Template-Type: ReDIF-Article 1.0 Author-Name: Shahin Wassim Author-Workplace-Name: Lebanese American University Title: Editor's Note Abstract: Journal: Review of Middle East Economics and Finance Pages: 1-2 Volume: 1 Issue: 1 Year: 2003 Month: January DOI: 10.2202/1475-3693.1000 File-URL: https://doi.org/10.2202/1475-3693.1000 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:1:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Henry Clement M. Author-Email: chenry@mail.la.utexas.edu Author-Workplace-Name: The University of Texas at Austin, TX Title: The Clash of Globalizations in the Middle East Abstract: Globalization connotes the removal of barriers between states to the movement of capital, goods and labor. While the lowering of barriers to the movement of factors of production has resulted in transnational networks of production and elements of an international civil society, it has also facilitated international terrorist networks, drug cartels and the like. In the Middle East, for strategic reasons discussed in this paper, the spectrum of barriers to be removed includes not just protectionist trade or monetary policies but the regimes as well. 'Regime change’ can be brutal or gradual, imposed or developed from within. This paper examines the sorts of political change envisaged by the authors of the Arab Human Development Report 2002 to overcome the region’s 'freedom deficit’ as well as the darker, by now all too familiar, scenarios associating this dimension of globalization— regime change—with American (multilateral or unilateral) military operations. The Middle East is home to most of the oil that fueled the world’s first truly global industry, but the region may also become the epicenter of forces that reverse the globalizing tendencies of states. Journal: Review of Middle East Economics and Finance Pages: 3-16 Volume: 1 Issue: 1 Year: 2003 Month: January DOI: 10.2202/1475-3693.1001 File-URL: https://doi.org/10.2202/1475-3693.1001 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:1:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Bibi Sami Author-Email: samibibi@gnet.tn Author-Workplace-Name: Faculté des Sciences Economiques et de Gestion de Tunis Title: On the Impact of Better Targeted Transfers on Poverty in Tunisia Abstract: This paper describes the effects of general food subsidies on poverty in Tunisia, as revealed by household survey data for 1990. The analysis indicates that the poorest certainly take advantage of this system, but at the price of considerable leakages to non-poor people and at a sizable economic efficiency loss resulting from relative price distortions. Further, nonparametric estimations suggest that there are no commodities predominantly consumed by the poor. This implies that targeting by commodities is not an effective way to fight against poverty and, thus, it is unlikely that restructuring the current scheme would improve significantly the living standards of the less well-off members of society. We then investigate the impact on poverty of a more targeted transfer scheme, based on proxy means tests, using an appropriate econometric technique for modeling. Simulations show that this design would be more effective in reducing poverty than the use of general food subsidies. Finally, dominance tests show that this design would first-order-dominate a food subsidies scheme within a range of poverty lines, including all those estimated and generally used for Tunisia. Journal: Review of Middle East Economics and Finance Pages: 17-35 Volume: 1 Issue: 1 Year: 2003 Month: January DOI: 10.2202/1475-3693.1002 File-URL: https://doi.org/10.2202/1475-3693.1002 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:1:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Nomani Farhad Author-Email: nomani@aup.fr Author-Workplace-Name: The American University of Paris Title: The Problem of Interest and Islamic Banking in a Comparative Perspective: The Case of Egypt, Iran and Pakistan Abstract: As a growing economic sector in many Muslim countries, Islamic banking has its roots in the application of the Shari’a. This is because Islamic banking is, in principle, based on legally recognized financial contracts and transactions that should be free of riba and gharar, both of which are interpreted somewhat differently by major Sunni and Shi’i schools of law. The objective of this study is (a) to shed light on the development of the debate on riba among Sunni and Shi’i scholars and the position of governments on the problem of interest-free banking in the twentieth century in Egypt, Iran and Pakistan; and (b) to study the implications of this debate for Islamic financial contracts. It is concluded that the expansion of a modern and viable internationally orientated Islamic banking and finance depends mainly on the development of financial capital markets, more independent and transparent central banking in Muslim countries, and a more innovative and flexible approach to Shari’a by different schools of law in Muslim countries. Journal: Review of Middle East Economics and Finance Pages: 36-69 Volume: 1 Issue: 1 Year: 2003 Month: January DOI: 10.2202/1475-3693.1003 File-URL: https://doi.org/10.2202/1475-3693.1003 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:1:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Hakimian Hassan Author-Email: h.hakimian@city.ac.uk Author-Workplace-Name: Cass Business School Title: Water Scarcity and Food Imports: An Emperical Investigation of the 'Virtual Water' Hypothesis in the MENA Region Abstract: Despite the long tradition established by the Heckscher–Ohlin (H–O) theorem and copious literature on the so-called Leontief Paradox, economists have not methodically linked the Middle East and North Africa (MENA) region’s well-known water-scarcity problem to its mounting food imports. This paper first reinterprets the factor endowments and comparative advantage theory in the MENA context, suggesting that the 'virtual water’ (VW) hypothesis, focusing on water embedded in commodities, is in line with the H–O model’s tenet that 'trade in commodities is an indirect way of trade in factors of production’. Second, findings using comparative cross-section regression analysis for 100 countries appear to vindicate the VW hypothesis that the import structures for water-deficit areas are dominated by large food/agricultural imports. The study ends with a discussion of the policy and political economy implications of the hypothesis in the light of our empirical findings. Journal: Review of Middle East Economics and Finance Pages: 70-84 Volume: 1 Issue: 1 Year: 2003 Month: January DOI: 10.2202/1475-3693.1004 File-URL: https://doi.org/10.2202/1475-3693.1004 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:1:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Djoundourian Salpie Author-Workplace-Name: School of Business, Lebanese American University Author-Name: Baroudi Sami E Author-Workplace-Name: Lebanese American University Title: Book Reviews Abstract: The Economics of Women and Work in the Middle East and North Africa, edited by E. Mine Cinar (Elsevier Science B. V., 2001). Labor and the State in Egypt: Workers, Unions, and Economic Reconstructuring, by Marsha Pripstein Posusney (New York: Columbia University Press, 1997). 327 pp., bibliography, index, $US21.50 (paperback), ISBN 0-231-10693-9. Journal: Review of Middle East Economics and Finance Pages: 85-94 Volume: 1 Issue: 1 Year: 2003 Month: January DOI: 10.2202/1475-3693.1005 File-URL: https://doi.org/10.2202/1475-3693.1005 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:1:n:6 Template-Type: ReDIF-Article 1.0 Author-Name: Chatti Rim Author-Email: rim.chatti@gnet.tn Author-Workplace-Name: ESSEC; URECA Title: A CGE Assessment of FTA Between Tunisia and the EU Under Oligopolistic Market Structures Abstract: In this paper, the impact of removing all Tunisian tariffs on imports from the EU, while maintaining protection on imports from the rest of the world, is evaluated using computable general equilibrium (CGE) models. Both competitive and Cournot oligopolistic commodities market structures with and without barriers to entry and exit are considered. It is found that a free trade agreement (FTA) improves welfare in all cases, with maximum gains under oligopoly and free entry and exit. At the sectoral level, the FTA benefits different industries at the expense of agriculture and services, which are relatively intensive in primary factors of production. Journal: Review of Middle East Economics and Finance Pages: 1-30 Volume: 1 Issue: 2 Year: 2003 Month: August DOI: 10.2202/1475-3693.1006 File-URL: https://doi.org/10.2202/1475-3693.1006 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:2:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Halicioglu Ferda Author-Workplace-Name: The University of Greenwich Title: Testing Wagner's Law for Turkey, 1960-2000 Abstract: This paper presents an empirical analysis of Wagner’s law in the case of Turkey over the period 1960–2000. The paper uses modern time-series econometric techniques to test the law’s proposition that in the course of economic development, government expenditures increase. The results of this study do not support the empirical validity of Wagner’s law for Turkey for the period 1960–2000. However, the paper finds statistical evidence for an augmented version of Wagner’s law. Journal: Review of Middle East Economics and Finance Pages: 31-42 Volume: 1 Issue: 2 Year: 2003 Month: August DOI: 10.2202/1475-3693.1007 File-URL: https://doi.org/10.2202/1475-3693.1007 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:2:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Sioud Olfa Benouda Author-Workplace-Name: Department of Finance, Institut des Hautes Etudes Commerciales de Carthage Author-Name: Mezzez Hmaied Dorra Author-Workplace-Name: Department of Finance, Institut des Hautes Etudes Commerciales de Carthage Title: The Effects of Automation on Liquidity, Volatility, Stock Returns and Efficiency: Evidence from the Tunisian Stock Market Abstract: This paper examines the effects of automation on the liquidity, volatility, returns and efficiency of shares traded on the Tunisian stock exchange (TSE). By the end of 1996, stocks listed on the TSE were transferred gradually from manual trading to automated trading. The TSE operates a continuous market for frequently traded securities and a 'call-auction’ for infrequently traded securities. While our results show an improvement in the liquidity of shares following the automation, returns decreased and no significant effects on volatility or efficiency were detected. Journal: Review of Middle East Economics and Finance Pages: 43-56 Volume: 1 Issue: 2 Year: 2003 Month: August DOI: 10.2202/1475-3693.1008 File-URL: https://doi.org/10.2202/1475-3693.1008 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:2:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Mehanna Dr Rock-Antoine Author-Workplace-Name: Lebanese Amercican University Title: Do Politics and Culture Affect Middle East Trade? Evidence from the Gravity Model Abstract: This paper estimates the effects of politics and culture on Middle East trade by applying an augmented version of the gravity model. The econometric specification of the model accounts for oil-exporting countries, regional trade blocs and other pertinent exogenous factors. The model endogenously accounts for potential selection-bias between Arab and Islamic countries. Unlike past and contemporary work, this paper employs a Middle Eastern framework by incorporating politics, corruption and culture. The levels of corruption and political freedom represent politics, while language affiliation and religion capture some aspects of culture. Journal: Review of Middle East Economics and Finance Pages: 57-72 Volume: 1 Issue: 2 Year: 2003 Month: August DOI: 10.2202/1475-3693.1009 File-URL: https://doi.org/10.2202/1475-3693.1009 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:2:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Assaf Ata Author-Workplace-Name: University of Windsor Title: Transmission of Stock Price Movements: The Case of GCC Stock Markets Abstract: Using a vector autoregressive analysis, this paper investigates the dynamic interactions among stock market returns from six Gulf Cooperation Council (GCC) countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates). The empirical investigation is conducted using weekly data from 15 January 1997 to 26 April 2000. During this period, significant steps were taken that intensified financial integration in the GCC region, including privatization policies, increased liberalization of the financial markets and easier entrance of foreign investors to the stock markets. Our empirical evidence suggests the following: (1) there is substantial evidence of interdependence and feedback effects among GCC stock markets; (2) Bahrain plays a dominant role in influencing the GCC markets with a significant persistent impact beyond weeks one and two; (3) Saudi Arabia shows a slow process in responding to shocks originated in other markets; and (4) markets are not completely efficient in processing regional news, providing an opportunity for portfolio diversification at the regional level. Journal: Review of Middle East Economics and Finance Pages: 73-92 Volume: 1 Issue: 2 Year: 2003 Month: August DOI: 10.2202/1475-3693.1010 File-URL: https://doi.org/10.2202/1475-3693.1010 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:2:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Baroudi Sami E Author-Workplace-Name: Lebanese American University Title: Book Review Abstract: Globalization and the Politics of Development in the Middle East, by Clement M. Henry and Robert Springborg (Cambridge: Cambridge University Press, 2001). 258 pp., figures, tables, notes, bibliography, index, $US50.00 (hardback), ISBN 0-521-62312-X; $US20.00 (paperback), ISBN 0-521-62631-5. Journal: Review of Middle East Economics and Finance Pages: 93-96 Volume: 1 Issue: 2 Year: 2003 Month: August DOI: 10.2202/1475-3693.1011 File-URL: https://doi.org/10.2202/1475-3693.1011 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:2:n:6 Template-Type: ReDIF-Article 1.0 Author-Name: Haouas Ilham Author-Workplace-Name: Centre d’Etudes du Developpement Author-Name: Yagoubi Mahmoud Author-Workplace-Name: CRIFES-MATISSE Author-Name: Heshmati Almas Author-Workplace-Name: Techno-Economics and Policy Program, College of Engineering, Seoul National University Title: Labor-use Efficiency in Tunisian Manufacturing Industiries Abstract: This paper investigates the process of adjustment in employment. A dynamic model is applied to a panel of six Tunisian manufacturing industries observed over a period of 25 years, from 1971 to 1996. Industries are assumed to adjust their labor inputs toward a desired level. A labor requirement function is specified in terms of observable variables used to model the desired level of labor. The adjustment process is both industry-specific, as well as time-specific, and is expressed in terms of factors affecting the speed of adjustment. The empirical results show that, in the long run, employment demands respond greatest to output, followed by changes in capital stock, and least by wages. Over time, the speed of adjustment in employment and the degree of labor-use efficiency show large variations among the industries. Journal: Review of Middle East Economics and Finance Pages: 1-20 Volume: 1 Issue: 3 Year: 2003 Month: December DOI: 10.2202/1475-3693.1012 File-URL: https://doi.org/10.2202/1475-3693.1012 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:3:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Sayan Serdar Author-Workplace-Name: Bilkent University Title: H-O for H2O: Can the Heckscher-Ohlin Framework Explain the Role of Free Trade in Distributing Scarce Water Resources Around the Middle East? Abstract: This paper aims to test econometrically the validity of Heckscher–Ohlin (H–O) theory within the context of export patterns of 11 relatively water abundant and relatively water-scarce countries located in the Eastern Mediterranean and Middle East and North Africa (MENA) regions. For this purpose, the paper calculates the revealed comparative advantage (RCA) and net trade indices (NTI) for 13 sectors in each country and estimates the relationship between RCA values and water requirements of production in each sector. The results are then used to test whether parameter values estimated from this exercise can be linked to water endowments of the countries considered. By helping determine whether the countries in the sample act according to their comparative advantages, econometric results from this innovative application of H–O theory yield interesting policy conclusions. Journal: Review of Middle East Economics and Finance Pages: 21-36 Volume: 1 Issue: 3 Year: 2003 Month: December DOI: 10.2202/1475-3693.1013 File-URL: https://doi.org/10.2202/1475-3693.1013 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:3:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Omran Mohammed Author-Workplace-Name: Arab Academy for Science & Technology, College of Management & Technology Author-Name: Bolbol Ali Author-Workplace-Name: Arab Monetary Fund, Economic Policy Institute Title: Foreign Direct Investment, Financial Development, and Economic Growth: Evidence from the Arab Countries Abstract: The emerging literature on foreign direct investment (FDI) now stipulates that FDI’s positive impact on growth depends on absorptive capacities. Prime among these capacities is financial development. The paper provides support to this thesis in the context of the Arab countries whose financial system is predominantly bank-based. It finds that Arab FDI will have a favorable effect on growth if interacted with financial variables at a given threshold level of development. It also finds that in reform countries FDI could Granger cause financial development. The conclusions that emerge from the paper are that domestic financial reforms should precede policies promoting FDI, investment measures should enhance the environment for all investors—foreign and domestic alike—and liberal commercial policies should be designed as initial measures to attract FDI. Journal: Review of Middle East Economics and Finance Pages: 37-55 Volume: 1 Issue: 3 Year: 2003 Month: December DOI: 10.2202/1475-3693.1014 File-URL: https://doi.org/10.2202/1475-3693.1014 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:3:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Limam Imed Author-Workplace-Name: The Arab Planning Institute Title: Is Long Memory a Property of Thin Stock Markets? International Evidence Using Arab Countries Abstract: The paper analyzes the long memory property of stock index returns in 14 markets with diverse levels of development. While the sample includes the developed stock markets of Japan, UK and USA, it also includes, in addition to the emerging markets of Brazil, India and Mexico, those of eight Arab countries as benchmarks of thin markets with the aim of investigating the link between fractional integration dynamics in stock returns and the level of stock market development. Using parametric and semi-parametric estimation procedures, the results show that the property of long-range dependence in stock index returns tend to be associated with relatively thin stock markets. Evidence from the Arab countries seems to suggest that long-memory might also be linked to the peculiar characteristics and the environment within which each stock market operates. Journal: Review of Middle East Economics and Finance Pages: 56-71 Volume: 1 Issue: 3 Year: 2003 Month: December DOI: 10.2202/1475-3693.1015 File-URL: https://doi.org/10.2202/1475-3693.1015 