Uncertainty, budget deficit and economic growth in OPEC member countries

ABSTRACT

In this research, the effect of uncertainty and the government budget deficit on economic growth has been investigated in 12 OPEC member countries from 1997 to 2013. Given the structure of OPEC member countries, production uncertainty and oil revenue uncertainty were introduced as the proxy for the uncertainty variable, and the PP-GARCH method was used to estimate the two mentioned uncertainties. To investigate the relationship between research variables, the panel ARDL model was used based on two methods of PMG and MG for without and with uncertainty situations. The results of the research showed that under without uncertainty conditions, the government deficit and tax revenue had a significant negative effect on the economic growth of OPEC member countries. Also, in the uncertainty scenarios, both variables of production uncertainty and oil revenue uncertainty had a significant negative effect on the economic growth of countries in both short and long run.

KEYWORDS:

• Uncertainty
• budget deficit
• economic growth
• panel ARDL

Notes

1. Goulas and Zervoyianni (2013) examined the impact of budget deficits on economic growth in the case of uncertainty about manufacturing production and stock returns using the GMM approach in 27 European countries.

Additional information

Notes on contributors

Marzieh Nazari

Marzieh Nazari received the B.Sc. degree in Theoretical Economics from Isfahan University, Isfahan, Iran, in 2003, and M.Sc. degree in Economic Development & Planning from Islamic Azad University, Khomeini Shahr Branch, Isfahan, in 2016. Her current research interests include monetary policy, public sector and financial market. She has been working at Mellat Bank since 2004 and has worked in several Branches and in Personnel Department of Mellat Bank until 2019.

Ehsan Asadi

Ehsan Asadi is a teacher of economics at Islamic Azad University (IAU), Isfahan, Iran. He received the B.Sc. degree in Business Economics from IAU, Isfahan, Iran, in 2009, and M.Sc. degree in Economic Development & Planning from the above-mentioned University, in 2013. He completed his PhD in Economics (public sector) at IAU, Shiraz, Iran, in 2018. He is interested in the research field of financial markets, public sector, econometric methods, and macroeconomics.

Mahdi Imanian

Mahdi Imanian received the B.Sc degree in Drilling engineering from Petroleum University of Technology, Iran, in 2009, M.Sc degree in instrumentation & automation engineering from Petroleum University of Technology, Iran, in 2012, and PhD degree in Industrial Engineering (Automation) from Islamic Azad University (Najafabad Branch), Iran, in 2018. His current research interests include engineering process control and statistical process control in petroleum engineering.