Does Trade Openness Lead to Big Government Size?
This study examines the long run equilibrium relationship between trade openness and government size in the Kingdom of Saudi Arabia using Cointegration technique and the direction of causality relationship in the long and short runs between the variables utilizing the Vector Error Correction Model (VECM). The Cointegration test indicates the existence of the long run equilibrium relationship between trade openness and government size. The causality test indicated that there is a uni-directional causal relationship that runs from government size to trade openness in the long run not vice versa. In addition, The short run causality test indicates that causality is running from trade openness to government size.
Over all, it may be concluded that the results provide support to the compensation hypothesis that entails a positive causality that is running from the trade openness to the government size in the log run not in the short run.
The study examines the long-run equilibrium relationship between energy consumption and economic growth in the Kingdom of Saudi Arabia (1970–2008), using a cointegration technique and the…
The purpose of the paper is to investigate Saudi Arabia’s current account dynamic based on consumption theory using present value model.