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:3:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Omran M. F. Author-Workplace-Name: College of Business and Management, University of Sharjah Title: Equity Valuation Using Multiples in the Emerging Market of the United Arab Emirates Abstract: This study offers some preliminary results about stock valuation in the emerging market of the United Arab Emirates. It examines the determinants of three valuation multiples in the period from 1996–2001, the price sales (PS), the price book value (PBV) and the price earnings (PE). Consistent with economic theory it is found that (1) the PS is positively significantly related to net profit margin; (2) the PBV is positively significantly related to return on equity; and (3) PE is positively significantly related to the payout ratio. The PE proved to be the most difficult to model because of the existence of outliers. These outliers can be explained by two extreme cases: Case 1, companies that have very low payout and growth rates, and still achieve the highest PE ratios; Case 2, companies that tend to pay far more in dividends compared to what they achieved in profit. Abu Dhabi Islamic bank seems to be trading at higher PE and PS multiples compared with commercial banks due to its clientele appreciation of its services rather than the net profit margin achieved or the dividends paid. Judged by R2 and statistical evidence, the PBV and PS valuation models stand a better chance of explaining and possibly predicting prices in the UAE than the PE model. Journal: Review of Middle East Economics and Finance Pages: 72-88 Volume: 1 Issue: 3 Year: 2003 Month: December DOI: 10.2202/1475-3693.1016 File-URL: https://doi.org/10.2202/1475-3693.1016 File-Format: text/html Handle: repec:bpj:rmeecf:v:1:y:2003:i:3:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Mariano Roberto S Author-Workplace-Name: School of Economics and Social Sciences, Singapore Management University and Department of Economics Author-Name: Gultekin Bulent N Author-Workplace-Name: Wharton School, University of Pennsylvania Author-Name: Ozmucur Suleyman Author-Workplace-Name: University of Pennsylvania Author-Name: Shabbir Tayyeb Author-Workplace-Name: Univ of Pennsylvania Author-Name: Alper C. Emre Author-Workplace-Name: Department of Economics, Bogazici University Title: Prediction of Currency Crises: Case of Turkey Abstract: This paper explores the issue of constructing an economic predictive model of financial vulnerability through an alternative econometric methodology that addresses drawbacks in existing approaches. The methodology entails estimating a Markov regime switching model of exchange rate movements, with time-varying transition probabilities. Experiments with monthly and weekly models indicate that real exchange rate, foreign exchange reserves and domestic credit/deposit ratio are the most important determinants of financial vulnerability. These variables should be observed very closely by researchers and policy makers in order to determine if the country is heading for financially difficult times. Journal: Review of Middle East Economics and Finance Pages: 1-21 Volume: 2 Issue: 2 Year: 2004 Month: August DOI: 10.2202/1475-3693.1022 File-URL: https://doi.org/10.2202/1475-3693.1022 File-Format: text/html Handle: repec:bpj:rmeecf:v:2:y:2004:i:2:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Khashadourian Edmund Author-Workplace-Name: University of Phoenix Author-Name: Grammy Abbas P Author-Workplace-Name: Department of Economics, California State University Title: The Political Economy of Growth-Inflation Transmission: The Case of Iran Abstract: After detrending Iran’s growth rates into stochastic and deterministic components and by decomposing nominal shocks into inflation and real output growth, 80% of the demand side shocks are found to be absorbed by price increases. This finding would cast doubt on the compatibility between inflation and growth targets outlined in the third five-year economic plan of the country. The simulation results here suggest that if the plan were constrained to a 6% real growth target, Iran’s chronic double-digit inflation rate would further accelerate. Hence, expansionary policies aiming at achieving the plan’s targets would move the economy along a near-vertical line Phillips curve. Journal: Review of Middle East Economics and Finance Pages: 22-34 Volume: 2 Issue: 2 Year: 2004 Month: August DOI: 10.2202/1475-3693.1023 File-URL: https://doi.org/10.2202/1475-3693.1023 File-Format: text/html Handle: repec:bpj:rmeecf:v:2:y:2004:i:2:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Boulila Ghazi Author-Workplace-Name: FSEGT, Tunisia Author-Name: Trabelsi Mohamed Author-Workplace-Name: IHEC - Tunisia Title: The Causality Issues in the Finance and Growth Nexus: Emperical Evidence from Middle East and North African Countries Abstract: This paper explores the causality issue between financial development and economic growth in the Middle East and North Africa (MENA) region for different periods ranging from 1960 to 2002. The empirical evidence presented in the paper, either with cointegration techniques or Granger causality tests provides support to the hypothesis that causality is running from the real to the financial sector. Moreover, there is a little support to the view that finance is a leading sector in the determination of long-run growth in the countries of the region. These findings might be associated with four features: (1) the strict control of the financial sector in these countries for long periods of time; (2) the delay in the implementation of financial reforms in these countries; (3) the persisting issues in reform implementation (non-performing loans in particular); and (4) the high information and transaction costs that prevent resource promotion and financial deepening even in the face of financial reform. Journal: Review of Middle East Economics and Finance Pages: 35-50 Volume: 2 Issue: 2 Year: 2004 Month: August DOI: 10.2202/1475-3693.1024 File-URL: https://doi.org/10.2202/1475-3693.1024 File-Format: text/html Handle: repec:bpj:rmeecf:v:2:y:2004:i:2:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: El-Shazly Alaa Author-Workplace-Name: Department of Economics, Cairo University Title: Investment Under Uncertainty in Egypt: A Real-Options Approach Abstract: This paper provides a numerical analysis of investment under uncertainty using Egyptian data. It is based on the theoretical foundations that the irreversibility of investment decisions and the uncertainty about their future rewards create a value to waiting for new information before the firm commits resources and incurs unrecoverable costs. Accordingly, the optimal investment policy of the firm balances the value of waiting for new information with the cost of postponing the investment in terms of forgone return. The analytical framework uses diffusion-jump processes to model uncertainty over time and shows that the value of waiting increases with the degree of uncertainty. As a consequence, uncertainty increases the hurdle rate to investment and can become a powerful deterrent to investors. Journal: Review of Middle East Economics and Finance Pages: 51-60 Volume: 2 Issue: 2 Year: 2004 Month: August DOI: 10.2202/1475-3693.1025 File-URL: https://doi.org/10.2202/1475-3693.1025 File-Format: text/html Handle: repec:bpj:rmeecf:v:2:y:2004:i:2:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Nasr Nafhat N Author-Workplace-Name: DePauw University Title: Book Review Abstract: Lebanon’s Second Republic: Prospects for the Twenty-first Century, edited by Kail C. Ellis (Gainesville: University Press of Florida, 2002). 236 pp., $59.95, ISBN 0813025397 Journal: Review of Middle East Economics and Finance Pages: 61-65 Volume: 2 Issue: 2 Year: 2004 Month: August DOI: 10.2202/1475-3693.1026 File-URL: https://doi.org/10.2202/1475-3693.1026 File-Format: text/html Handle: repec:bpj:rmeecf:v:2:y:2004:i:2:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Shahnawaz Sheikh Author-Workplace-Name: Monterey Institute Author-Name: Nugent Jeffery B Author-Workplace-Name: U. of Southern California Title: Is Natural Resource Wealth Compatible with Good Governance? Abstract: This paper analyzes the effects of natural resource wealth on the economic and political environment of a country. A dynamic game-theoretic model is used to highlight the policy choice of the government vis-a`-vis the opposition. The government utilizes both economic and other policy tools to further its own interests. These policies include repression, co-option of the opposition (by way of sharing the natural resource wealth), taxation, the level of commitment to expanding the resource base through further exploration, and extraction of existing resources. The opposition is in the private sector and chooses how much of its wealth to save and invest and on whether or not to accept what is offered to it by the government and, if not, to start a civil war. In contrast to other political economy models that involve such phenomena as repression and civil wars and which view the political game as one between the government and the marginalized peasantry, this model views the game as between the government and another e´ lite group. The model is used to explain several quite different political outcomes observed in countries endowed with natural resources. These include repressive regimes, democratic regimes, benevolent autocracies/' sham democracies’, instability and civil war. The analysis shows how these outcomes depend on technology driving the process that converts income into consumption, the likelihood of finding additional natural resource wealth through exploration, the size of the private sector and other factors. The model is also illustrated empirically by comparing the governance and other characteristics of countries with different levels of natural resource wealth. Journal: Review of Middle East Economics and Finance Pages: 1-33 Volume: 2 Issue: 3 Year: 2004 Month: December DOI: 10.2202/1475-3693.1027 File-URL: https://doi.org/10.2202/1475-3693.1027 File-Format: text/html Handle: repec:bpj:rmeecf:v:2:y:2004:i:3:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Halicioglu Ferda Author-Workplace-Name: The University of Greenwich Title: Defense Spending and Economic Growth in Turkey: An Empirical Application of New Macroeconomic Theory Abstract: This study presents new empirical evidence on the relationship between the level of economic growth and defense expenditures in the case of Turkey for the period of 1950–2002. On using new macroeconomic theory and multivariate cointegration procedure, this study demonstrates empirically that there exists a positive long-run relationship between aggregate defense spending and aggregate output in Turkey. In addition, the CUSUM and CUSUMSQ tests confirm the stability of the aggregate output function. The results obtained from this study are, by and large, in line with the previous studies concerning Turkey. Journal: Review of Middle East Economics and Finance Pages: 34-43 Volume: 2 Issue: 3 Year: 2004 Month: December DOI: 10.2202/1475-3693.1028 File-URL: https://doi.org/10.2202/1475-3693.1028 File-Format: text/html Handle: repec:bpj:rmeecf:v:2:y:2004:i:3:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Al-Mawali Nasser R Author-Workplace-Name: Sultan Qaboos University Title: Revisting the Trade-Growth Nexus: Further Evidence from Egypt Abstract: This paper utilizes Feder’s production function in revisiting the relationship between exports and economic growth by testing the hypothesis of the export-led growth in relation to the Arab Republic of Egypt. It also aims to show the difference in the marginal productivities between the export and non-export sectors in Egypt and how the export sector can positively affect the non-export sectors. The model mainly adopts a supply-side description of the economy, using the neo-classical growth approach under the framework of an aggregate production function. The conclusion of the study is that marginal productivities are higher in the export sector than in the non-export sector. This will allow the Egyptian economy to grow faster without having new capital infusion or labor expansion simply by reallocating the limited resources into the export sector. The reallocation of resources to the export sector will produce positive externalities and result in higher productivity for the whole Egyptian economy. Journal: Review of Middle East Economics and Finance Pages: 51-58 Volume: 2 Issue: 3 Year: 2004 Month: December DOI: 10.2202/1475-3693.1029 File-URL: https://doi.org/10.2202/1475-3693.1029 File-Format: text/html Handle: repec:bpj:rmeecf:v:2:y:2004:i:3:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Brixiova Zuzana Author-Workplace-Name: International Monetary Fund Title: Book Review Abstract: Unlocking the Employment Potential in the Middle East and North Africa: Toward a New Social Contract. MENA Development Report (Washington, D.C.: The World Bank, 2004), 262 pp., $25.00, ISBN 0-8213-5678-X Journal: Review of Middle East Economics and Finance Pages: 59-60 Volume: 2 Issue: 3 Year: 2004 Month: December DOI: 10.2202/1475-3693.1030 File-URL: https://doi.org/10.2202/1475-3693.1030 File-Format: text/html Handle: repec:bpj:rmeecf:v:2:y:2004:i:3:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Alper C. Emre Author-Email: alper@boun.edu.tr Author-Workplace-Name: Department of Economics, Bogazici University Author-Name: Aruoba S. Boragan Author-Workplace-Name: University of Maryland Title: Moving Holidays and Seasonal Adjustment: The Case of Turkey Abstract: When holiday variation is present so that the dates of certain holidays change from year to year, the relatively automatic seasonal adjustment procedures may fail to extract the seasonal component from a series since the holiday effects are not confined to that component. Turkey, a predominantly Muslim country, constitutes a good example of moving holidays since the official calendar is Gregorian, based on the cycles of the Earth around the sun, while significant Islamic holidays are tied to the Hegirian calendar, based on the lunar cycles. One finds significant deterministic seasonality remains in the conventionally de-seasonalized time series and removing the effects of religious seasonality using a very simple method improves the qualities of the de-seasonalized component. Journal: Review of Middle East Economics and Finance Pages: 44-50 Volume: 2 Issue: 3 Year: 2004 Month: December DOI: 10.2202/1475-3693.1047 File-URL: https://doi.org/10.2202/1475-3693.1047 File-Format: text/html Handle: repec:bpj:rmeecf:v:2:y:2004:i:3:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Mikhail Ossama Author-Workplace-Name: University of Central Florida Title: Economic Freedom and the Business Cycle: The Egyptian Experience Abstract: Most studies that emphasize and encourage the shift towards a less regulated and financially open system rest on the premise of a prosperous growth prospect. Accordingly, interests have focused on growth models as a framework to understand and to analyze the effects of economic freedom. This paper investigates the short-run characteristics of economic freedom. Using a stochastic general equilibrium framework, it is argued that economic reforms tend to ease periods of recession, increase welfare and alleviate the burden of unemployment. Calibrated to the Egyptian economy, the model is simulated and the (robust) relationship between economic reforms and the business cycle is investigated. Journal: Review of Middle East Economics and Finance Pages: 1-19 Volume: 3 Issue: 1 Year: 2005 Month: April DOI: 10.2202/1475-3693.1031 File-URL: https://doi.org/10.2202/1475-3693.1031 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:1:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Tosun Mehmet S Author-Workplace-Name: University of Nevada, Reno Title: The Tax Structure and Trade Liberalization of the Middle East and North Africa Region Abstract: There has been an unprecedented trade liberalization which started in the mid- 1980s in a wide spectrum of developing countries. In the same period, there have also been considerable changes in the tax structures of countries. This paper uses panel data on 65 countries, including 16 Middle East and North Africa (MENA) countries, for the period 1980–1997 to examine how tax structures responded to trade liberalization. It is found that, unlike other non-OECD countries, the MENA countries did not increase their reliance on domestic consumption taxes in response to trade liberalization. Trade liberalization did not seem to have a strong impact on major revenue sources of the MENA countries. Journal: Review of Middle East Economics and Finance Pages: 20-37 Volume: 3 Issue: 1 Year: 2005 Month: April DOI: 10.2202/1475-3693.1032 File-URL: https://doi.org/10.2202/1475-3693.1032 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:1:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Astrup Claus Author-Workplace-Name: The World Bank Author-Name: Dessus Sebastien Author-Workplace-Name: The World Bank Title: Exporting Goods or Exporting Labor?: Long-term Implications for the Palestinian Economy Abstract: During the past four and a half years, the number of Palestinian workers in the Israeli labor market how significantly contracted primarily as a result of restrictions on the movement of Palestinian labor imposed by the Government of Israel. The restricted access of Palestinian workers to the Israeli labor market is a major negative shock for the Palestinian economy, and naturally raises the question of whether an alternative strategy to exporting labor is feasible and presents at least similar income opportunities. This article develops a dynamic general equilibrium model to assess the impact of restricted access to the Israeli labor market on the Palestinian export performance and, in turn, on GDP growth. The results suggest first that exporting large flows of Palestinian workers to Israel tends to reduce the capacity of the Palestinian industry to export goods. Secondly, that— even under optimistic assumptions on the trade-led growth potential of the Palestinian economy—the induced depreciation of the real exchange rate after the closure will not have sufficient growth effects to avoid income losses incurred with the closure of the Israeli labor market. Thirdly, that the adoption of appropriate trade and fiscal policies in this context could significantly magnify the potential growth impact of a real exchange rate depreciation. Journal: Review of Middle East Economics and Finance Pages: 38-60 Volume: 3 Issue: 1 Year: 2005 Month: April DOI: 10.2202/1475-3693.1033 File-URL: https://doi.org/10.2202/1475-3693.1033 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:1:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Guncavdi Oner Author-Workplace-Name: Istanbul Technical University Author-Name: Kucukcifci Suat Author-Workplace-Name: Istanbul Technical University Title: Financial Reforms and the Decomposition of Economic Growth: An Investigation of the Changing Role of the Financial Sector in Turkey Abstract: Turkey undertook a far-reaching structural adjustment program in 1980. As an integral element of this program, financial liberalization was geared towards increasing domestic savings and directing them efficiently towards financing investment projects, a goal assumed to create positive impacts on economic growth. After 20 years the effects of these reforms in financial markets are still a matter of concern among academics. The aim of this paper is to examine the role of the financial sector in the economy as a whole and to assess the sources of gross output of the sector. In doing so, financial reforms can be connected with different sources