From windfalls to welfare-related income? Long- and short-run effects of oil prices on real GDP per capita in MENA and Azerbaijan

Gulaliyev M., ƏLİYEV Ş., CABBAROVA A., Aliyeva G., Bagırov I.

Resources Policy, vol.117, 2026 (Scopus) identifier

  • Publication Type: Article / Article
  • Volume: 117
  • Publication Date: 2026
  • Doi Number: 10.1016/j.resourpol.2026.105919
  • Journal Name: Resources Policy
  • Journal Indexes: Scopus, Compendex, EconLit, Geobase, Index Islamicus, INSPEC, Public Affairs Index
  • Keywords: Cross-sectional dependence, Fiscal burden, GCC, Heterogeneity, MENA, Oil price, Panel PMG/ARDL, Welfare-related income
  • Azerbaijan State University of Economics (UNEC) Affiliated: Yes

Abstract

The article uses real GDP per capita as a macro-level proxy for welfare. The study examines how the volatility of oil prices is related to long-run income-based welfare dynamics in a panel of 10 selected oil-exporting countries. To this end, a panel PMG/ARDL model is estimated. To better account for cross-sectional dependence as well as unobserved common shocks, the baseline specification is complemented with CCE-type robustness checks. The main PMG results confirm the existence of a stable long-run cointegrating relationship between real GDP per capita and its key determinants. In this specification, the long-run relationship between real oil prices and real GDP per capita is positive but modest, suggesting that oil revenues support welfare-related income outcomes only to a limited extent. Government expenditure burden and population growth emerge as more persistent long-run constraints, while world GDP growth is positively associated with income outcomes. The CCE-type robustness checks indicate that the negative fiscal effect is the most robust finding across estimators.