A static macro model for the Saudi economy : 1970-1985

Abstract EN

This is an introductory survey of the Saudi Arabian national economy.

It provides a brief exposition to a vigorously growing and rapidly changing economy, which has come to play a very significant role on the international scene.

Saudi Arabia is a strong example of direct government involvement in national economic development.

Massive oil fortunes were successfully and directly used through the public sector to transform a primitive economy into a modern industrial complex.

The study tests several basic economic relationships to determine the patterns of behavior for consumption, investment and the money markets in the Saudi economy.

It uses econometric tests to isolate several significant relationships and contributes to the available literature on the topic.

As expected, the study documents the dominance of fiscal variables.

It shows government expenditures as the variable exhibiting the most significant effect on the national economy.

The study also, presents an estimate of the multiplier of expenditures and of the velocity of money.

These estimates also fall with conventional expectations for developing economies.

However, the study failed to detect any significant effect for the interest rates it tested on economic variables.