of growth, and the impact of reforms on the production of financial services in the pre- and post-liberalization periods can be analyzed. To accomplish this aim, a methodology based on the Leontief’s input–output models is introduced. The results imply that the production sector of the Turkish economy has increasingly become increasingly independent from the use of financial services produced by the banking and insurance sectors particularly in the post-reform period. Journal: Review of Middle East Economics and Finance Pages: 61-84 Volume: 3 Issue: 1 Year: 2005 Month: April DOI: 10.2202/1475-3693.1034 File-URL: https://doi.org/10.2202/1475-3693.1034 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:1:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Djoundourian Salpie Author-Workplace-Name: School of Business, Lebanese American University Title: Book Review Abstract: The Lessons of Lebanon: The Economics of War and Development. Samir Makdisi. London, New York: I. B. Tauris, 2004, 237 pp. £45.00 (hardback), ISBN 1-85043-398-4. Journal: Review of Middle East Economics and Finance Pages: 85-88 Volume: 3 Issue: 1 Year: 2005 Month: April DOI: 10.2202/1475-3693.1035 File-URL: https://doi.org/10.2202/1475-3693.1035 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:1:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Kamar Bassem Author-Workplace-Name: International University of Monaco, Monte-Carlo, Monaco Author-Name: Bakardzhieva Damyana Author-Workplace-Name: International University of Monaco Title: Economic Trilemma and Exchange Rate Management in Egypt Abstract: The recent banking and exchange rate crises in Latin America, East Asia, Eastern Europe and Turkey have proved that a fixed exchange rate is unsustainable in the context of growing financial globalization. The other corner solution advocated by the IMF—the free float—makes economies subject to high fluctuations. Therefore, the main question for most emerging market economies, and particularly for Egypt since January 2003, is what kind of managed float to have. This paper presents a single-equation econometric model approach to define the variables that determined the real exchange rate behavior in Egypt during the 1971–99 period as an indicator of the government’s de facto exchange rate policy. The empirical findings confirm that the Egyptian economic policy mix has almost always led to some real exchange rate volatility, which is inconsistent with the fixed exchange rate policy. Therefore, it is believed that the most viable solution for Egypt is the 'managed bands’ regime around a crawling effective equilibrium central parity, with no pre-announced management bands parameters. This choice will allow Egyptian policy-makers to steer the economy out of the numerous regional and international political and economic shocks. Journal: Review of Middle East Economics and Finance Pages: 1-24 Volume: 3 Issue: 2 Year: 2005 Month: August DOI: 10.2202/1475-3693.1036 File-URL: https://doi.org/10.2202/1475-3693.1036 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:2:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Maneschiold Per-Ola Author-Workplace-Name: University of Skovde Title: International Diversification Benefits between US, Turkish and Egyptian Stock Markets Abstract: International portfolio diversification benefits between US stock markets and corresponding markets in Turkey and Egypt are examined from a short- and long-term perspective. The Johansen cointegration procedure reveals cointegration at the general index level related to some but not all sub-indexes investigated. Granger causality indicates, in general, causality running between USA and Turkey but only isolated cases involving Egypt. Overall, the results suggest that US investors can obtain diversification benefits at a sub-index level given a long-term investment horizon restricted to positions in one but not both Middle Eastern markets in one and the same portfolio. Short-term benefits involve the Egyptian market related to two out of three sub-indexes. Journal: Review of Middle East Economics and Finance Pages: 25-43 Volume: 3 Issue: 2 Year: 2005 Month: August DOI: 10.2202/1475-3693.1037 File-URL: https://doi.org/10.2202/1475-3693.1037 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:2:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Narayan Paresh K Author-Workplace-Name: Griffith University Author-Name: Prasad Biman Chand Author-Workplace-Name: The University of the South Pacific Title: The Validity of Purchasing Power Parity Hypothesis for Eleven Middle Eastern Countries Abstract: There is a large literature that examines purchasing power parity (PPP). The growth in this literature is mainly due to the absence of a consensus view on whether or not PPP holds. This paper considers PPP for 11 Middle Eastern countries using a number of tests: the one-break test unit root, the two-breaks unit root test, and the panel Lagrange multiplier (LM) unit root test with structural breaks. The main finding from univariate tests is that there is evidence for PPP in only seven countries (Lebanon, Saudi Arabia, Egypt, Iran, Syria, Tunisia and Sudan). However, when the panel LM test is applied with two structural breaks, strong evidence is found in favor of PPP for the Middle Eastern countries. Journal: Review of Middle East Economics and Finance Pages: 44-58 Volume: 3 Issue: 2 Year: 2005 Month: August DOI: 10.2202/1475-3693.1038 File-URL: https://doi.org/10.2202/1475-3693.1038 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:2:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: El-Shazly Alaa Author-Workplace-Name: Department of Economics, Cairo University Title: Imperfect Information and Credit Rationing Equilibrium: Evidence from Egypt Abstract: This paper investigates the empirical significance of the concept of credit rationing equilibrium. The evidence from a disequilibrium model of the credit market with application to Egypt provides support for this concept. In particular, loan supply is not found an increasing function of the return on intermediated credit. Also, expectations on the state of the economy appear to explain the changing pattern of credit rationing over time. Journal: Review of Middle East Economics and Finance Pages: 59-72 Volume: 3 Issue: 2 Year: 2005 Month: August DOI: 10.2202/1475-3693.1039 File-URL: https://doi.org/10.2202/1475-3693.1039 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:2:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Rubeiz Ibrahim G Title: Book Review Abstract: Food, Agriculture, and Economic Policy in the Middle East and North Africa. Hans Lofgren. Research in Middle East Economics, 5 (Oxford, UK: Elsevier Science Ltd for The Middle East Economic Association, 2003). 337 pp. ISBN 0-7623-0992-X. Journal: Review of Middle East Economics and Finance Pages: 73-78 Volume: 3 Issue: 2 Year: 2005 Month: August DOI: 10.2202/1475-3693.1040 File-URL: https://doi.org/10.2202/1475-3693.1040 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:2:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Shahin Wassim Author-Workplace-Name: Lebanese American University Title: Editor's Note Abstract: Journal: Review of Middle East Economics and Finance Pages: 1-1 Volume: 3 Issue: 3 Year: 2005 Month: December DOI: 10.2202/1475-3693.1041 File-URL: https://doi.org/10.2202/1475-3693.1041 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:3:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Looney Robert E Author-Workplace-Name: Naval Postgraduate School Title: Why Has the Middle East Been so Slow to Globalize? Abstract: Over the last several decades, the economic performance of the Middle East and North Africa (MENA) has lagged behind many other parts of the world. While a number of factors have been cited as the cause of the region’s malaise, the lack of globalization is increasingly mentioned as a possible source of difficulty. Focusing on the factors responsible for increased levels of globalization, it appears that internal policy reforms rather than external constraints are primarily responsible for the relative integration of the MENA countries into the world economy. Of the areas of policy under the direct control of MENA governments, improvements in several categories of governance, rather than further economic reforms, appear most effective in the attainment of increased levels of globalization. Journal: Review of Middle East Economics and Finance Pages: 2-31 Volume: 3 Issue: 3 Year: 2005 Month: December DOI: 10.2202/1475-3693.1042 File-URL: https://doi.org/10.2202/1475-3693.1042 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:3:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Valadkhani Abbas Author-Workplace-Name: University of Wollongong Title: Sources of Iranian Labour Productivity Abstract: This study presents a model capturing sources of Iranian aggregate labour productivity using annual time series data from 1960 to 2002. Labour productivity in this model is determined by real net capital stock, information technology and telecommunications (ITT) and trade openness. Empirical estimates indicate that policies aimed at promoting various types of investment and trade openness, which generates technology spillovers, can improve labour productivity. A substantial rise in productivity can not be achieved unless the economy increases its stock of capital in both ITT and non-ITT sectors, and industrial protectionist policies are reversed. Journal: Review of Middle East Economics and Finance Pages: 32-47 Volume: 3 Issue: 3 Year: 2005 Month: December DOI: 10.2202/1475-3693.1043 File-URL: https://doi.org/10.2202/1475-3693.1043 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:3:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Ben Naceur Samy Author-Workplace-Name: University Of Carthage, IHEC Author-Name: Ghazouani Samir Author-Workplace-Name: ISCAE Title: Does Inflation Impact on Financial Sector Performance in the MENA Region? Abstract: This study gives some issues regarding the relationship between inflation and the financial sector performance for some MENA region countries. The negative association is confirmed through the estimation of a dynamic panel model using the GMM methodology. Moreover, a threshold effect must be also identified in order to prove that negative effect of inflation on the financial sector performance becomes appreciable once the rate of inflation exceeds some threshold. Journal: Review of Middle East Economics and Finance Pages: 48-58 Volume: 3 Issue: 3 Year: 2005 Month: December DOI: 10.2202/1475-3693.1044 File-URL: https://doi.org/10.2202/1475-3693.1044 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:3:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Neaime Simon Author-Workplace-Name: Department of Economics, Institute of Financial Economics, American University of Beirut Title: Financial Market Integration and Macroeconomic Volatility in the MENA Region: An Empirical Investigation Abstract: Using panel data regression models this study examines empirically the impact of regional and international financial integration on macroeconomic volatility in the developing economies of the MENA region over the period 1980–2002. Our empirical results indicate that financial openness is associated with an increase in consumption volatility, contrary to the notions of improved international risk-sharing opportunities through financial integration. Our empirical findings emphasize the role of sound fiscal and monetary policies in driving macroeconomic volatility. In regard to structural reforms, the development of the domestic financial sector is critical, as a high degree of financial sector development is significantly associated with lower macroeconomic volatility. We argue that enhancing regional financial integration might constitute a venue to circumvent the vulnerability of the small open MENA economies to external shocks, and a mean to enhance consumption smoothing opportunities, as well as international financial integration. Journal: Review of Middle East Economics and Finance Pages: 59-83 Volume: 3 Issue: 3 Year: 2005 Month: December DOI: 10.2202/1475-3693.1045 File-URL: https://doi.org/10.2202/1475-3693.1045 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:3:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: El-Sakka M. I. T. Author-Workplace-Name: Kuwait University Author-Name: Ghali Khalifa H Author-Workplace-Name: Kuwait University Title: The Sources of Inflation in Egypt: A Multivariate Co-integration Analysis Abstract: The aim of this paper is to empirically investigate the sources of inflation in Egypt. For this, price dynamics is herein represented by a vector error-correction model, which we use to test for the existence of a long-run relationship between the consumer price index, real gross domestic product (GDP), the exchange rate, interest rate, money supply and world prices. Then using the augmented VAR approach, we test for Granger non-causality between the different variables and inflation. The main results that are of interest to monetary policy in Egypt suggest that structural reforms based on improving the country’s productive capacity, shrinking the budget deficit and credit to the government, are crucial for controlling inflation. Journal: Review of Middle East Economics and Finance Pages: 84-96 Volume: 3 Issue: 3 Year: 2005 Month: December DOI: 10.2202/1475-3693.1046 File-URL: https://doi.org/10.2202/1475-3693.1046 File-Format: text/html Handle: repec:bpj:rmeecf:v:3:y:2005:i:3:n:6 Template-Type: ReDIF-Article 1.0 Author-Name: Sekkat Khalid Author-Workplace-Name: U of Bruxelles Title: Sources of Growth in Morocco: An Emperical Analysis in a Regional Perspective Abstract: This paper investigates the Moroccan growth experience since 1960 and compares it with the rest of the Middle East and North Africa (MENA). While Morocco and the MENA have faced a decreasing growth rate over the period, Moroccan growth was higher and much more volatile. The contribution of labor to growth remained constant over the period, while the contributions of capital and total factor productivity decreased markedly. The growth experience of Morocco was further impacted by the predominance of a rural population and the frequency of drought years. In contrast to the MENA, human capital had a positive impact on growth. Journal: Review of Middle East Economics and Finance Pages: 1-17 Volume: 2 Issue: 1 Year: 2007 Month: June DOI: 10.2202/1475-3693.1017 File-URL: https://doi.org/10.2202/1475-3693.1017 File-Format: text/html Handle: repec:bpj:rmeecf:v:2:y:2007:i:1:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Haque Mahfuzul Author-Workplace-Name: Indiana State University Author-Name: Hassan M. Kabir Author-Workplace-Name: University of New Orleans Author-Name: Maroney Neal C Author-Workplace-Name: University of New Orleans Author-Name: Sackley William H Author-Workplace-Name: Economics and Finance Department, University of North Carolina at Wilmington Title: An Empirical Examination of Stability, Predictability, and Volatility of Middle Eastern and African Emerging Stock Markets Abstract: This paper examines the stability, predictability, volatility, time varying risk premiums and persistence of shocks to volatility in the ten Middle Eastern and African (ME&A) emerging stock markets. Although the majority of ME&A markets only recently gained emerging status, one finds that five out of the ten ME&A emerging markets have stable returns over time. On the issue of predictability in the ME&A emerging markets, three different tests have been employed to draw conclusions. It was found that by using the three different tests, one receives slightly different results on predictability. In general, one finds ME&A markets to be unpredictable. The findings on volatility in the emerging market indicate that eight out of the ten markets show evidence of volatility clustering, but in these eight ME&A markets the shocks are not explosive. On persistence of shocks to volatility, one finds only one market to have permanent shocks; and the volatility movement affects the stock market returns. In summary, eight emerging markets have volatility clustering and one market shows positive and significant time varying risk premiums. Overall, the results fail to indicate time varying risk premium in nine of the ten ME&A markets. Although many of the emerging markets in ME&A regions are in the formative stage, it is felt that ME&A equity markets are where investors may find a good return for the investment, considering the trade-off between risk and return. In particular, the correlation is found to be low, which provides investors with the opportunity for diversification. Journal: Review of Middle East Economics and Finance Pages: 18-41 Volume: 2 Issue: 1 Year: 2004 Month: April DOI: 10.2202/1475-3693.1018 File-URL: https://doi.org/10.2202/1475-3693.1018 File-Format: text/html Handle: repec:bpj:rmeecf:v:2:y:2004:i:1:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Neaime Simon Author-Workplace-Name: Department of Economics, Institute of Financial Economics, American University of Beirut Title: Sustainability of Budget Deficits and Public Debt in Lebanon: A Stationarity and Co-Integration Analysis Abstract: This paper presents a thorough empirical analysis of fiscal developments in Lebanon over the past three decades. After an evaluation of major fiscal and monetary developments, the paper uses the Present Value Constraint framework to analyze whether debt and deficits are sustainable. Unit root and co-integration tests reveal that public debt in Lebanon is not sustainable. It is also shown that Lebanon could be heading towards a debt and exchange rate crisis, which could degenerate into a banking crisis similar to the one observed in Argentina, unless timely fiscal adjustment measures are introduced in the near future. Journal: Review of Middle East Economics and Finance Pages: 42-60 Volume: 2 Issue: 1 Year: 2004 Month: April DOI: 10.2202/1475-3693.1019 File-URL: https://doi.org/10.2202/1475-3693.1019 File-Format: text/html Handle: repec:bpj:rmeecf:v:2:y:2004:i:1:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Hassanain K. Author-Workplace-Name: Department of Economics, UAE University Title: Purchasing Power Parity: Further Evidence and Implications Abstract: This study tests the validity of the purchasing power parity (PPP) theory using a panel of ten Arab countries. It also measures the speed of convergence for the panel and for the Gulf Cooperation Council (GCC), including Bahrain, Kuwait, Qatar, Saudi Arabia and United Arab Emirates which follow a hard dollar peg. The test is conducted using nine base currencies. The main findings are first on the validity of PPP. (1) The null of unit root is rejected using each of the nine currencies as a numeraire—the result appears to be invariant to the choice of the base currency. (2) The result appears to be stronger when the estimation is based on heterogeneous rather than homogeneous serial correlations among panel units. Secondly, on persistence. (3) The estimated average half-life of a shock to the real exchange rate in the full panel is 2.19 years. (4) The study reveals that for the GCC economies deviation from PPP will be more persistent due to the hard peg, the dollar volatility and the weak goods market arbitrage. Clearly, the GCC countries will need to move to a more stable peg to be able to achieve the benefits they hope by engaging in a monetary union by 2010. Journal: Review of Middle East Economics and Finance Pages: 61-75 Volume: 2 Issue: 1 Year: 2004 Month: April DOI: 10.2202/1475-3693.1020 File-URL: https://doi.org/10.2202/1475-3693.1020 File-Format: text/html Handle: repec:bpj:rmeecf:v:2:y:2004:i:1:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Garcia-Herrero Alicia Author-Workplace-Name: The Bank of Spain Title: Book Review Abstract: Dollarization: Lessons from Europe and the Americas, edited by Louis-Philippe Rochon and Mario Seccareccia (Routledge, 2003). 