THE EFFECT OF THE DOWNTURN IN OIL PRICES ON THE RELATIVE EFFICIENCY OF GOVERNMENT EXPENDITURE IN THE GCC COUNTRIES

This paper tests a control model to discover the effect of the decline in oil prices on the relative efficiency of government expenditure in the member states of the Gulf Cooperation Council. The econometric an alysis shows that as a consequence of the decline in oil prices, the G CC countries need a relatively higher proportional rate of growth in t heir government expenditure to maintain a given percentage of income g rowth in the long run. This may, however, prove difficult, which neces sitates greater reliance on other means of control.