Munich Personal RePEc Archive

Bi-Demographic Changes and Current Account using SVAR Modeling: Evidence from Saudi Arabia

Ghassan, Hassan and Alhajhoj, Hassan R. and Balli, Faruk (2018): Bi-Demographic Changes and Current Account using SVAR Modeling: Evidence from Saudi Arabia.

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Abstract

The paper aims to explore the impacts of bi-demographic structure on the current account and growth. Using a SVAR modeling, we track the dynamic impacts between these underlying variables. New insights have been developed about the dynamic interrelation between population growth, current account and economic growth. The long-run net impact on economic growth of the domestic working population growth and demand labor for emigrants is positive, due to the predominant contribution of skilled emigrant workers. Besides, the positive long-run contribution of emigrant workers to the current account growth largely compensates the negative contribution from the native population, because of the predominance of skilled compared to unskilled workforce. We find that a positive shock in demand labor for emigrant workers leads to an increasing effect on native active age ratio. Thus, the emigrants appear to be more complements than substitutes for native workers.

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