192 pp., 26 line figures, 3 tables, (hardback), ISBN 04 1 5298784. Journal: Review of Middle East Economics and Finance Pages: 76-78 Volume: 2 Issue: 1 Year: 2004 Month: April DOI: 10.2202/1475-3693.1021 File-URL: https://doi.org/10.2202/1475-3693.1021 File-Format: text/html Handle: repec:bpj:rmeecf:v:2:y:2004:i:1:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Bonato Leo Author-Workplace-Name: IMF Title: Money and Inflation in the Islamic Republic of Iran Abstract: This paper looks at the determinants of inflation in Iran. Unlike the traditional estimates of the demand function for real money balances, the approach followed here focuses on the relationship between nominal variables and inflation. The model estimates are used to address the questions raised by the decline in inflation that occurred up to the first half of 2006, looking at the structural stability of the estimated relationships and the ability of the model to predict inflation at the end of the sample. The estimates confirm the strong relationship between money and inflation when M1 is used, with no evidence of a structural change. Journal: Review of Middle East Economics and Finance Pages: 41-58 Volume: 4 Issue: 1 Year: 2008 Month: January DOI: 10.2202/1475-3693.1051 File-URL: https://doi.org/10.2202/1475-3693.1051 File-Format: text/html Handle: repec:bpj:rmeecf:v:4:y:2008:i:1:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Noland Marcus Author-Workplace-Name: Peterson Institute for International Economics Title: Explaining Middle Eastern Political Authoritarianism I: The Level of Democracy Abstract: Arab political regimes are both unusually undemocratic and unusually stable. A series of statistical models are nested to parse competing explanations. The democratic deficit is comprehensible in terms of modernization, democracy waves, and the Arab population share, with the last determinant subject to multiple interpretations. Hypotheses that did not receive robust support include the presence of oil rents, conflict with Israel or other neighbors, and the influence of Islam. Journal: Review of Middle East Economics and Finance Pages: 1-30 Volume: 4 Issue: 1 Year: 2008 Month: January DOI: 10.2202/1475-3693.1057 File-URL: https://doi.org/10.2202/1475-3693.1057 File-Format: text/html Handle: repec:bpj:rmeecf:v:4:y:2008:i:1:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Dessus Sebastien Author-Workplace-Name: The World Bank Author-Name: Ghaleb Joey R Author-Workplace-Name: The World Bank Title: Trade and Competition Policies for Growth in Lebanon: A General Equilibrium Analysis Abstract: Using recent data on concentration indexes, we estimate that rents accruing from monopolistic positions represent more than 16 percent of GDP in Lebanon. In turn, using an applied computable general equilibrium model, we compare the long term impact of raising domestic competition with that of reducing import tariffs. Simulation results suggest that Lebanon would largely benefit from the reduction of anti-competitive practices. By way of comparison, reducing tariffs would be structurally less effective in terms of raising investment opportunities and real wages, which, in the long run, would inevitably affect economic growth. Journal: Review of Middle East Economics and Finance Pages: 59-80 Volume: 4 Issue: 1 Year: 2008 Month: January DOI: 10.2202/1475-3693.1067 File-URL: https://doi.org/10.2202/1475-3693.1067 File-Format: text/html Handle: repec:bpj:rmeecf:v:4:y:2008:i:1:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Kasman Adnan Author-Workplace-Name: Dokuz Eylul University Author-Name: Turgutlu Evrim Author-Workplace-Name: Dokuz Eylul University Title: Competitive Conditions in the Turkish Non-Life Insurance Industry Abstract: This paper investigates the evolution of market structure in the Turkish insurance industry over the period 1996-2004, using the Panzar and Rosse (1987) methodology. The sample period has been divided into three sub-periods (1996-1998, 1999-2001, and 2002-2004). The results suggest that in the first and second sub-periods, the insurance firms operating in the Turkish insurance industry earned revenues under the monopoly or conjectural variations short-run oligopoly. In the third period, however, the results indicate that the insurance market was neither monopolistic nor perfectly competitive. Firm revenues were earned as if operating under monopolistic competition. Overall, the results show that market concentration is not significantly related to competitive conduct. Journal: Review of Middle East Economics and Finance Pages: 81-96 Volume: 4 Issue: 1 Year: 2008 Month: January DOI: 10.2202/1475-3693.1071 File-URL: https://doi.org/10.2202/1475-3693.1071 File-Format: text/html Handle: repec:bpj:rmeecf:v:4:y:2008:i:1:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Noland Marcus Author-Workplace-Name: Peterson Institute for International Economics Title: Explaining Middle Eastern Political Authoritarianism II: Liberalizing Transitions Abstract: Long-lived undemocratic political regimes are ubiquitous in the Arab world. The likelihood of a transition declines as a country liberalizes and approaches the democratic asymptote. Worldwide democracy waves are positively associated with the likelihood of transition. Adherence to Islam among the population is uncorrelated with the likelihood of a liberalizing episode, but the Arab population share is negatively correlated with the likelihood of a liberalizing transition. For the Arab countries of the Middle East, the odds on liberalizing transitions occurring are low but rising, and alternative interpretations of the Arab population share variable are important in this regard. Journal: Review of Middle East Economics and Finance Pages: 31-40 Volume: 4 Issue: 1 Year: 2008 Month: January DOI: 10.2202/1475-3693.1112 File-URL: https://doi.org/10.2202/1475-3693.1112 File-Format: text/html Handle: repec:bpj:rmeecf:v:4:y:2008:i:1:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Zarour Bashar Abu Author-Workplace-Name: University of Patras Author-Name: Siriopoulos Costas P Author-Workplace-Name: University of Patras Title: Transitory and Permanent Volatility Components: The Case of the Middle East Stock Markets Abstract: Recent research has suggested that returns volatility may contain both short-run and long-run components due to the existence of heterogeneous information flows or heterogeneous agents (Andersen and Bollerslev 1997a, 1997b; Müller et al., 1997). This paper investigates the existence of such volatility decomposition in daily index returns data for nine emerging markets in the Middle East region using the permanent-transitory component variance model of Engle and Lee (1993). The existence of a component structure to volatility is supported by the existence of a transitory component to volatility and a permanent volatility that decays over a much longer horizon in three markets in the Middle East, namely Jordan, Oman, and Saudi Arabia. The component model was able to capture all structure within the data for Saudi Arabia on the basis of residual tests. However, some structure in the residuals remains in the Oman and Jordan markets. Journal: Review of Middle East Economics and Finance Pages: 80-92 Volume: 4 Issue: 2 Year: 2008 Month: April DOI: 10.2202/1475-3693.1060 File-URL: https://doi.org/10.2202/1475-3693.1060 File-Format: text/html Handle: repec:bpj:rmeecf:v:4:y:2008:i:2:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Berument Hakan Author-Workplace-Name: Bilkent University Author-Name: Ceylan Nildag Basak Author-Workplace-Name: Atilim University Title: US Monetary Policy Surprises and Foreign Interest Rates: Evidence from a Set of MENA Countries Abstract: This paper assesses the response of a set of emerging markets' domestic interest rates to the US monetary policy surprises within a dynamic framework. Monthly data from Algeria, Bahrain, Israel, Jordan, Kuwait, Tunisia and Turkey for the 1989:03 to 2005:12 period reveal positive effects of the unanticipated Federal Funds target changes on the short-term interest rates of these countries. When we look at the effect of US monetary policy surprises for different Turkish interest rates, the evidence is robust for the 3 and 12-month rates, but government controlled interbank and treasury auction rates have reverse positions. Journal: Review of Middle East Economics and Finance Pages: 117-133 Volume: 4 Issue: 2 Year: 2008 Month: April DOI: 10.2202/1475-3693.1065 File-URL: https://doi.org/10.2202/1475-3693.1065 File-Format: text/html Handle: repec:bpj:rmeecf:v:4:y:2008:i:2:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Cifter Atilla Author-Workplace-Name: Sekerbank and Marmara University Author-Name: Ozun Alper Author-Workplace-Name: Is Bank of Turkey Title: Estimating the Effects of Interest Rates on Share Prices in Turkey Using a Multi-Scale Causality Test Abstract: This paper examines the impact of changes in interest rates on stock returns in Turkey by using wavelet analysis with Granger causality tests. By using daily closing values of the ISE 100 Index and interest rates, it is proven that starting with the 9 day time-scale effect, Granger interest rates cause the ISE 100 index and the effect of interest rates on stock returns to increase with higher time-scales. This evidence shows that the bond market has a significant long-term effect on the stock market in Turkey. Journal: Review of Middle East Economics and Finance Pages: 68-79 Volume: 4 Issue: 2 Year: 2008 Month: April DOI: 10.2202/1475-3693.1069 File-URL: https://doi.org/10.2202/1475-3693.1069 File-Format: text/html Handle: repec:bpj:rmeecf:v:4:y:2008:i:2:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Soofi Abdol S Author-Workplace-Name: University of Wisconsin-Platteville Title: Global Financial Integration and the MENA Countries: Evidence from Equity and Money Markets Abstract: This study measures the degree of financial integration between Egypt, Jordan, Lebanon, Tunisia, and Turkey on the one hand and the United States and United Kingdom on the other hand. Using cointegration, error correction, and Granger causality tests I find that only the Turkish equity market is cointegrated with both S&P and FTSE stock markets. Journal: Review of Middle East Economics and Finance Pages: 93-116 Volume: 4 Issue: 2 Year: 2008 Month: April DOI: 10.2202/1475-3693.1102 File-URL: https://doi.org/10.2202/1475-3693.1102 File-Format: text/html Handle: repec:bpj:rmeecf:v:4:y:2008:i:2:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Almounsor Abdullah Author-Workplace-Name: International Monetary Fund Title: Capital Flight Accounting and Welfare Implications in the MENA Region Abstract: This research brings together the first estimates of capital flight in the MENA countries from 1970 to 2002. In addition, it explains the nature, volume, determinants and growth impact of capital flight in the resource-based and the resource-poor economies of the MENA region on the basis of their respective structural and institutional characteristics. Our findings suggest that capital flight follows a systematic pattern depending on whether a MENA country is resource-based. The resource-based economies are found to be net creditors to the world economy and have experienced more than 273 billion of 1995 USD in capital flight (average of 9.42 percent of GDP). In these economies, capital flight is assisted by natural resource exporting rents, the outward orientation of most economies and the monarchial character of most of their political systems. In assessing the welfare impact, capital flight is shown to negatively and significantly affect economic growth in the resource-based economies. In contrast, the nonresource economies are shown to have experienced a net inflow of an unrecorded foreign exchange of $215 billion in 1995 USD (average of 9.38 percent of GDP). These inflows are mainly reflected in smuggling of imported goods to avoid trade taxes and regulations and are assisted by the inward-looking strategies, one-party or militarily controlled governments and the relatively significant capital controls in these economies. Interestingly, while capital flight is an outcome of government control in resource-based economies, increasing government control induces unrecorded foreign exchange inflows in the resource-poor economies. However, we find no significant effect of unrecorded inflows on economic growth in these economies. Based on these findings, the research provides policy implications for development in the MENA region. Journal: Review of Middle East Economics and Finance Pages: 1-67 Volume: 4 Issue: 2 Year: 2008 Month: April DOI: 10.2202/1475-3693.1121 File-URL: https://doi.org/10.2202/1475-3693.1121 File-Format: text/html Handle: repec:bpj:rmeecf:v:4:y:2008:i:2:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Al-Mashat Rania Author-Workplace-Name: Central Bank of Egypt Author-Name: Billmeier Andreas Author-Workplace-Name: International Monetary Fund Title: The Monetary Transmission Mechanism in Egypt Abstract: This paper examines the monetary transmission mechanism in Egypt against the background of the central bank's intention to shift to inflation targeting. It first describes the changing transmission channels over the last decade. Second, the channels are evaluated in a VAR model. The exchange rate channel plays a strong role in propagating monetary shocks to output and prices. Most other channels (bank lending, asset price) are rather weak. The interest rate channel is underdeveloped but appears to be strengthening since the introduction of the interest corridor in 2005, which bodes well for adopting inflation targeting over the medium term. Journal: Review of Middle East Economics and Finance Pages: 32-82 Volume: 4 Issue: 3 Year: 2008 Month: September DOI: 10.2202/1475-3693.1126 File-URL: https://doi.org/10.2202/1475-3693.1126 File-Format: text/html Handle: repec:bpj:rmeecf:v:4:y:2008:i:3:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Marktanner Marcus Author-Workplace-Name: American University of Beirut Author-Name: Makdisi Samir Author-Workplace-Name: American University of Beirut Title: Development against All Odds? The Case of Lebanon Abstract: This paper explores Lebanon's development potential associated with greater fiscal capacity building to promote more equality of economic opportunities and productive economic activity and examines their impact on the country's likelihood of sporadic or lasting armed conflict. It is found that Lebanon forgoes a substantial amount of socio-economic development due to the political system's inability to build an efficiently sized public sector that can complement private economic activity. But even if Lebanon utilized its full development potential, it can barely beat the odds of armed conflict. This can be explained by Lebanon's exposure to considerable geoeconomic and geopolitical constraints. Journal: Review of Middle East Economics and Finance Pages: 101-133 Volume: 4 Issue: 3 Year: 2008 Month: September DOI: 10.2202/1475-3693.1173 File-URL: https://doi.org/10.2202/1475-3693.1173 File-Format: text/html Handle: repec:bpj:rmeecf:v:4:y:2008:i:3:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Murshed Syed Mansoob Author-Workplace-Name: Institute of Social Studies and University of Birmingham Title: Development despite Modest Growth in the Middle East Abstract: The Middle Eastern region is a major supplier of the world's energy. It is also characterised by conflict, and is the focus of global geo-political interest both because of oil and the volatile nature of disputes in the region, which are perceived to have far reaching global security implications. Would we expect such a region to prosper? On the one hand, the answer should be affirmative on account of natural resource wealth, but on the other hand it could be negative due to the presence of conflict and the potential resource rent mismanagement. The actual record is somewhere in the middle. I argue that the region has made substantial progress in human development in spite of modest growth rates, which is related to the region's cultural heritage with a low tolerance for poverty and inequality. Its outcome based institutional development is not unimpressive, which bodes well for long-term growth prospects. Additionally, recent oil rents have not been mismanaged. More, however, needs to be done to foster economic diversification and diminish dependence on natural resources. Journal: Review of Middle East Economics and Finance Pages: 1-31 Volume: 4 Issue: 3 Year: 2008 Month: September DOI: 10.2202/1475-3693.1180 File-URL: https://doi.org/10.2202/1475-3693.1180 File-Format: text/html Handle: repec:bpj:rmeecf:v:4:y:2008:i:3:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Yeldan Erinc A. Author-Workplace-Name: Bilkent University Title: Prospects for Inflation Targeting in the MENA Region: Feasibility, Desirability and Alternatives Abstract: Inflation targeting (IT) has recently become the dominant monetary policy prescription over the last decade. Emerging markets governments, in particular, are increasingly pressured to follow IT as part of their IMF-led stabilization packages and the routine rating procedures of the international finance institutions. However, the common expectation of IT promoters that price stability would ultimately lead to macroeconomic stability and sustained growth has failed to materialize. This paper is an attempt to assess the desirability of the IT regime for a select group of MENA countries. I also argue that modern central banking ought to have more policy space in balancing out various objectives and instruments, and that central bank `independence' should not be equivalent to central bank `irrelevance.' Journal: Review of Middle East Economics and Finance Pages: 83-100 Volume: 4 Issue: 3 Year: 2008 Month: September DOI: 10.2202/1475-3693.1193 File-URL: https://doi.org/10.2202/1475-3693.1193 File-Format: text/html Handle: repec:bpj:rmeecf:v:4:y:2008:i:3:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Kasman Adnan Author-Workplace-Name: Dokuz Eylul University Author-Name: Vardar Gülin Author-Workplace-Name: Izmir University of Economics Author-Name: Okan Berna Author-Workplace-Name: Izmir University of Economics Author-Name: Aksoy Gökçe Author-Workplace-Name: Izmir University of Economics Title: The Turkish Stock Market Integration with Developed and Emerging Countries' Stock Markets: Evidence from Cointegration Tests with and without Regime Shifts Abstract: This paper examines the existence of integration between the Turkish stock market and the markets in some developed and emerging countries, using both the conventional Engle and Granger (1987) cointegration test and the Gregory and Hansen (1996) test, which allows a structural break in the cointegration vector. The conventional test suggests that there is no long-run relationship between the Turkish stock market and any of the sample countries' stock markets. The results from the Gregory and Hansen (1996) test, however, suggest that the Turkish stock market is cointegrated with the markets in the sample. Moreover, the error correction version of the ARDL model, which takes the structural break dates into account, is also used to specify the short-run and long-run dynamics of the stock prices. The results indicate that the speed of adjustment is especially higher in the cases of major trading partners of Turkey (i.e., France, Germany, and the UK). The presence of these equilibrium relations could also be attributed to the growing exposure of