Study Standard for the Causal Relationship between Government spending and Private Consumer spending in Saudi Arabia ( 1990-2022)

Abstract

This study aimed to estimate the causal relationship between public spending and private consumption spending in the Kingdom of Saudi Arabia for the period 1990-2022. The researcher used a variety of advanced econometric analysis methods to test the causal relationship between government spending and private consumption spending represented in the use of the ray autoregressive (VAR) methodology because it is commonly used in economics to have models in which some variables are not only explanatory variables for a dependent variable, but are It is also explained by the variables that used to explain it, and this applies to this study. In this case we obtain the simultaneous equation models. Which of them must be specified for internal variables and external or previously defined variables .The result of the analysis proved that there is a common integration between the time series of the variables of private spending and public spending, and therefore it is possible to rely on the relationship resulting from the analysis to benefit from it in determining the nature of the causal relationship between them. The study concluded that there is a long-term and short-term causal relationship with two directions between private consumption spending and public spending, which indicates that there is a reciprocal relationship between them, meaning that private consumption spending affects public spending, and public spending affects private consumption spending, and this result proves the validity of the study hypothesis . One of the most important recommendations reached by the researcher is the interest in the nature of the causal relationship between public spending and private consumption spending in drawing up appropriate financial policies to address economic imbalances.