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Changes in size and composition of government revenues and expenditures have important impact on the goals of fiscal policy. But, it is well known that the goals of fiscal policy are contradictory in some respects. Therefore, the impact of a change in some category of expenditures on other categories is not necessarily neutral.

This paper aims at determining the impact of changes in the size and composition of government expenditures on the various sectors in the Kuwaiti economy in light of the structure prevailing after Gulf war. Specifically, the impact of changes in government purchases of goods and services will be ascertained using Leontief’s open-ended input-output model which represents the existing industrial relations in the Kuwaiti economy.

Towards achieving this goal, an input table for the year 1991 was constructed taking into consideration the economic effects of the Gulf war. This model was consequently utilized to assess the impacts of the changes in government purchases of goods and services on the various sectors of the economy.