the Turkish stock market to foreign capital flows since late 1980's. Journal: Review of Middle East Economics and Finance Pages: 24-49 Volume: 5 Issue: 1 Year: 2009 Month: May DOI: 10.2202/1475-3693.1120 File-URL: https://doi.org/10.2202/1475-3693.1120 File-Format: text/html Handle: repec:bpj:rmeecf:v:5:y:2009:i:1:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Omran M. F. Author-Workplace-Name: Nile University Title: Examining the Effects of Islamic Beliefs on the Valuation of Financial Institutions in the United Arab Emirates Abstract: The study examines whether United Arab Emirates (U.A.E.) investors value more Islamic financial institutions in comparison with traditional financial institutions and other companies in the economy during the period from 2001 to 2005. The study highlights the major differences between products offered by Islamic versus traditional financial institutions. It is argued that these differences do not necessarily affect the measures of profitability and performance. The main finding of the paper is that stockholders of Islamic financial institutions in the U.A.E. were willing to pay a premium for their Islamic faith. This highlights the U.A.E. clientele preference for institutions that closely follow Islamic laws. Journal: Review of Middle East Economics and Finance Pages: 72-79 Volume: 5 Issue: 1 Year: 2009 Month: May DOI: 10.2202/1475-3693.1127 File-URL: https://doi.org/10.2202/1475-3693.1127 File-Format: text/html Handle: repec:bpj:rmeecf:v:5:y:2009:i:1:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Farooq Omar Author-Workplace-Name: Al Akhawayn University Author-Name: El Attari Ahmed Author-Workplace-Name: Al Akhawayn University Title: Can Individual/Naive Investors Infer Valuable Information from Institutional Investors' Trades? Evidence from the Casablanca Stock Exchange Abstract: Do different institutional investors possess different sets of information? The extent to which different institutional investors offer different information to individual/naive investors remains an interesting question in information poor emerging stock markets. Using a comprehensive data of institutional investors' trades from the Casablanca Stock Exchange, we find that foreign institutions have the least information and financial institutions have the most information in their buy trades. The paper also provides evidence that financial institutions have the least information in their sell trades. Our results have implications for individual/naive investors in the way that they can infer valuable information from financial institutions' buy trades and foreign institutions' as well as politically-connected institutions' sell trades. Journal: Review of Middle East Economics and Finance Pages: 50-71 Volume: 5 Issue: 1 Year: 2009 Month: May DOI: 10.2202/1475-3693.1154 File-URL: https://doi.org/10.2202/1475-3693.1154 File-Format: text/html Handle: repec:bpj:rmeecf:v:5:y:2009:i:1:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Bulut Levent Author-Workplace-Name: Emory University Author-Name: Nal Osman Author-Workplace-Name: Texas Southern University Title: Market Discipline in Turkey Before and After the 2001 Financial Crisis Abstract: This paper compares the effectiveness of market discipline mechanisms in the banking sector before and after the 2001 financial crisis in Turkey. It employs an empirical model that incorporates the contemporaneous feedback effects between deposits growth rate and the implicit interest rate. Using 3SLS procedure, the results show that market disciplinary forces in Turkey have been effective both before and after the 2001 financial crisis. The findings show that the effect of the implicit interest rate on deposits becomes more sensitive to bank risk fundamentals after the 2001 financial crisis. Depositors, on the other hand, do not change their behavior in the aftermath of the crisis which can be explained by an implicit “too-big-to-fail" protection at work. Journal: Review of Middle East Economics and Finance Pages: 1-23 Volume: 5 Issue: 1 Year: 2009 Month: May DOI: 10.2202/1475-3693.1183 File-URL: https://doi.org/10.2202/1475-3693.1183 File-Format: text/html Handle: repec:bpj:rmeecf:v:5:y:2009:i:1:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Packey Daniel J Author-Workplace-Name: Curtin University of Technology Author-Name: Nusair Salah Author-Workplace-Name: Gulf University for Science and Technology Title: Kuwaiti Consumption in the Presence of Dramatic Economic Events: 1973-2003 Abstract: The Kuwaiti consumption function is examined for the 1973-2003 time period. The dramatic events included: the Arab oil embargo of 1973, Kuwait's nationalization of oil facilities in 1976, the oil price shock in 1978, the Iranian Revolution in 1979, the Iran/Iraq war, Kuwait's unofficial stock market Al Manakh crash, increases in crude oil supply by non-OPEC producers by ten million barrels per day, the collapse of world crude oil prices in 1986, and the 1990 Iraq invasion. This paper examines three decades in which Kuwait experiences a variety of uncommonly dramatic economic and sociological events. The question we are addressing econometrically is: "Is consistency in Kuwaiti consumption maintained even in the presence of extreme economic conditions?"We found that Kuwaiti consumption is consistent with the Permanent Income Hypothesis. That is the marginal propensity to consume (MPC) approaches the average propensity to consume (APC) and the intercept is not significantly different from zero. Moreover, this result of a relatively small MPC of 0.30 is consistent with the contentions of Keynes and Kurihara that wealthy high income economies have relatively small values for MPC and APC. Journal: Review of Middle East Economics and Finance Pages: 1-20 Volume: 5 Issue: 2 Year: 2009 Month: September DOI: 10.2202/1475-3693.1103 File-URL: https://doi.org/10.2202/1475-3693.1103 File-Format: text/html Handle: repec:bpj:rmeecf:v:5:y:2009:i:2:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Balli Faruk Author-Workplace-Name: Massey University Author-Name: Louis Rosmy J Author-Workplace-Name: Vancouver Island University Author-Name: Osman Mohamed A Author-Workplace-Name: University of Dubai Title: International Portfolio Inflows to GCC Markets: Are There Any General Patterns? Abstract: In this paper, we document the main factors underlying foreign portfolio inflows to Gulf Corporation Council countries (hereafter GCC). We find that bilateral factors, in particular, export volumes from GCC (host) countries to source countries, play a truly significant role in determining the volume of cross border portfolio inflows to GCC markets. This connection becomes even stronger over time. Moreover, GCC members' stable fiscal position is practically one of the important determinants of the volume of portfolio inflows to GCC markets. We have also found that the extent of openness in capital account transactions and the income levels of source countries are additional factors that can help explain the volume of foreign portfolio inflows to GCC members. Last but not least there exists to some extent a "GCC bias;" a large share of the portfolio inflows to GCC markets comes from other GCC countries. Journal: Review of Middle East Economics and Finance Pages: 45-65 Volume: 5 Issue: 2 Year: 2009 Month: September DOI: 10.2202/1475-3693.1156 File-URL: https://doi.org/10.2202/1475-3693.1156 File-Format: text/html Handle: repec:bpj:rmeecf:v:5:y:2009:i:2:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Awdeh Ali Author-Workplace-Name: Lebanese International University Author-Name: El Moussawi Chawki Author-Workplace-Name: Lebanese University Title: Bank Efficiency and Foreign Ownership in the Lebanese Banking Sector Abstract: We have compared the efficiency of banks with majority domestic ownership, banks with majority foreign ownership, and the subsidiaries of foreign banks operating in the Lebanese market between 1996 and 2005. We have implemented the DEA methodology to calculate the yearly scores for technical, allocative, and cost efficiencies for the three groups of banks. Moreover, we have extended our study to reveal the factors that shape bank efficiency, by proposing several micro and macroeconomic variables and testing their correlation with this efficiency. Journal: Review of Middle East Economics and Finance Pages: 66-87 Volume: 5 Issue: 2 Year: 2009 Month: September DOI: 10.2202/1475-3693.1161 File-URL: https://doi.org/10.2202/1475-3693.1161 File-Format: text/html Handle: repec:bpj:rmeecf:v:5:y:2009:i:2:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Taghipour Anoshirvan Author-Workplace-Name: The Economic Planning Department of Vice-Presidency for Strategic Planning and Control, Iran and University of Tehran Title: Financial Restraint and Financial Development in Iran: The Conditional Co-Integration Approach Abstract: This paper aims to investigate empirically the effect of financial restraints on financial development in Iran over the period 1960–2005 by using the conditional co-integration method. In doing so, different hypotheses in terms of financial restraints and financial development in the context of the McKinnon/Shaw model and the monopoly bank model are addressed. The main results show that financial restraints had a negative effect on financial development. The finding indicates that monetary authorities in Iran used a severe financial repression policy because a mild repressive policy in a monopoly banking structure which is the case in Iran could have increased financial intermediation. Journal: Review of Middle East Economics and Finance Pages: 88-106 Volume: 5 Issue: 2 Year: 2009 Month: September DOI: 10.2202/1475-3693.1200 File-URL: https://doi.org/10.2202/1475-3693.1200 File-Format: text/html Handle: repec:bpj:rmeecf:v:5:y:2009:i:2:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Pastore Francesco Author-Workplace-Name: Seconda Università di Napoli and IZA Author-Name: Ferragina Anna Maria Author-Workplace-Name: Università di Salerno Author-Name: Giovannetti Giorgia Author-Workplace-Name: Università di Firenze Title: A Tale of Parallel Integration Processes: A Gravity Analysis of EU Trade with Mediterranean and Central and Eastern European Countries Abstract: Despite the EU emphasis on the 1995 Barcelona process, trade integration with the Mediterranean (MED) countries is still underdeveloped. To contrast the success of EU integration with MED countries and that with the new EU members, we compute the trade potential of these EU partners from 1995 to 2002 using an "out-of-sample" methodology. The coefficients are taken from different panel estimators of the gravity equation relative to intra-EU trade. Our analysis suggests the existence of sizeable, unexploited trade potential with both groups of partners, although the ratio of potential to actual trade with the MED countries is much larger (from 1.7 to 2.5 times), more dispersed and stable compared to that with the CEECs. Journal: Review of Middle East Economics and Finance Pages: 21-44 Volume: 5 Issue: 2 Year: 2009 Month: September DOI: 10.2202/1475-3693.1228 File-URL: https://doi.org/10.2202/1475-3693.1228 File-Format: text/html Handle: repec:bpj:rmeecf:v:5:y:2009:i:2:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Boughanmi Houcine Author-Workplace-Name: Sultan Qaboos University Author-Name: Al Shidhani Jamal Author-Workplace-Name: Sultan Qaboos University Author-Name: Mbaga Msafiri Author-Workplace-Name: Sultan Qaboos University Author-Name: Kotagama Hemesiri Author-Workplace-Name: Sultan Qaboos University Title: The Effects of Regional Trade Arrangements on Agri-Food Trade: An Application of the Gravity Modeling Approach to the Arab Gulf Cooperation Council (GCC) Countries Abstract: The objective of this paper is to assess the trade performance of the Gulf Cooperation Council (GCC) countries as a regional trade arrangement and estimate the trade potential of the GCC with countries or groups of countries with which a preferential trade agreement is signed or still in negotiation. The study uses disaggregated data and estimate gravity equations for total exports, total agri-food exports and seven agri-food commodities according to the SITC classification, covering the period 1994-2004. Results indicate that the GCC as a regional trade arrangement has actually promoted trade integration significantly between the member countries in agri-food products as opposed to total aggregate trade. Trade integration is highest in dairy products where GCC intra-trade is 10 times more than what would be predicted by the basic model, followed by meat, fish, and cereal products. The GCC intra-trade did not seem however to change significantly over the years and had probably reached its full potential during the 1993-1996 period. The newly created GCC Custom Union is therefore promising enhancing new opportunities of trade as it goes beyond the removal of tariffs to the elimination of non tariff barriers. Except with the Mashreq countries, trade of GCC with other regional groups and sub-groups is less than expected in all commodities suggesting that there is untapped trade potential which can be enhanced by negotiating a freer trade arrangement between these groups and the GCC region. Journal: Review of Middle East Economics and Finance Pages: 46-62 Volume: 5 Issue: 3 Year: 2010 Month: February DOI: 10.2202/1475-3693.1182 File-URL: https://doi.org/10.2202/1475-3693.1182 File-Format: text/html Handle: repec:bpj:rmeecf:v:5:y:2010:i:3:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Chaibi Hasna Author-Workplace-Name: Institut Supérieur de Gestion de Tunis Author-Name: Ben Naceur Sami Author-Workplace-Name: International Monetary Fund Title: The Best Asset Pricing Model for Estimating Industry Costs of Equity in Tunisia Abstract: The Capital Asset Pricing Model (CAPM) has dominated finance theory for over 30 years; it suggests that the market beta alone is sufficient to explain security returns. However, evidence shows that the cross-section of stock returns cannot be described solely by the one-factor CAPM. Alternative studies have been proposed in response to the poor performance of the standard CAPM. The main contribution of this paper is to offer to investors planning to invest the appropriate model for estimating the cost of equity in the Tunisian market. The paper allows choosing among the CAPM, the Fama&French asset-pricing model (TPFM), and the Four Factor Pricing Model (FFPM), which adds a third and fourth moment to estimate the cost of equity of firms listed on the Tunisian stock market. In addition to the classic, the selection of the best model is based on information criteria: the Akaike Information Criteria (AIC) and the Schwartz Information Criteria (SIC). The simple FFPM of Cahart proved to be the selected model. Journal: Review of Middle East Economics and Finance Pages: 63-90 Volume: 5 Issue: 3 Year: 2010 Month: February DOI: 10.2202/1475-3693.1210 File-URL: https://doi.org/10.2202/1475-3693.1210 File-Format: text/html Handle: repec:bpj:rmeecf:v:5:y:2010:i:3:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Brach Juliane Author-Workplace-Name: University of Copenhagen and German Institute of Global and Area Studies Title: Technology, Political Economy, and Economic Development in the Middle East and North Africa Abstract: Comparing the pace and extent of economic development across the developing regions yields that Arab countries have displaced a weak economic performance over the past 20 years, despite their favorable geo-strategic location and a high density of national and international structural adjustment efforts. Using cross-country regressions, this paper identifies two binding constraints to economic development in the Arab countries of the Middle East and North Africa (MENA): 1) Most countries are not able to apply or adopt existing technologies efficiently and 2) The economically inefficient allocation of resources is rooted deeply in regional political economy structures. These results challenge the scholarly debate, but can help to understand why international structural adjustment programs that focused on privatization and trade liberalization only showed limited success in the MENA region. Journal: Review of Middle East Economics and Finance Pages: 1-23 Volume: 5 Issue: 3 Year: 2010 Month: February DOI: 10.2202/1475-3693.1240 File-URL: https://doi.org/10.2202/1475-3693.1240 File-Format: text/html Handle: repec:bpj:rmeecf:v:5:y:2010:i:3:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Azzam Islam Author-Workplace-Name: American University in Cairo Title: Bank Ownership and Corporate Performance: Evidence from Egypt Abstract: Previous studies conclude that bank ownership in developed markets improves firms' performance while in large emerging markets it promotes firm access to bank loans and lowers performance. We examine the effect of bank ownership on firms' performance and their access to bank loans in Egypt. We also look at the factors that affect bank presence in a firm. Our study finds that bank ownership in a firm improves its financial performance and lowers its access to bank loans. We show that banks in Egypt are not likely to cherry pick the best performance firms. Our results find that banks prefer to own equity in firms with better financial performance, lower debt, and higher collateral assets. Additionally, public ownership concentration hurts performance and discourages banks ownership. Journal: Review of Middle East Economics and Finance Pages: 91-118 Volume: 5 Issue: 3 Year: 2010 Month: February DOI: 10.2202/1475-3693.1243 File-URL: https://doi.org/10.2202/1475-3693.1243 File-Format: text/html Handle: repec:bpj:rmeecf:v:5:y:2010:i:3:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Dewhurst John Author-Workplace-Name: University of Dundee Author-Name: Kerwat Jamal Author-Workplace-Name: University of Dundee Author-Name: Molana Hassan Author-Workplace-Name: University of Dundee Title: Viability of Keeping a Fixed Exchange Rate in an Oil Exporting Country: Some Results for Libya from a Computable General Equilibrium Model Abstract: We use the CGE analysis to provide an assessment of the way an oil exporting LDC is affected by a positive exogenous shock due to the rise in the price of oil. Our main purpose is to examine how the effects differ under fixed and flexible exchange rate regimes; it is desirable, from a short-run policy point of view, if a situation could be identified in which the benefits accrued from the higher oil price lead to a rise in households' and government's consumption as well as to a considerably higher level of investment. Journal: Review of Middle East Economics and Finance Pages: 24-45 Volume: 5 Issue: 3 Year: 2010 Month: February DOI: 10.2202/1475-3693.1249 File-URL: https://doi.org/10.2202/1475-3693.1249 File-Format: text/html Handle: repec:bpj:rmeecf:v:5:y:2010:i:3:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Karam Fida Author-Workplace-Name: Gulf University for Science and Technology Title: When Migrant Remittances Are Not Everlasting: How Can Morocco Make Up? Abstract: This paper builds a dynamic computable general equilibrium model of the Moroccan economy that investigates the linkages that transmit the influence of remittances to households and economic sectors. The model shows that the linkage between the real estate sector and other sectors in a general equilibrium context gives interesting results. Given that the real estate sector uses intermediary inputs from other sectors, a drop of remittances will negatively affect the overall economy in contrast to the little impact such a drop will have in partial equilibrium. Hence, the channeling of investment from real estate to productive sectors is unexpectedly harmful. Positive