THE ROLE OF EXTERNAL SHOCKS IN DOMESTIC SAVING: EXPERIENCES OF OIL-PRODUCING COUNTRIES
Keywords:external shocks, domestic savings, oil-revenue ratio to GDP, savings-to-GDP ratio.
The study aims to shed light on the level of domestic savings in light of external shocks, as five oil countries were selected, two of which are members of OPEC, and data on economic variables (domestic saving to output, oil revenue to output, domestic savings growth rate) were collected for a period of 13 years, as during that period the two strongest shocks occurred, namely, the mortgage crisis in 2007 and the crude oil price crisis in 2014. Economic indicators were discussed at the level of the countries of the study sample, and then those indicators were discussed for each economy separately. The importance of the study lies in the necessity of building good domestic savings to mitigate external shocks in the local economy. The study concluded that the countries that are less dependent on oil are less harmful in their level of savings when receiving external shocks from countries that depend heavily on oil to finance their economic activities. The study recommends raising the public’s awareness of saving, reducing unjustified consumption, and efficiently redistributing savings in financing economic activities, by raising the efficiency of financial and monetary institutions.