A Macroeconometric Model for Saudi Arabia: A Case Study on the World's Largest Oil Exporter

The KAPSARC Global Energy Macroeconometric Model (KGEMM) is a policy analysis tool that examines the impacts of domestic policy measures and global economic and energy shocks on the Kingdom of Saudi Arabia. It combines a theory-driven approach with a data-driven approach and has eight blocks that interact to represent the macroeconomy and energy linkages. The model is applied to time series data using a cointegration and equilibrium correction modeling (ECM) methodology to estimate its behavioral equations.

Format: Paperback / softback
Length: 169 pages
Publication date: 02 January 2023
Publisher: Springer International Publishing AG

This Open Access Brief presents the KAPSARC Global Energy Macroeconometric Model (KGEMM). KGEMM is a policy analysis tool designed to examine the impacts of domestic policy measures and global economic and energy shocks on the Kingdom of Saudi Arabia. The model comprises eight interconnected blocks, representing various aspects of the Saudi economy and energy linkages. These blocks include the real sector, fiscal policy, monetary policy, external sector, price dynamics, labor and wages, energy, population, and age cohorts. By interacting with each other, the model captures the macroeconomic dynamics and energy interconnections of the Kingdom.

The KGEMM incorporates key features from the New Keynesian demand-side framework, anchored in medium-run equilibrium and long-run aggregate supply. It employs a cointegration and equilibrium correction modeling (ECM) methodology to estimate the behavioral equations of the model within the framework of Autometrics, a general-to-specific econometric modeling strategy. This combination of theoretical and data-driven approaches allows the model to provide a comprehensive analysis of the Saudi economy.

The Brief begins with an introduction to the theoretical framework of the KGEMM and the methodology employed. It then provides a detailed overview of the structure of the model and its behavioral equations. The book concludes with simulations demonstrating the practical application of the model to analyze various scenarios and policy implications.

Designed for researchers and policymakers interested in macroeconomics, energy economics, econometrics, and the economy of Saudi Arabia, this Brief offers a valuable resource for understanding the complex dynamics of the Saudi economy and its interactions with the global energy market.

Weight: 291g
Dimension: 235 x 155 (mm)
ISBN-13: 9783031122743
Edition number: 1st ed. 2023