effects arise only from an improvement in the country risk premium and from a reduction of international transfer costs. Journal: Review of Middle East Economics and Finance Pages: 1-38 Volume: 6 Issue: 1 Year: 2010 Month: July DOI: 10.2202/1475-3693.1226 File-URL: https://doi.org/10.2202/1475-3693.1226 File-Format: text/html Handle: repec:bpj:rmeecf:v:6:y:2010:i:1:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Reynaud Julien P.M. Author-Workplace-Name: University of Paris 1 Pantheon-Sorbonne Title: Could Efficiency Analysis Help in Predicting Bank Failure? The Case of the 2001 Turkish Crisis Abstract: Inefficient, or weak banks, are continuously pointed out as threatening financial stability as they are more likely to fail than efficient ones and thus to weaken the whole banking sector (BIS, 2002). Consequently, banks' efficiency analysis, a measure of bank's management efficiency, should be a useful tool for policy makers to predict bank failure. This paper tests the usefulness of efficiency analysis in predicting bank failure by using the 2001 Turkish banking crisis as a case study. It implements in a first step both parametric, Stochastic Frontier Analysis (SFA), and non-parametric, Data Envelopment Analysis (DEA), to predict Turkish banks' efficiency scores over 1996 to 2001. During this period, 19 out of 55 were taken over by the Turkish Saving and Deposit Insurance Fund (SDIF). In a second step, efficiency scores are tested against the standard CAMELS model to check their capacity in predicting banks' probability to fail, i.e. SDIF taken-over. The findings indicate that banks taken-over were less cost efficient than others. Moreover, banks which were lending to connected parties were also less cost efficient than others. On the methodology side, our results using a parametric approach are found to be more significant than the non-parametric ones. Journal: Review of Middle East Economics and Finance Pages: 39-59 Volume: 6 Issue: 1 Year: 2010 Month: July DOI: 10.2202/1475-3693.1255 File-URL: https://doi.org/10.2202/1475-3693.1255 File-Format: text/html Handle: repec:bpj:rmeecf:v:6:y:2010:i:1:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Al Janabi Mazin A. M. Author-Workplace-Name: United Arab Emirates University Title: Incorporating Asset Liquidity Effects in Risk-Capital Modeling Abstract: Recent turmoil in financial markets endorses the need for rigorous handling and integration of asset liquidity risk into Value-at-Risk (VaR) models. In this work we develop and test measures of certain kinds of asset liquidity risk that is useful for completing the definition of market risk and for predicting liquidity-adjusted VaR under adverse market conditions. This paper presents a practical simulation framework for the modeling of asset liquidity risk for portfolios that consist of multiple long and short trading assets. We put forward a method whereby the holding periods are adjusted according to the specific needs of each trading portfolio by explicitly modeling a linearly-distributed liquidation scheme by means of a pertinent scaling multiplier. The empirical testing is achieved using daily return data of emerging Gulf-Cooperation-Council (GCC) stock markets. We simulate and analyze different relevant portfolios (of both long and short-sales trading positions) and determine the risk-capital exposure under varied illiquid and adverse market conditions. Journal: Review of Middle East Economics and Finance Pages: 60-89 Volume: 6 Issue: 1 Year: 2010 Month: July DOI: 10.2202/1475-3693.1258 File-URL: https://doi.org/10.2202/1475-3693.1258 File-Format: text/html Handle: repec:bpj:rmeecf:v:6:y:2010:i:1:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Torul Orhan Author-Workplace-Name: University of Maryland Author-Name: Alper C. Emre Author-Workplace-Name: Bogazici University Title: Asymmetric Effects of Oil Prices on the Manufacturing Sector in Turkey Abstract: We investigate the relationship between oil prices and manufacturing sector of a small open economy, Turkey. We take into account exogeneity of oil prices, extreme oil-reliance and import-dependence, as well as asymmetric responses of oil product prices to world crude oil price changes. We also control for the global liquidity and domestic finance conditions, along with real exchange rate dynamics in our VAR estimations. We report that while oil price increases do not significantly affect the manufacturing sector in aggregate terms, some sub-sectors are adversely affected. Journal: Review of Middle East Economics and Finance Pages: 90-105 Volume: 6 Issue: 1 Year: 2010 Month: July DOI: 10.2202/1475-3693.1269 File-URL: https://doi.org/10.2202/1475-3693.1269 File-Format: text/html Handle: repec:bpj:rmeecf:v:6:y:2010:i:1:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Harrigan Jane R Author-Workplace-Name: School of Oriental and African Studies - University of London Author-Name: El-Said Hamed Author-Workplace-Name: Manchester Metropolitan University Business School Title: The Economic Impact of IMF and World Bank Programs in the Middle East and North Africa: A Case Study of Jordan, Egypt, Morocco and Tunisia, 1983 - 2004 Abstract: This paper examines whether the economic reforms attached to IMF and World Bank policy-based lending in the Middle East and North Africa have stimulated sustained economic growth. In order to investigate this, we chose four countries to study in depth: Jordan, Egypt, Tunisia and Morocco. These were chosen as they have been put forward by both the IMF and the World Bank as successful reformers who, for prolonged periods, carried out World Bank and IMF guided economic reform programs. We examine the sources of growth during the reform period in these four countries, looking at intensive versus extensive growth, growth in the tradables sector versus the non-tradables sector and growth caused by the reforms versus growth caused by exogenous factors. We discovered that the reform programs in all four countries were associated with spurts of economic growth, but that, apart from Tunisia, this was not sustained, with intensive growth in the tradables sector stimulated by the reform program. Journal: Review of Middle East Economics and Finance Pages: 1-25 Volume: 6 Issue: 2 Year: 2010 Month: November DOI: 10.2202/1475-3693.1261 File-URL: https://doi.org/10.2202/1475-3693.1261 File-Format: text/html Handle: repec:bpj:rmeecf:v:6:y:2010:i:2:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Harb George Author-Workplace-Name: Lebanese American University Title: Communication Infrastructures, Institutional Efficiency and EU-Arab Trade: Assessment and Implications Abstract: With the implementation of the European Neighborhood Policy, many Arab countries have been actively pursuing economic and policy reforms in the context of bilateral Action Plans with the European Union (EU). Among other things, these reforms target enhanced communication infrastructures as well as more efficient public administrations. Using a gravity model and panel data econometrics, we evaluate the impact of the Internet diffusion and institutional efficiency on EU-Arab trade. We generate a series of simulations suggesting that upgrading the aforementioned factors would significantly increase Arab imports from the EU. Results allow us to identify sectoral-reform priorities from both country-level and regional perspectives to be anchored in the Action Plans. Journal: Review of Middle East Economics and Finance Pages: 49-73 Volume: 6 Issue: 2 Year: 2010 Month: November DOI: 10.2202/1475-3693.1270 File-URL: https://doi.org/10.2202/1475-3693.1270 File-Format: text/html Handle: repec:bpj:rmeecf:v:6:y:2010:i:2:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Foad Hisham Author-Workplace-Name: San Diego State University Title: Assimilation and Trade between the Middle East, Europe, and North America Abstract: How are immigration and trade related? Migration leads to the formation of social networks across borders, driving down trade costs. Immigrants may also retain a preference for their native country's products, creating a local market for exports. I examine these two competing theories by estimating the immigration-trade linkage separately for migrants moving from the Middle East and North Africa (MENA) to Europe and North America. While these two groups originate in the same location and have similar preferences, they are quite different in terms of both income and education, with migrants to North America tending to be less numerous but more educated. The greater degree of economic assimilation for North American migrants should strengthen migrant network effects, but greater cultural assimilation weakens both network and preference effects. I find the migration-trade link to be stronger for migrants to Europe, with the strongest effect for imports. The link is stronger for differentiated goods than for homogeneous goods and strongest for differentiated goods imports into Europe. These results suggest that while network effects matter, immigrant preferences for native country goods are the key factor driving the migration-trade link. Journal: Review of Middle East Economics and Finance Pages: 74-92 Volume: 6 Issue: 2 Year: 2010 Month: November DOI: 10.2202/1475-3693.1298 File-URL: https://doi.org/10.2202/1475-3693.1298 File-Format: text/html Handle: repec:bpj:rmeecf:v:6:y:2010:i:2:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Anzoategui Diego Author-Workplace-Name: World Bank Author-Name: Martinez Peria Maria S. Author-Workplace-Name: World Bank Author-Name: Rocha Roberto R Author-Workplace-Name: World Bank Title: Bank Competition in the Middle East and Northern Africa Region Abstract: This paper studies the extent of bank competition in the Middle East and Northern Africa (MENA) region during 1994-2008, using non-structural measures of competition such as the H-statistic and the Lerner index. Both these measures suggest that banking sector competition in MENA is lower relative to other regions and has not improved in recent years. An analysis of the determinants of competition across countries suggests that lower levels of competition in MENA are explained by a worse credit information environment and lower market contestability. Journal: Review of Middle East Economics and Finance Pages: 26-48 Volume: 6 Issue: 2 Year: 2010 Month: November DOI: 10.2202/1475-3693.1313 File-URL: https://doi.org/10.2202/1475-3693.1313 File-Format: text/html Handle: repec:bpj:rmeecf:v:6:y:2010:i:2:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Achour Maha Author-Workplace-Name: Institut Supérieur de Gestion de Tunis Author-Name: Trabelsi Abdelwahed Author-Workplace-Name: Institut Supérieur de Gestion de Tunis Title: Markov Switching and State-Space Approaches for Investigating the Link between Egyptian Inflation Level and Uncertainty Abstract: In this paper, we use the Markov switching model, the state-space model with Markov switching heteroskedasticity and the local level model with GARCH(1,1) disturbances to investigate the link between the level of Egyptian inflation and its uncertainty. We use different ways to measure inflation uncertainty. First, we consider it as the variance of unanticipated inflation. Second, we measure it as the unconditional variance of unanticipated changes in inflation. Finally, we measure it by the conditional variance modeled as GARCH effect. We find evidence of a positive effect of inflation level on inflation uncertainty for the three models. By making the distinction between the long run and the short run, we conclude that inflation has a significant positive effect on uncertainty in the short run but no effect in the long run. We state that the cost of inflation is mainly due to the association between higher inflation and higher short-run uncertainty. Reversing the causality link between inflation and its uncertainty, we find that inflation uncertainty has a positive effect on inflation level in the short run but this effect dies out in the long run, which is indicative of a stabilization monetary policy in Egypt. According to the likelihood-based information criteria (Akaike and Schwarz Bayesian criteria), the state-space model with Markov switching heteroskedasticity and the two-state Markov switching model outperform all others. Journal: Review of Middle East Economics and Finance Pages: 46-62 Volume: 6 Issue: 3 Year: 2011 Month: February DOI: 10.2202/1475-3693.1267 File-URL: https://doi.org/10.2202/1475-3693.1267 File-Format: text/html Handle: repec:bpj:rmeecf:v:6:y:2011:i:3:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Abo-Zaid Salem M Author-Workplace-Name: University of Maryland Title: The Trade-Growth Relationship in Israel Revisited: Evidence from Annual Data, 1960-2004 Abstract: The topic of trade effects on economic growth has been usually controversial. Former empirical evidence linking trade to growth in Israel has been mixed and inconclusive either. This study reexamines the role of trade in Israel by testing for cointegration and causality from both exports and imports to output and total factor productivity over the period 1960-2004. The results suggest that both output and TFP are positively long-run correlated with exports and imports. The Granger causality tests indicate positive effects of exports on both output and TFP, where imports influence output only. In addition, physical capital has also been found to be Granger-caused by imports. This may suggest that the impact of imports on output is through the accumulation of physical capital and/or improvement in TFP over time. Journal: Review of Middle East Economics and Finance Pages: 63-93 Volume: 6 Issue: 3 Year: 2011 Month: February DOI: 10.2202/1475-3693.1272 File-URL: https://doi.org/10.2202/1475-3693.1272 File-Format: text/html Handle: repec:bpj:rmeecf:v:6:y:2011:i:3:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Alhassan Abdullah Mohammed Author-Workplace-Name: International Monetary Fund Title: A Coincident Indicator of the Gulf Cooperation Council Business Cycle Abstract: This paper constructs a coincident indicator for the Gulf Cooperation Council (GCC) area business cycle. The resulting coincident indicator provides a reliable measure of the GCC business cycle over the last decade, where the GCC coincident index and the real GDP growth have moved closely together. Since the indicator is constructed using a small number of common factors, the strong correlation between the indicator and real GDP growth points to a high degree of commonality across GCC economies. The timing and direction of movements in macroeconomic variables are characterized with respect to the coincident indicator. Finally, to obtain a meaningful economic interpretation of the latent factors, their behavior is compared to the observed economic variables. Journal: Review of Middle East Economics and Finance Pages: 1-23 Volume: 6 Issue: 3 Year: 2011 Month: February DOI: 10.2202/1475-3693.1302 File-URL: https://doi.org/10.2202/1475-3693.1302 File-Format: text/html Handle: repec:bpj:rmeecf:v:6:y:2011:i:3:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Joharji Ghazi A. Author-Workplace-Name: American University Author-Name: Starr Martha A Author-Workplace-Name: American University Title: Fiscal Policy and Growth in Saudi Arabia Abstract: Whether government spending can boost the pace of economic growth is widely debated. In the neoclassical growth model, it is supplies of productive resources and productivity that determine growth in the long-run. In endogenous growth models, an increase in government spending may raise the steady-state rate of growth due to positive spillover effects on investment in physical and/or human capital. This paper examines the relationship between government spending and non-oil GDP in the case of Saudi Arabia. Using time-series methods and data for 1969-2005, we find that increases in government spending have a positive and significant long-run effect on the rate of growth. Estimated effects of current expenditure on growth turn out to exceed those of capital expenditure—suggesting that government investment in infrastructure and productive capacity has been less growth-enhancing in Saudi Arabia than programs to improve administration and operation of government entities and support purchasing power. We discuss possible reasons for this finding in the Saudi case and draw some policy implications. Journal: Review of Middle East Economics and Finance Pages: 24-45 Volume: 6 Issue: 3 Year: 2011 Month: February DOI: 10.2202/1475-3693.1305 File-URL: https://doi.org/10.2202/1475-3693.1305 File-Format: text/html Handle: repec:bpj:rmeecf:v:6:y:2011:i:3:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Witte Mark David Author-Workplace-Name: College of Charleston Title: Female Labor, Western Culture and Growth in the Gulf Cooperation Council Countries Abstract: This paper examines the determinants of the female labor force and the impact of female labor on the growth rates of six Gulf Cooperation Council (GCC) countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. Using per capita spending on imported US books to approximate for western cultural sentiment, the paper finds a positive relationship between the female percentage of total labor and per capita U.S. book expenditures. The estimates suggest that an increase in western cultural sentiment equivalent to an additional $1 per person spent on U.S. books would raise the female percentage of total labor by 1.5 percent in a given GCC country. In fact, the female percentage of total labor can account for approximately 1.6 percent of the variation in growth rates between the GCC countries over time. Moreover, a 1 percent increase in the female percentage of total labor creates GDP growth equivalent to a 2 percent increase in the international price of oil. Journal: Review of Middle East Economics and Finance Pages: 20-31 Volume: 7 Issue: 1 Year: 2011 Month: May DOI: 10.2202/1475-3693.1276 File-URL: https://doi.org/10.2202/1475-3693.1276 File-Format: text/html Handle: repec:bpj:rmeecf:v:7:y:2011:i:1:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Ghoilpour Hassan Fereidouni Author-Workplace-Name: Universiti Sains Malaysia Title: The Effect of Energy Prices on Iranian Industry Stock Returns Abstract: While previous studies have provided some evidence that energy prices have impact on stock returns across industries, to the best of our knowledge, it is surprising that no recent work is known about the Iran’s emerging stock market. However, the published daily data on Tehran’s industry stock indices since 2005 make such a study possible. Therefore, our study is considered very beneficial as it provides insights regarding information transmission and volatility estimation of oil and gas prices and Iranian industry equity returns. The purpose of this study is to examine the effect of oil and gas prices on Iranian industry stock returns. To this end, we analyze 35 Iranian industry indices for the period from January 2005 to March 2010. Based on the multifactor model and using time-series regressions, our findings indicate that oil prices are an important determinant of returns in the banks, credit and other financial institutions, basic metals, electric machinery and apparatus and refined petroleum products and nuclear fuel industries. The findings also suggest that gas price movements do not seem to play a role for Iranian industry stock returns except for motor vehicles and auto parts industry. Moreover, consistent with the capital asset pricing model (CAPM), the market portfolio is a significant pricing factor in most of the (studied) industry stock returns. The results of this study help domestic and potential foreign investors to understand the effect of energy price changes on Iranian industry