Research Article 2026-04-20 under-review v1

Fiscal Policy, Economic Complexity, and Income Inequality in the MENA Region: Evidence from Dynamic Panel and Bayesian Approaches

H
Hamid FAYOU Université Ibn-Tofail
N
Nabil Boubrahimi Université Ibn-Tofail

Abstract

This paper investigates the relationship between fiscal policy, economic complexity, and income inequality in the Middle East and North Africa (MENA) region, with additional country-level evidence from Morocco. Using an unbalanced panel of MENA economies over the period 2002–2022, the study applies System Generalized Method of Moments (SGMM) and Bayesian regression techniques to address endogeneity and parameter uncertainty. The results show that economic complexity is associated with higher income inequality in MENA countries. Tax revenue exhibits a significant equalizing effect, whereas government expenditure tends to exacerbate inequality when inefficiently allocated. Importantly, the interaction between fiscal policy and economic complexity significantly reduces inequality, with posterior probabilities exceeding 95%, indicating strong statistical support. These findings highlight the importance of aligning fiscal policy with structural transformation strategies. JEL Classification : D31, E62, O11, O43, C23

Citation Information

@article{hamidfayou2026,
  title={Fiscal Policy, Economic Complexity, and Income Inequality in the MENA Region: Evidence from Dynamic Panel and Bayesian Approaches},
  author={Hamid FAYOU and Nabil Boubrahimi},
  journal={SN Business & Economics},
  year={2026},
  doi={https://doi.org/10.21203/rs.3.rs-8981864/v1}
}
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