This Open Access Brief presents the KAPSARC Global Energy Macroeconometric Model (KGEMM). KGEMM is a policy analysis tool for examining the impacts of domestic policy measures and global economic and energy shocks on the Kingdom of Saudi Arabia. The model has eight blocks (real sector, fiscal, monetary, external sector, price, labor and wages, energy, population, and age cohorts) that interact with each other to represent the Kingdom's macroeconomy and energy linkages. It captures New Keynesian demand-side features anchored to medium-run equilibrium and long-run aggregate supply. It applies a cointegration and equilibrium correction modeling (ECM) methodology to time series data to estimate the model's behavioral equations in the framework of Autometrics, a general-to-specific econometric modeling strategy. Hence, the model combines 'theory-driven' approach with 'data-driven' approach.
The Brief begins with an introduction to the theoretical framework of the model and the KGEMM methodology and then walks the reader through the structure of the model and its behavioral equations. The book closes with simulations showing the application of the model. Providing a detailed introduction to a cutting-edge, robust predictive model, this Brief will be of great use to researchers and policymakers interested in macroeconomics, energy economics, econometrics, and more specifically, the economy of Saudi Arabia.
About the Author: Fakhri Hasanov is Project Leader and Research Fellow at King Abdullah Petroleum Studies and Research Center (KAPSARC) Riyadh, Saudi Arabia. He received his PhD in econometrics from Azerbaijan State University of Economics, Baku (Azerbaijan) and has more than fifteen years extensive experience in econometric modeling and forecasting. His research focuses on the building and application of macroeconometric models for policy scenario analyses, energy and environmental economics with a particular focus on natural resource-rich countries.
Frederick L. Joutz was a Professor of Economics and Co-director of the Research Program on Forecasting at the George Washington University (US). His research focused on macroeconomic and energy econometric modeling and forecasting. He served as a consultant and technical expert to Energy Information Administration, the IMF, the UAE, Uzbekistan, the American Gas Association, New England Power Pool, Consumers Energy, the U.S. and European Patent Offices, and other private corporations and government agencies. In addition, he was a Research Scholar at the IMF. He received his PhD in Economics from the University of Washington (US).
Jeyhun Ismayil Mikayilov is a Research Fellow in Energy Systems and Macroeconomics at King Abdullah Petroleum Studies and Research Center (KAPSARC), Riyadh, Saudi Arabia. He received a PhD in Applied Mathematics from Agromechanics Scientific-Research Institute (Azerbaijan) and a ScD in econometrics from the Ministry of Economy of the Republic of Azerbaijan Institute for Scientific Research on Economic Reforms. He has twenty years extensive experience in teaching of econometrics and statistics and ten years' experience in econometric modeling.
Muhammad Javid is a research fellow at KAPSARC. His research interests include, but are not limited to, economic development, the economics of energy and the environment, and sustainable development. He holds a Ph.D. in applied economics from the Pakistan Institute of Development Economics (PIDE), Islamabad, Pakistan. Before joining KAPSARC, Muhammad worked as a senior research economist at PIDE. He has worked extensively in the areas of energy, environment, trade, and macroeconomics. He also has experience working for various research, academic and governmental organizations such as King Saud University, Saudi Arabia, theBenazir Income Support Program, Pakistan, and PIDE.