stock returns in order to manage their portfolios effectively. Journal: Review of Middle East Economics and Finance Pages: 32-51 Volume: 7 Issue: 1 Year: 2011 Month: May DOI: 10.2202/1475-3693.1307 File-URL: https://doi.org/10.2202/1475-3693.1307 File-Format: text/html Handle: repec:bpj:rmeecf:v:7:y:2011:i:1:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Alanazi Ahmed Author-Workplace-Name: Griffith University Author-Name: Liu Benjamin Author-Workplace-Name: Griffith University Author-Name: Forster John Author-Workplace-Name: Griffith University Title: Saudi Arabian IPOs and Privatized Firms Profitability Abstract: A sample of 21 privatized and IPO Saudi firms has been examined in this paper. Consistent with the relative literature on privatization and IPOs, we have documented two contrasting outcomes. First, we found that Saudi State Owned Enterprises SOEs and the private joint stock companies are showing a large improvement after-IPO as compared to the pre-IPO financial performance. On the contrary, we found a financial performance deterioration among the family owned businesses or the limited liability type of firms after the IPO compared to the pre-IPO level as measured by the return on assets (ROA) and return on sales (ROS). Journal: Review of Middle East Economics and Finance Pages: 67-90 Volume: 7 Issue: 1 Year: 2011 Month: May DOI: 10.2202/1475-3693.1309 File-URL: https://doi.org/10.2202/1475-3693.1309 File-Format: text/html Handle: repec:bpj:rmeecf:v:7:y:2011:i:1:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Corneo Giacomo Author-Workplace-Name: Free University of Berlin Title: Stakeholding as a New Development Strategy for Saudi Arabia Abstract: The transition from an oil-based to a knowledge-based economy requires that the population dramatically increases its level of human capital. This paper examines ways to achieve that transition in Saudi Arabia. It argues that massive public investment in education is not sufficient since non-cognitive skills are a bottleneck in the process of building human capital. In order to strengthen those skills, a set of reforms is proposed. The core of the proposal is the introduction of a social inheritance to each Saudi citizen reaching adult age, the SSGY. Journal: Review of Middle East Economics and Finance Pages: 1-19 Volume: 7 Issue: 1 Year: 2011 Month: May DOI: 10.2202/1475-3693.1331 File-URL: https://doi.org/10.2202/1475-3693.1331 File-Format: text/html Handle: repec:bpj:rmeecf:v:7:y:2011:i:1:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Metghalchi Massoud Author-Workplace-Name: University of Houston-Victoria Author-Name: Garza-Gomez Xavier Author-Workplace-Name: University of Houston-Victoria Title: Trading Rules for the Abu Dhabi Stock Index Abstract: In this article, we investigate technical trading rules using data from the Abu Dhabi stock market. Empirical evidence shows that technical rules have predictive power and can discern recurring price patterns in the Abu Dhabi stock market, which suggests that traders can exploit this predictive power and design profitable strategies to beat the buy and hold strategy even after considering transaction costs. Journal: Review of Middle East Economics and Finance Pages: 52-66 Volume: 7 Issue: 1 Year: 2011 Month: May DOI: 10.2202/1475-3693.1342 File-URL: https://doi.org/10.2202/1475-3693.1342 File-Format: text/html Handle: repec:bpj:rmeecf:v:7:y:2011:i:1:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Moosa Imad Author-Workplace-Name: Royal Melbourne Institute of Technology Title: Risk Transfer Arrangements as a Hedging Device with Evidence from the Kuwaiti Dinar-British Pound Market Abstract: An operational hedging technique is proposed to shift some of the foreign exchange risk from the importer to the exporter when the currency of invoicing is the base currency of the exporter. This technique, which may be resorted to when financial hedging is not feasible or expensive, requires an arrangement for the conversion of cash flows at a range of exchange rates calculated as some weighted average of the rates used under a risk sharing arrangement and a currency collar. The problem of negotiating the dimensions of the arrangement when the exporter and importer have different degrees of risk tolerance can be resolved by fine tuning the weights in such a way as to eliminate the sensitivity of the base currency value of the cash flow to the value of the risk sharing threshold parameter. The theory is subsequently illustrated by using monthly observations on the exchange rate between the Kuwaiti dinar and the British pound. Journal: Review of Middle East Economics and Finance Pages: 1-18 Volume: 7 Issue: 2 Year: 2011 Month: September DOI: 10.2202/1475-3693.1247 File-URL: https://doi.org/10.2202/1475-3693.1247 File-Format: text/html Handle: repec:bpj:rmeecf:v:7:y:2011:i:2:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Shafiq M. Najeeb Author-Workplace-Name: University of Pittsburgh Title: Do School Incentives and Accountability Measures Improve Skills in the Middle East and North Africa? The Cases of Jordan and Tunisia Abstract: There is general agreement that skill-enhancing school reforms in the Middle East and North Africa (MENA) region are necessary for economic, political and social reasons. Using student-level data from Jordan and Tunisia, this study assesses the relationship between skills and the following school incentive and accountability measures: pedagogical autonomy, school competition, freedom to hire and fire teachers, publicly posting data, and parent involvement in school affairs. Quantile regression analyses of mathematics, science, and reading skills of 15-year-old students suggest that students in schools with incentive and accountability measures do not have higher skills than students in school without the measures; this suggests that schools with incentive and accountability measures are no more efficient than other schools that have not adopted the measures. In terms of equity, the reforms are not associated with higher skills for the less skilled; a notable exception is parent involvement in Tunisia, which is associated with higher science and reading skills among low-skilled students. The main policy implication is that school incentive- and accountability-based reform should not be pursued until researchers have identified the effective design properties of each incentive and accountability measure. Journal: Review of Middle East Economics and Finance Pages: 1-28 Volume: 7 Issue: 2 Year: 2011 Month: September DOI: 10.2202/1475-3693.1279 File-URL: https://doi.org/10.2202/1475-3693.1279 File-Format: text/html Handle: repec:bpj:rmeecf:v:7:y:2011:i:2:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Farooq Omar Author-Workplace-Name: Al Akhawayn University Author-Name: El Kacemi Youssef Author-Workplace-Name: Al Akhawayn University Title: Ownership Concentration, Choice of Auditors, and Firm Performance: Evidence from the MENA Region Abstract: Using a large dataset of ownership concentration from the MENA region during the period between 2004 and 2008, we document that ownership concentration does not have a significant impact on firm performance. It is, rather, the way concentrated firms govern themselves that determine their performance. We argue that concentrated ownership firms, being aware of the agency problems embedded in their ownership structure, appoint one of the big-four auditors as their external auditor to signal to the market that they are disclosing reliable information. Our results also show a significantly positive relationship between ownership concentration and the choice of auditor. We further show that for a given level of ownership concentration, appointing one of the big-four auditors leads to superior firm performance. Journal: Review of Middle East Economics and Finance Pages: 1-17 Volume: 7 Issue: 2 Year: 2011 Month: September DOI: 10.2202/1475-3693.1303 File-URL: https://doi.org/10.2202/1475-3693.1303 File-Format: text/html Handle: repec:bpj:rmeecf:v:7:y:2011:i:2:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Hammami Yacine Author-Workplace-Name: University of Tunis ISCC Bizerte Author-Name: Jilani Faouzi Author-Workplace-Name: University of Tunis ISCC Bizerte Title: Testing Factor Pricing Models in Tunisia: Macroeconomic Factors vs. Fundamental Factors Abstract: The arbitrage pricing theory and the intertemporal capital asset pricing model do not identify the risk factors that drive expected stock returns. Two approaches have emerged from the literature to fill the gap: macroeconomic models and fundamental models. A common view is that macroeconomic models have sounder economic rationale than fundamental models, but the latter fit the data better than the former. However, many papers in the U.S. have recently shown that even in empirical work, macroeconomic models perform better than fundamental models. This paper addresses this issue in the Tunisian stock market. We found no evidence that fundamental models explain average returns better than macroeconomic models in Tunisia. On the contrary, a macroeconomic model that contains as factors the term structure, private bank lending and retail sales generate the best empirical results. The empirical evidence here and in the U.S. implies that the common practice of using exclusively fundamental models in many areas of financial research is inappropriate. Macroeconomic models should be considered in the empirical asset pricing literature in addition to, or instead of, fundamental models. Journal: Review of Middle East Economics and Finance Pages: 1-22 Volume: 7 Issue: 2 Year: 2011 Month: September DOI: 10.2202/1475-3693.1334 File-URL: https://doi.org/10.2202/1475-3693.1334 File-Format: text/html Handle: repec:bpj:rmeecf:v:7:y:2011:i:2:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Stampini Marco Author-Workplace-Name: Inter-American Development Bank Author-Name: Verdier-Chouchane Audrey Author-Workplace-Name: African Development Bank Title: Labor Market Dynamics in Tunisia: The Issue of Youth Unemployment Abstract: This paper analyzes the dynamics of the youth labor market in Tunisia using unique labor force survey data from 2005 to 2007 that include a longitudinal component. We show that sustained economic growth can reduce the youth unemployment rate by 15 percentage points over the next few years. Tourism is the sector with the highest potential to create jobs for the youth. Yet, the public sector remains the main provider of employment for the graduates, in particular for women. In the face of high turnover in the private sector, young graduates appear to be willing to experience long unemployment spells as they queue for high skill jobs in the public administration. Journal: Review of Middle East Economics and Finance Pages: 1-35 Volume: 7 Issue: 2 Year: 2011 Month: September DOI: 10.2202/1475-3693.1394 File-URL: https://doi.org/10.2202/1475-3693.1394 File-Format: text/html Handle: repec:bpj:rmeecf:v:7:y:2011:i:2:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Seçkin Aylin Author-Workplace-Name: Istanbul Bilgi University Author-Name: Atukeren Erdal Author-Workplace-Name: ETH Zurich, SBS Swiss Business School, BSL Business School Lausanne, University of Applied Sciences Northwestern Switzerland (FHNW) Title: A Heckit Model of Sales Dynamics in Turkish Art Auctions: 2005-2008 Abstract: Unsold artworks are excluded from a traditional hedonic price index as no observable price can be attached to them. The question is whether the exclusion of unsold artworks lead to a sample selection bias in the traditionally constructed art price indices. In this paper, we examine the art auction sales performance in Turkey for the period between January 2005 and February 2008 using a unique database which contains 11,212 sales records including unsold items. We employ the two-stage Heckit model. Our empirical model combines demand-side influences with supply-side characteristics as well as the auction microstructure. We find that there is no sample selection bias created by unsold works. This finding also provides an explanation for why the attempts in the literature to identify which works are (not) sold turned out to be largely unsuccessful. On the behavioural side, we confirm the existence of the “afternoon effect” in both sales rates and in sales prices in Turkish art auctions. There is also some evidence for the “death effect” and “master effect” in both sales rates and sales prices. Finally, we find that the returns in the Turkish art market serve as a hedge against inflation in our sample period. Journal: Review of Middle East Economics and Finance Pages: 1-32 Volume: 7 Issue: 3 Year: 2012 Month: May DOI: 10.1515/1475-3693.1304 File-URL: https://doi.org/10.1515/1475-3693.1304 File-Format: text/html Handle: repec:bpj:rmeecf:v:7:y:2012:i:3:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Sengul Gonul Author-Workplace-Name: Central Bank of Turkey Author-Name: Üngör Murat Author-Workplace-Name: Central Bank of Turkey Title: Increasing Share of Agriculture in Employment in the Time of Crisis: Puzzle or Not? Abstract: In the first quarter of 2008, along with the beginning of the crisis, the employment share of agriculture in Turkey deviated from its long-run trend and started to rise. Both the timing and the direction of the change caused a public debate seeking an explanation of this phenomenon. Getting attention in the debate is the fact that labor productivity in agriculture has been declining since that quarter. How much of the increase in agricultural employment can be explained by the secular changes in its productivity? To answer this question, we use a multi-sector general equilibrium model in which employment share in agriculture is determined solely by the subsistence constraint and labor productivity in agriculture, where sectoral productivity growth rates are treated as exogenous. The model accounts for more than 90 percent of the decline in the agricultural employment share between 2000:Q2 and 2010:Q3. The model is also able to generate the increase in agricultural employment since 2008:Q1, although it slightly overpredicts the agricultural employment share. The model also predicts the sectoral allocations of labor in non-agricultural activities during the sample period. A detailed analysis of the driving forces of the growth in agricultural productivity is needed, since it lies at the heart of the secular changes in employment shares in Turkey. Journal: Review of Middle East Economics and Finance Pages: 1-32 Volume: 7 Issue: 3 Year: 2012 Month: May DOI: 10.1515/1475-3693.1398 File-URL: https://doi.org/10.1515/1475-3693.1398 File-Format: text/html Handle: repec:bpj:rmeecf:v:7:y:2012:i:3:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Bosco Maria Giovanna Author-Workplace-Name: Universita Bocconi Title: FDI in Turkey: An Out-Of-Sample Analysis Of Unexploited Potential Abstract: The EU’s 2004 decision to begin membership negotiations with Turkey marked the turning point in FDI (Foreign Direct Investments) flows to Turkey. The EU decision probably convinced international investors and multinational corporations that the future of Turkey lies with the EU, so that FDI inflows in 2006 and 2007 boomed. The trend slowed down in 2008 and 2009 because of the pervasive financial crisis, though the government has recently been adopting extended measures in order to attract more investments from abroad. After a brief survey of the state-of-the-art FDI potential measures for Turkey, I try to understand the main reasons for the country’s relatively laggard position and then which could have been the FDI inflows and stocks into Turkey if the country had already been an EU accession country in the recent years (referring to the 2004 and 2007 enlargement). Using an out-of-sample estimation technique in a gravity environment I find that the unexploited potential for more FDI in Turkey is indeed exceptional. Journal: Review of Middle East Economics and Finance Pages: 1-21 Volume: 7 Issue: 3 Year: 2012 Month: May DOI: 10.1515/1475-3693.1404 File-URL: https://doi.org/10.1515/1475-3693.1404 File-Format: text/html Handle: repec:bpj:rmeecf:v:7:y:2012:i:3:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Poghosyan Tigran Author-Workplace-Name: International Monetary Fund Title: Determinants of the Foreign Exchange Risk Premium in the Gulf Cooperation Council Countries Abstract: This paper analyzes macroeconomic determinants of the foreign exchange risk premium in two Gulf Cooperation Council (GCC) countries that peg their currencies to the U.S. dollar: Saudi Arabia and the United Arab Emirates. The analysis is based on the stochastic discount factor methodology, which imposes a no arbitrage condition on the relationship between the foreign exchange risk premium and its macroeconomic determinants. Estimation results suggest that U.S. inflation and consumption growth are important factors driving the risk premium, which is in line with the standard C-CAPM model. In addition, growth in international oil prices influences the risk premium, reflecting the important role played by the hydrocarbon sector in GCC economies. The methodology employed in this paper can be used for forecasting the risk premium on a monthly basis, which has important practical implications for policymakers interested in the timely monitoring of risks in the GCC. Journal: Review of Middle East Economics and Finance Pages: 1-26 Volume: 7 Issue: 3 Year: 2012 Month: May DOI: 10.1515/1475-3693.1436 File-URL: https://doi.org/10.1515/1475-3693.1436 File-Format: text/html Handle: repec:bpj:rmeecf:v:7:y:2012:i:3:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Galego Aurora Author-Workplace-Name: Universidade de Évora and CEFAGE-UE Author-Name: Caetano José Manuel Author-Workplace-Name: University of Évora and CEFAGE-UE Title: Institutional and Economic Determinants of FDI: A Comparison between the European Union and the MENA Region Abstract: FDI flows to the MENA region have been relatively low when compared to neighboring countries. This paper aims at investigating whether there are significant region-specific factors for FDI performance in MENA and EU regions. We employ a panel data approach and use the inward FDI performance index as dependent variable, including both institutional and macroeconomic variables as FDI determinants. The results reveal similar impact of the economic factors but significant differences between the two regions with regard to institutional determinants particularly investment climate, government size and trade barriers. This leads to the conclusion that more appropriate policies are needed in the MENA region in order to develop a friendly economic and institutional environment to attract foreign investors. Journal: Review of Middle East Economics and Finance Pages: 1-23 Volume: 8 Issue: 1 Year: 2012 Month: August DOI: 10.1515/1475-3693.1297 File-URL: https://doi.org/10.1515/1475-3693.1297 File-Format: text/html Handle: repec:bpj:rmeecf:v:8:y:2012:i:1:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Ghanem Darine Author-Workplace-Name: University Montpellier I /LaboratoireMontpelliérain d’Economie Théorique et Appliquée (LAMETA) Title: Fixed Exchange Rate Regimes and Inflation Performance: Evidence from MENA Countries Abstract: In this paper we study the empirical evidence on inflation performance of fixed but adjustable exchange rate regimes in MENA over the period of 1980-2007, using exchange rate regimes as declared (de jure) and as observed (de facto). We identify credible regimes by matching what is announced and what is observed. Our results suggest that, even when accounting for possible endogeneity, credible pegs were associated with lower inflation, while declared fixed exchange rates were not significantly