This study aims to analyze the causes of inflation in Saudi Arabia using GARCH mode. Inflation in Saudi Arabia is measured based on the growth rate of the Consumer Price Indexes (CPIs). Prior to 2000 Saudi economy witnessed low rates of inflation not exceeding 1%. Inflation sparked in 2018 due to VAT implementation. The empirical results of the study displayed the existence of the long-run equilibrium between the variables of the model. The regression results show that growth domestic product, government expenditure, money supply, and oil prices are statistically significant on inflation. Openness of the economy is not significant or has no effect on inflation. The study recommends appropriate fiscal and monetary measures to control inflation Saudi Arabia and enhance economic growth.
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