Revisiting the impact of oil price fluctuations on government spending : the case of Saudi Arabia

Abstract EN

The issue of oil price fluctuations have attracted the attention of many economists who attempted to explain the nature of the relationship between oil price fluctuations and government spending behavior.

In this paper, we examined the impact of oil price fluctuations on Saudi government spending in some major sectors using annual data (1981-2016) to cover the main fluctuations' periods.

The VAR (vector autoregressive) model was applied to investigate the long-run relationships between variables.

The results suggest that, there is a significant and positively strong relationship between oil prices fluctuations and the government spending in the selected sectors in the long run.