The Impact of Government Spending on GDP in a Remitting Country

19 Pages Posted: 1 Aug 2018 Last revised: 18 Nov 2021

See all articles by Almukhtar S. Al‐Abri

Almukhtar S. Al‐Abri

Sultan Qaboos University

Ismail H. Genc

American University of Sharjah, School of Business Administration, Department of Economics

George Naufal

Texas A&M University; IZA Institute of Labor Economics

Abstract

The literature on remittances is large and growing. However, its focus has mainly been on the effects of remittance inflows on the receiving economies. Little has been done on the sending economies. In this paper, we use data from Saudi Arabia, one of the top remitting countries in the world, to identify the impact of government spending on Saudi Arabia's real output considering the role of remittance outflows. The results suggest that remittance outflows have a weak effect, if at all, on government spending, which, in turn, has an insignificant impact on GDP. The paper discusses some policy implications.

Keywords: remittances, multipliers, fiscal policy, GCC

JEL Classification: C23, E61, F24, N15

Suggested Citation

Al-Abri, Almukhtar and Genc, Ismail H. and Naufal, George Sami, The Impact of Government Spending on GDP in a Remitting Country. Available at SSRN: https://ssrn.com/abstract=3217494 or http://dx.doi.org/10.2139/ssrn.3217494

Almukhtar Al-Abri (Contact Author)

Sultan Qaboos University ( email )

PO Box 20
Al-khod SQU 123
Muscat
Oman

Ismail H. Genc

American University of Sharjah, School of Business Administration, Department of Economics ( email )

Sharjah, Sharjah 26666
United Arab Emirates
+971-6-515-2327 (Phone)

HOME PAGE: http://https://www2.aus.edu/facultybios/profile.php?faculty=igenc

George Sami Naufal

Texas A&M University ( email )

Public Policy Research Institute
4476 TAMU
College Station, TX 77843
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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