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June 4, 2026EnergiesOpen Access

Fiscal Policy as a Transmission Channel of Oil Price Shocks: Evidence from a VECM Analysis of Non-Oil Growth in Saudi Arabia Under Vision 2030

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Authors

FMFatma MabroukPrincess Nourah bint Abdulrahman UniversityHAHiyam AbdulrahimPrincess Nourah bint Abdulrahman University

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Implication

Randomized trial examines fiscal policy effects on non-oil growth in Saudi Arabia, suggesting the need for reforms.

Key Points

  • This study explores how oil price shocks affect non-oil economic activity and the mediating role of fiscal policy in Saudi Arabia.
  • Analyzed quarterly data from 2010Q1 to 2025Q3 using Vector Error Correction Model (VECM) for long-run and short-run dynamics.
  • Investigated the relationships among oil prices, consumer prices, government consumption expenditure, and non-oil GDP.
  • Oil price increases significantly stimulate government spending, yet fiscal expansion's effect on non-oil output is modest and short-lived.
  • Inflation is influenced primarily through indirect fiscal channels, reflecting weak fiscal multipliers.
  • Non-oil GDP responds indirectly and moderately to oil price shocks, indicating incomplete economic diversification.

Cite This Study

Mabrouk et al. (2026) studied this question.

synapsesocial.com/papers/6a2117fdd499ed480b170ca1https://doi.org/10.3390/en19112682
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Also Consider

Synapse has enriched 3 closely related papers on similar clinical questions. Consider them for comparative context:

  1. 1Fiscal Policy and Economic Resilience: Impact of Government Consumption alongside Oil and Non-Oil Revenues on Saudi Arabia's GDP During Crises (1969-2022)2024 · 3 citations
  2. 2Fiscal sustainability in Saudi Arabia under Vision 2030: evidence from an ARDL analysis, 1991–20232026 · 2 citations
  3. 3Economic Diversification in the GCC2014 · 204 citations