The Effect of the Fluctuations in the Components of Aggregate Demand on the non-oil GDP of the Kingdom of Saudi Arabia: a Vector Auto-Regression analysis

Journal Article

ALqudair, Khalid Hamad . 2014

• Publication Work Type: Article
• Magazine \ Newspaper: ARGUMENTA OECONOMICA
• Issue Number: 32
• Volume Number: 1
• Pages: 95-113

Publication Abstract

 
The study investigates the effect of the fluctuations in the components of aggregate demand on the non-oil GDP (RNOGDP) in the Kingdom of Saudi Arabia (KSA) using Vector Auto Regression analysis(VAR). The Cointegration test indicates the existence of a long run relationship between (RNOGDP)  and the components of aggregate demand. The Variance decomposition (VDs) suggests that fluctuations in real government expenditure (RGOV) and real net exports (RNEXP) play a major role in explaining the fluctuations of real non-oil GDP. While, the Impulse Response Functions (IRFs) indicate that the fluctuations in RGOV and real private consumption (RCONS) have a positive and the most influence on fluctuations in RNOGDP in the short run, but that vanishes in the long run. On the other hand, the IRFs indicate that fluctuations in real investment (RI) and RNEXP have a negative effect on the fluctuations in RNOGDP in the short run, though; they decline in the long run.