Journal of World Economic Research
Volume 5, Issue 5, October 2016, Pages: 65-71
Received: Sep. 6, 2016;
Accepted: Sep. 18, 2016;
Published: Oct. 9, 2016
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Abdulaziz Hamad Algaeed, Department of Economics, College of Economics and Administrative Sciences, Imam Mohamed bin Saud Islamic University, Riyadh, Saudi Arabia
This paper focuses on exploring the relationship between inflation and economic growth in Saudi Arabia. The real growth of non-oil measure is used as a dependent variable, whereas wholesale price is implemented as a proxy for inflation. This study covers the period of 1985-2015. The short and long-run relationships are estimated using co-integration techniques. The results support the existence of positive effects of inflation over economic growth. The threshold level of inflation for non-oil GDP is around a 10 percent. In addition, the long-run causality is running from inflation to real growth of non-oil GDP. The impulse responses test points out that future responsiveness of growth due to impulse of inflation is negative and significant after a year and a half. Whereas, the inflation responsiveness due to a shock in growth is effective positively after three years and a half in the future.
Abdulaziz Hamad Algaeed,
The Relationship Between Inflation and Economic Growth: A Further Evidence, Journal of World Economic Research.
Vol. 5, No. 5,
2016, pp. 65-71.
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