KGEMM: A Macroeconometric Model for Saudi Arabia

Abstract

The King Abdullah Petroleum Studies and Research Center (KAPSARC) is a non-profit global institution dedicated to independent research into energy economics, policy, technology and the environment across all types of energy. KAPSARC's mandate is to advance the understanding of energy challenges and opportunities facing the world today and tomorrow, through unbiased, independent, and high-caliber research for the benefit of society. KAPSARC is located in Riyadh, Saudi Arabia.

Sectoral employment analysis for Saudi Arabia

“…However, our estimated value-added elasticity of employment is small in magnitude (0.27) and this indicates that the common sense understanding of the sector might not be the case in Saudi Arabia. Indeed, this is supported by previous research: Alkhateeb et al (2017c) argue that the Kingdom's industry sector heavily depends on capital-intensive technology and Hasanov et al (2020) estimate the employment elasticity of value-added being 0.23 for the country's non-oil manufacturing sector for the period 1995-2016. These clearly show that the role of employment in the non-oil manufacturing activity in Saudi Arabia is considerably small and consequently, wage plays more role than output in the formation of the sector's employment.…”

“…First, the government sector is heavily labour intensive. Hasanov et al (2020) estimated that the labour and capital elasticities of valueadded are 0.48 and 0.21, respectively, in the production function of the government service sector in Saudi Arabia for the period 1996 to 2016. The labour elasticity being more than twice higher of the capital elasticity indicates that the sector's activity is mostly driven by labour.…”

Fiscal Multipliers for Saudi Arabia Revisited

“…Although some measures might have adverse effects on private consumption and investment in the short run, it is believed that their long-run impact will stimulate the non-oil economy and lessen the degree of fiscal dependence on oil receipts (see e.g., Hasanov et al 2020b). The government's nonoil revenues have increased significantly since these reforms were implemented, rising by 12%, 38% and 30% in 2016, 2017 and 2018, respectively.…”

Modeling Sectoral Employment in Saudi Arabia

“…First, the government sector is heavily labor intensive. Hasanov et al (2019) estimated that the labor and capital elasticities of value-added are 0.48 and 0.21, respectively, in the production function of the government service sector in Saudi Arabia for the period 1996 to 2016. Second, as in other developing economies, the government service sector exhibits significant room for efficiency improvement in Saudi Arabia.…”