Browsing by Author "Almutairi, Ebtehal"

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Assessing The Impact of Oil Price Fluctuations on The Saudi Economy, and Monetary Policy Uncertainty Shocks
(2023-08) Almutairi, Ebtehal; Xiaohan, Ma
This dissertation seeks to provide a theoretical analysis and overview of the Saudi economy from the 1970s to 2021, then investigates the impact of oil price instability on Saudi’s macroeconomic variables in the second chapter, describes the determinants of monetary policy in Saudi Arabia, especially under uncertainty in the third chapter, and finally assesses The Saudi 2030 Vision by examining the link between the government expenditure, fixed capital formation, and non-Oil GDP. The first two studies utilize The Vector Autoregressive Model (VAR) and the Vector Error Correction Model (VECM) while the third study applied The Autoregressive Distributed Lag Model (ARDL) in addition to the VAR model. The second chapter in this dissertation empirically investigates the effect of oil price fluctuations on several key macroeconomic indicators. The results show that oil prices have an insignificant impact on money supply and inflation except that there is a significant positive impact of oil price fluctuations on government expenditure during the short term. Moreover, IRF results indicate that there is a positive effect of oil price shock on inflation, but the magnitude of response is very slight. However, oil price shocks have a notable positive impact on government expenditure. Similarly, the money supply interacts with the shocks in the oil price, but the magnitude of response is smaller compared with the government expenditure. The third chapter in this dissertation explores whether changes in Saudi interest rate are related to political risks or other variables such as oil prices, money supply, GDP, and US interest rates. The results indicate that the GDP has the most significant negative effect on the Saudi interest rate. The results also suggest that there is an inverse relationship between geopolitical risk and the interest rate, and the response of the Saudi interest rate to its shocks is highly significant compared with other variables. When we extended the model by including the US interest rate, we obtained similar results. The fourth chapter in this dissertation assesses how The Vision 2030 scheme has contributed to boosting the non-oil GDP by supporting non-oil sectors. The results show that in the short term gross fixed capital formation has a positive impact on the non-oil GDP, while the first lag of government growth expenditure has a negative impact on non-oil. However. in the long term, the results reveal that government growth expenditure and gross fixed capital formation do not have statistically significant effects on non-oil GDP.
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