ABSTRACT
The structure of the economy in Organization of Petroleum Exporting Countries (OPEC) member countries differs from that of many other nations due to the heavy dependence on the export of one primary, depleting commodity: petroleum. The increase in oil revenues of these countries, as a result of the oil price rise, provided an engine of growth that enabled many OPEC states to plan a very high rate of economic growth without having to be overly concerned with financial resource constraints. A severe rate of inflation is one of the manifestations of the relatively high rate of economic growth in OPEC member countries. There are various factors to which inflation can be attributed, including increases in the price of imported goods, physical bottlenecks, shortages of labor, and government fiscal policies. In order to analyze the inflationary effect of government fiscal policy, it should be disaggregated into its two components: foreign exchange and domestic currency.
