprehensive development.

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    • Figure 1. Gross domestic product (current USD)
    • Figure 2. Government revenue (% of GDP)
    • Figure 3. Government expenditure (% of GDP)
    • Figure 4. Graphical plot of economic multi-variables of the GCC countries
    • Table 1. Growth in real GDP (%)
    • Table 2. Nominal GDP (USD billions)
    • Table 3. Oil exports: growth in crude and non-crude GDP (%)
    • Table 4. Oil and natural gas production (million barrels/day)
    • Table 5. Consumer price inflation (average year, %)
    • Table 6. Public gross debt (% of GDP)
    • Table 7. Descriptive statistics of each variable used in the study
    • Table 8. Multivariate regression analysis
    • Table 9. Vector auto-regression estimates
    • Table 10. Cointegration rank test
    • Conceptualization
      Rashid Khalil
    • Formal Analysis
      Rashid Khalil, Bilal Ahmad Pandow
    • Investigation
      Rashid Khalil
    • Methodology
      Rashid Khalil
    • Writing – original draft
      Rashid Khalil
    • Data curation
      Bilal Ahmad Pandow
    • Software
      Bilal Ahmad Pandow
    • Supervision
      Bilal Ahmad Pandow
    • Writing – review & editing
      Bilal Ahmad Pandow