Fiscal Adjustment in the Gulf Countries: Less Costly than Previously Thought

By Armand P Fouejieu, Sergio L. Rodriguez, Sohaib Shahid

June 13, 2018

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Armand P Fouejieu, Sergio L. Rodriguez, and Sohaib Shahid. Fiscal Adjustment in the Gulf Countries: Less Costly than Previously Thought, (USA: International Monetary Fund, 2018) accessed September 19, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper estimates fiscal multipliers for the Gulf Cooperation Council (GCC) countries. Using OLS panel fixed effects on a sample of six countries from 1990-2016, results indicate that GCC fiscal multipliers have declined in recent years which would make the on-going fiscal consolidation less costly than previously thought. Though both capital and current multipliers have declined in recent years, capital multipliers are larger than current multipliers, which implies that reducing (less productive) current spending will help limit the adverse impact of such measures on growth.

Subject: Capital spending, Current spending, Expenditure, Fiscal consolidation, Fiscal multipliers, Fiscal policy

Keywords: Capital spending, Current spending, Fiscal consolidation, Fiscal Multiplier, Fiscal multipliers, Fiscal Policy, GCC, GCC country, GDP, Global, Government spending, Multiplier, Oil GDP, Spending growth, Spending multiplier, Tourism expenditure, WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/133
Stock No:

WPIEA2018133
ISBN:

9781484361573
ISSN:

1018-5941

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