KAPSARC – The Macroeconomic Implications of Oil Price Uncertainty for Oil Exporting Economies

This paper investigates the macroeconomic effects of oil price uncertainty on oil-exporting economies, focusing specifically on Saudi Arabia.

Key findings include that oil price uncertainty negatively impacts Saudi Arabia’s economy regardless of oil price direction, lowering aggregate real GDP, worsening trade balance, increasing domestic prices, and causing a larger decline in oil GDP compared to non-oil GDP. Private consumption contracts significantly while total investment rises due to public investment, which acts as a stabilizing factor.