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Economic Reforms and Consumption Trends: A Deep Dive into Saudi Arabia's Economic Evolution
Version 1
: Received: 19 July 2024 / Approved: 22 July 2024 / Online: 22 July 2024 (12:26:59 CEST)
How to cite: Mohammed, M. Economic Reforms and Consumption Trends: A Deep Dive into Saudi Arabia's Economic Evolution. Preprints 2024, 2024071722. https://doi.org/10.20944/preprints202407.1722.v1 Mohammed, M. Economic Reforms and Consumption Trends: A Deep Dive into Saudi Arabia's Economic Evolution. Preprints 2024, 2024071722. https://doi.org/10.20944/preprints202407.1722.v1
Abstract
This study examines the aggregate consumption function of Saudi Arabia from 2000 to 2022, focusing on identifying key determinants of household consumption and evaluating the impacts of disposable income, household wealth, government expenditure, interest rates, and oil revenues. The research uses advanced econometric methods, including the Autoregressive Distributed Lag (ARDL) model and Johansen cointegration test, to analyze the relationships among these variables. The findings reveal that disposable income, household wealth, and government expenditure significantly and positively influence consumption, whereas interest rates show a negative correlation. Oil revenues also play a critical role, reflecting the country's economic reliance on oil. The study highlights the necessity for economic diversification to reduce the impact of oil price volatility on household income and consumption stability. The results offer crucial insights for policymakers, emphasizing the need for strategies that enhance household income and wealth, maintain robust public sector spending, and effectively manage interest rates. These findings also support the importance of consistent and predictable income sources for sustaining consumption. Additionally, this study suggests directions for future research, including developing sophisticated forecasting models to predict consumption trends and exploring other influencing factors such as demographic shifts and technological progress.
Keywords
aggregate consumption; government spending; oil revenues; interest rates Saudi Arabia
Subject
Business, Economics and Management, Economics
Copyright: This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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