An Analytical Study of the Financial Policies and Their Impact on the General Price Level in Yemen during 2000-2008.

Abstract

#The inflationary trends experienced by the Yemeni economy from the beginning of the new millennium until 2008 resulted in high annual consumer price levels, averaging 11.59%. This reflects a structural problem deeply rooted in the components and inputs of the overall Yemeni economy, which has been plagued by an imbalance between peaceful production sectors (excluding the oil sector) and the services and distribution sector, which still caters to marginal or low-productivity service activities. Successive governments have sought to address these imbalances through various fiscal and monetary policies, among others. Fiscal policy, with its various tools (expenditure, revenue, public debt), is considered one of the most important policies used in this regard. Recognizing the importance of this policy and the role it has played and continues to play in addressing these structural imbalances and pathological phenomena in the economy, we present this research that examines and analyzes fiscal policy and its various tools, shedding light on its different aspects during the period from 2000 to 2008 and its future trends until 2012. The research also extensively analyzes the general consumer price levels during the mentioned period within the framework of their correlation with fiscal policy. To enrich the analysis, a standard analytical methodology was employed by constructing a model to measure the extent of the impact of fiscal policy on price levels and predict their future trends until 2012. The research concludes with several findings and recommendations specific to this subject.