<abstract xmlns="http://www.w3.org/1999/xhtml"><p>The present paper studies empirically the relationship between government spending and non-oil economic growth in the UAE for the last four decades by using the vector autoregression (VAR) approach. The findings of the study suggest that the implementation of expansionary policy, through the intensification of current and development public expenditures, induces an increase in the non-oil economic growth during the subsequent periods of the government spending shock. Thus, the implementation of expansionary government spending stimulates the UAE economy, especially during recession periods. The study suggests that policymakers should concentrate their spending on the right projects, as well as on research and development. Moreover, they should channel their transfers and subsidies to the productive sectors, and they should ensure that higher productivity in public institutions is in conjunction with the rise in wages and salaries to achieve sustainable economic growth.</p></abstract>

The present paper studies empirically the relationship between government spending and non-oil economic growth in the UAE for the last four decades by using the vector autoregression (VAR) approach. The findings of the study suggest that the implementation of expansionary policy, through the intensification of current and development public expenditures, induces an increase in the non-oil economic growth during the subsequent periods of the government spending shock. Thus, the implementation of expansionary government spending stimulates the UAE economy, especially during recession periods. The study suggests that policymakers should concentrate their spending on the right projects, as well as on research and development. Moreover, they should channel their transfers and subsidies to the productive sectors, and they should ensure that higher productivity in public institutions is in conjunction with the rise in wages and salaries to achieve sustainable economic growth.

Government Spending and Non-Oil Economic Growth in the UAE

Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

{"article-title":"Government Spending and Non-Oil Economic Growth in the UAE"}

The present paper studies empirically the relationship between government spending and non-oil economic growth in the UAE for the last four decades by using...

Government Spending and Non-Oil Economic Growth in the UAE

Published Online: May 11, 2019

Page range: 82 - 93

DOI: https://doi.org/10.2478/eb-2019-0006

Keywords
Current Expenditures, Development Expenditures, Government Spending, Non-Oil Economic Growth, United Arab Emirates (UAE), Vector Autoregression (VAR)

© 2019 Carole Ibrahim, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Government Spending and Non-Oil Economic Growth in the UAE

Published Online: May 11, 2019

Page range: 82 - 93

DOI: https://doi.org/10.2478/eb-2019-0006

KeywordsCurrent Expenditures, Development Expenditures, Government Spending, Non-Oil Economic Growth, United Arab Emirates (UAE), Vector Autoregression (VAR)

© 2019 Carole Ibrahim, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
Current Expenditures, Development Expenditures, Government Spending, Non-Oil Economic Growth, United Arab Emirates (UAE), Vector Autoregression (VAR)