associated with lower inflation. Moreover, there is substantial evidence that suggests that countries, who have often announced more exchange rate flexibility in order to avoid speculative attacks while maintaining a stable exchange rate, were successful in achieving low inflation. Journal: Review of Middle East Economics and Finance Pages: 1-30 Volume: 8 Issue: 1 Year: 2012 Month: August DOI: 10.1515/1475-3693.1354 File-URL: https://doi.org/10.1515/1475-3693.1354 File-Format: text/html Handle: repec:bpj:rmeecf:v:8:y:2012:i:1:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Maghyereh Aktham Issa Author-Workplace-Name: United Arab Emirates University Author-Name: Awartani Basel Author-Workplace-Name: New York Institute of Technology Title: Modeling and Forecasting Value-at-Risk in the UAE Stock Markets: The Role of Long Memory, Fat Tails and Asymmetries in Return Innovations Abstract: In this paper, we investigate the adequacy of the fractionally integrated asymmetric power model to measure value at risk in the United Arab Emirates stock exchanges. Our empirical results show that the accuracy of the model is improved when value at risk is computed using innovations modeled as skewed Student-t distribution. Including a long memory in the conditional volatility process would also improve the results. We conclude that, the modeling of asymmetry, fat tails and long memory have potentially important implications for risk assessment, and hedging strategies in the UAE stock exchanges. Journal: Review of Middle East Economics and Finance Pages: 1-22 Volume: 8 Issue: 1 Year: 2012 Month: August DOI: 10.1515/1475-3693.1402 File-URL: https://doi.org/10.1515/1475-3693.1402 File-Format: text/html Handle: repec:bpj:rmeecf:v:8:y:2012:i:1:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Mbarek Lassaâd Author-Workplace-Name: Central Bank of Tunisia and Institut des Hautes Etudes Commerciales de Carthage, Tunisia Author-Name: Mezzez Hmaied Dorra Author-Workplace-Name: Institut des Hautes Etudes Commerciales de Carthage, Tunisia Title: Stock Market Assessment of Bank Risk: Evidence from the Maghreb Region Abstract: This paper examines the ability of stock market investors to monitor bank risk for a sample of listed banks in Tunisia and Morocco over the period 2003-2009. We construct numerous market-based risk measures: market beta, idiosyncratic risk component and total volatility of bank stock returns derived from the market model as well as the distance-to-default derived from the structural model of credit risk. Using a panel data analysis, we show that market-based measures of risk are strongly associated to bank fundamental characteristics. This finding has important implications for regulators as shareholders are able to assess bank financial condition and hence exert effective discipline on bank risk-taking behavior. Journal: Review of Middle East Economics and Finance Pages: 1-26 Volume: 8 Issue: 1 Year: 2012 Month: August DOI: 10.1515/1475-3693.1469 File-URL: https://doi.org/10.1515/1475-3693.1469 File-Format: text/html Handle: repec:bpj:rmeecf:v:8:y:2012:i:1:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Squalli Jay Author-Workplace-Name: American University of Sharjah Title: Expected Returns to Education and Experience in the United Arab Emirates Abstract: This paper makes use of a sample of 30,043 mostly unemployed Emiratis and a subsample of 376 employed Emiratis drawn from the Tanmia database to estimate the expected returns to education and experience in the UAE. Overall, we find evidence of a U-shaped relationship between expected wages and education and between expected wages and experience for both males and females, suggesting that the wage expectations of unemployed male and female Emiratis may be too unrealistic and thus could explain the challenges faced in finding suitable employment. It would appear from this study that UAE policymakers face serious challenges in ridding their economy of its reliance on skilled foreign expatriates without playing an active role in linking wages to education and productivity in the public sector. Journal: Review of Middle East Economics and Finance Pages: 1-17 Volume: 8 Issue: 2 Year: 2012 Month: October DOI: 10.1515/1475-3693.1350 File-URL: https://doi.org/10.1515/1475-3693.1350 File-Format: text/html Handle: repec:bpj:rmeecf:v:8:y:2012:i:2:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Yilmazer Tansel Author-Workplace-Name: Ohio State University Author-Name: Adaman Fikret Author-Workplace-Name: Boğaziçi University Author-Name: Kaytaz Mehmet Author-Workplace-Name: Işik University Title: The Impact of Financial Development on Homeownership and Housing in Emerging Economies: Evidence from Turkey Abstract: This paper aims to investigate the role of financial development on homeownership and housing in emerging economies. We construct a measure of regional financial development using data from the Survey of Consumer Finances in Turkey. Specifically, we estimate regional effects on the probability that a household does not have access to credit (i.e., are discouraged from applying for credit or their application was denied), and use these estimates to create an indicator of financial development. We find that homeownership increases with financial development in metropolitan areas. Home values, however, increase with financial development in both metropolitan and non-metropolitan areas. Our findings are robust to correction of potential endogeneity of our financial development measure. Our results are also robust to using the variation in the supply of credit across provinces as another measure of financial development. Journal: Review of Middle East Economics and Finance Pages: 1-29 Volume: 8 Issue: 2 Year: 2012 Month: October DOI: 10.1515/1475-3693.1409 File-URL: https://doi.org/10.1515/1475-3693.1409 File-Format: text/html Handle: repec:bpj:rmeecf:v:8:y:2012:i:2:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Al-Mashat Rania Author-Workplace-Name: Central Bank of Egypt Author-Name: Billmeier Andreas Author-Workplace-Name: Ziff Brothers Investments, L.L.C. Title: Push or Pull? The Determinants of Remittances to Egypt Abstract: Egypt is the recipient of sizeable remittance flows sent by the large number of Egyptians working outside their home country. In this paper, we analyze the relationship between these remittances and other macroeconomic variables, taking into account the nonstationary character of these time series. We find that both pull and push factors familiar from the capital flow literature are cointegrated with remittances, but our data do not allow us to clearly distinguish between altruism and other competing motives among the pull factors. Journal: Review of Middle East Economics and Finance Pages: 1-27 Volume: 8 Issue: 2 Year: 2012 Month: October DOI: 10.1515/1475-3693.1429 File-URL: https://doi.org/10.1515/1475-3693.1429 File-Format: text/html Handle: repec:bpj:rmeecf:v:8:y:2012:i:2:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Pfeifer Karen Author-Workplace-Name: Smith College Title: Gulf Arab Financial Flows and Investment, 2000-2010: Promises, Process and Prospects in the MENA Region Abstract: The Gulf Arab countries were promoted as dynamic, rapidly growing and self-transforming economies in the boom years of the 2000s, and were praised for their purported leadership of the MENA regional economy. As of 2010, despite the severity of the financial crisis and recession of 2008-2009 in the Gulf and consequent impact on the rest of the region, the GCC countries were still promoted as potential leaders of both the recovery and future regional development. An examination of the evidence regarding the direction, magnitude and uses of GCC financial flows both domestically and internationally from 2000 to 2010 finds that the investment programs in place in the boom years provided outcomes that only weakly fulfilled these promises and that they barely fulfilled them at all during the economic crisis and recovery. The author’s assessment is that GCC-sourced investment since 2008 mainly addressed the Gulf region’s internal development project, although even that seemed dependent on continued high levels of hydrocarbon revenues, and did little to demonstrate the promised leadership of the regional economy by the GCC. Journal: Review of Middle East Economics and Finance Pages: 1-36 Volume: 8 Issue: 2 Year: 2012 Month: October DOI: 10.1515/1475-3693.1501 File-URL: https://doi.org/10.1515/1475-3693.1501 File-Format: text/html Handle: repec:bpj:rmeecf:v:8:y:2012:i:2:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Kasrin Zein Author-Email: zein.salem@guc.edu.eg Author-Name: Lang Guenter Author-Email: guenter: guenter.lang@guc.edu.eg Author-Workplace-Name: Department of Economics, German University in Cairo, Cairo, Egypt Title: Estimating the Beveridge Curve of Egypt: An Econometric Study for the Period 2004 to 2010 Abstract: This paper estimates the Beveridge curve of Egypt for the period from 2004 to 2010, using quarterly data for both the private sector and the public sector. Our results confirm the negative relationship between unemployment and private job offers for the Egyptian labor market. The Beveridge curve has shifted inwards during the observation period, indicating an improved matching process between labor supply and private labor demand. However, the results for the public sector are poor, showing the Beveridge curve relation cannot be used to explain the relationship between government sector vacancy rates and the unemployment rate. Journal: Review of Middle East Economics and Finance Pages: 1-16 Volume: 8 Issue: 3 Year: 2013 Month: January DOI: 10.1515/rmeef-2012-0004 File-URL: https://doi.org/10.1515/rmeef-2012-0004 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:8:y:2013:i:3:p:1-16:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Farooq Omar Author-Email: omar.farooq.awan@gmail.com Author-Name: Derrabi Mohamed Author-Email: m.derrabi@aui.ma Author-Workplace-Name: Mundiapolis University, Casablanca, Morocco Author-Name: Naciri Monir Author-Email: m.naciri@aui.ma Author-Workplace-Name: Al Akhawayn University, Ifrane, Morocco Title: Corporate Governance and Liquidity: Pre- and Post-Crisis Analysis from the MENA Region Abstract: This paper examines the impact of corporate governance mechanisms on liquidity in the MENA region, i.e. Morocco, Egypt, Saudi Arabia, United Arab Emirates, Jordan, Kuwait, and Bahrain. Using turnover as a proxy for liquidity, we document significant difference in liquidity between the pre- and the post-crisis periods in the MENA region. In addition, our results show that bulk of this reduction in turnover can be explained due to weaknesses of corporate governance mechanisms. For example, that dividend payout ratio and choice of auditors – proxies for agency problems – can explain the entire difference in liquidity between the two periods. Furthermore, our results indicate that more than 50% of this difference between the two periods can be explained by operational and informational complexity of a firm – proxy for transparency. We argue that poor corporate governance mechanisms increase information asymmetries between insiders and outsiders. Outsiders, being liquidity providers, therefore do not trade in stocks for which they have no information. Therefore, firms with poor governance mechanisms usually experience higher decline in liquidity during periods of market-wide uncertainty. Journal: Review of Middle East Economics and Finance Pages: 1-19 Volume: 8 Issue: 3 Year: 2013 Month: January DOI: 10.1515/rmeef-2012-0006 File-URL: https://doi.org/10.1515/rmeef-2012-0006 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:8:y:2013:i:3:p:1-19:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Bassil Charbel Author-Email: cbassil@ndu.edu.lb Title: Intervention Model for Analyzing the Lebanese Tourism Sector Abstract: This paper investigates changes in the number of tourists who visited Lebanon between 1995 and 2010 and its consequences on the economy. We consider different seasonal autoregressive integrated moving average intervention models in which the interventions take the form of a permanent shock, a temporary shock, or a gradual changing shock. The intervention dates are endogenously determined using Lumsdaine–Papell unit root test with two breaks. Using monthly data from January 1995 to December 2010, we find strong evidence in favor of a stationary process with two structural breaks. The two breaks identified correspond to November 1997 and January 2007, respectively. We also find that the first break is temporary while the second is gradually changing. The number of tourists dropped by 55% in November 1997 which costs the tourism sector a minimum loss of around 19 billion Lebanese Pound. After January 2007, the number of tourists has increased gradually by 0.7%. Journal: Review of Middle East Economics and Finance Pages: 1-15 Volume: 8 Issue: 3 Year: 2013 Month: January DOI: 10.1515/rmeef-2012-0022 File-URL: https://doi.org/10.1515/rmeef-2012-0022 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:8:y:2013:i:3:p:1-15:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Nagac Kadir Author-Email: zein.salem@guc.edu.eg Title: Effect of Tax Administration Reform and Audits on Tax Evasion in Turkey Abstract: In recent years, many developing countries have carried out reforms in their tax administration to increase their effciency in collecting taxes. In 2005, the tax authority in Turkey established Tax Offce Directorates (TODs) in 29 provinces for the purpose of controlling the underground economy, improving taxpayer assistance, and increasing auditing effciency. By using the panel data on province-level tax returns, my analysis answers two questions. First, I examine the effect of audits on reported income and reported tax liability. By controlling for the detectability of evasion and other socioeconomic variables, I find that audits have the same effectiveness in increasing reported income and reported tax liability. Second, I investigate the effect of establishing TODs in 29 provinces on compliance in those provinces. I find that establishing TODs had no significant effect on the compliance level of existing taxpayers while it increased the number of tax returns significantly. Journal: Review of Middle East Economics and Finance Pages: 1-23 Volume: 8 Issue: 3 Year: 2013 Month: January DOI: 10.1515/rmeef-2012-0046 File-URL: https://doi.org/10.1515/rmeef-2012-0046 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:8:y:2013:i:3:p:1-23:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Ghosh Saibal Author-Email: saibalghosh@rbi.org.in Author-Workplace-Name: Reserve Bank of India, Central Office, Fort, Mumbai 400001 India Title: Funding Structure, Procyclicality and Lending: Evidence from GCC Banks Abstract: The article examines whether banks’ funding structure amplifies procyclicality. Using data for GCC banks for the period 1996–2009, the evidence suggests that banks with higher wholesale dependence cut back lending by a greater amount. In addition, the procyclicality of the financial system and the crisis exacerbates the effect, although the results differ across bank ownership. Robustness checks lend credence to these findings. Journal: Review of Middle East Economics and Finance Pages: 241-270 Volume: 9 Issue: 2 Year: 2013 Month: August DOI: 10.1515/rmeef-2012-0007 File-URL: https://doi.org/10.1515/rmeef-2012-0007 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:9:y:2013:i:2:p:241-270:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Mohaddes Kamiar Author-Email: km418@cam.ac.uk Author-Workplace-Name: Faculty of Economics and Girton College, University of Cambridge, Cambridge, UK Author-Name: Raissi Mehdi Author-Email: mraissi@imf.org Author-Workplace-Name: International Monetary Fund, Washington, DC, USA Title: Oil Prices, External Income, and Growth: Lessons from Jordan Abstract: This article extends the long-run growth model of Esfahani, Mohaddes, and Pesaran (Journal of Applied Econometrics, 2012a, forthcoming) to a labor-exporting country that receives large inflows of external income – the sum of remittances, foreign direct investment, and general government transfers – from major oil-exporting economies. The theoretical model predicts real oil prices to be one of the main long-run drivers of real output. Using quarterly data between 1979 and 2009 on core macroeconomic variables for Jordan and a number of key foreign variables, we identify two long-run relationships: an output equation as predicted by theory and an equation linking foreign and domestic inflation rates. It is shown that real output in the long run is shaped by (i) oil prices through their impact on external income and in turn on capital accumulation and (ii) technological transfers through foreign output. The empirical analysis of the article confirms the hypothesis that a large share of Jordan’s output volatility can be associated with fluctuations in net income received from abroad (arising from oil price shocks). External factors, however, cannot be relied upon to provide similar growth stimuli in the future, and, therefore, it will be important to diversify the sources of growth in order to achieve a high and sustained level of income. Journal: Review of Middle East Economics and Finance Pages: 99-131 Volume: 9 Issue: 2 Year: 2013 Month: August DOI: 10.1515/rmeef-2012-0011 File-URL: https://doi.org/10.1515/rmeef-2012-0011 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:9:y:2013:i:2:p:99-131:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Farazi Subika Author-Email: sfarazi@worldbank.org Author-Name: Feyen Erik Author-Email: efeijen@worldbank.org Author-Name: Rocha Roberto Author-Email: rrocha@worldbank.org Author-Workplace-Name: World Bank, Washington, DC, USA Title: Bank Ownership and Performance in the Middle East and North Africa Region Abstract: Although both domestic and foreign private banks have gained ground in Middle East and North Africa (MENA) in recent years, state banks continue to play an important role in many countries. Using a MENA bank-level panel dataset for the period 2001–2008, the article contributes to the empirical literature on bank ownership and performance by documenting recent ownership trends and assessing the relations between bank ownership and performance in MENA while accounting for key bank characteristics such as size and balance sheet composition. The article is the first to analyze headline performance indicators as well as their key drivers and finds that state banks exhibit significantly weaker performance, despite their larger size and potential scale economies. This result is mainly driven by larger holdings of government securities, higher costs due to larger staffing, and larger loan-loss provisions reflecting weaker asset quality. These results seem to reflect both operational inefficiencies and policy mandates. Taken together, the results do not reject the development role of state banks, but show that their policy interventions come at a cost. As such, the article argues that there is scope to reduce the share of state banks in some MENA countries and to clarify the mandates, improve the governance, and strengthen the operational efficiency of most state banks in the region. Journal: Review of Middle East Economics and Finance Pages: 159-196 Volume: 9 Issue: 2 Year: 2013 Month: August DOI: 10.1515/rmeef-2012-0025 File-URL: https://doi.org/10.1515/rmeef-2012-0025 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:9:y:2013:i:2:p:159-196:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Bjorvatn Kjetil Author-Email: kjetil.bjorvatn@nhh.no Author-Workplace-Name: NHH Norwegian School of Economics, Bergen, Norway Author-Name: Farzanegan Mohammad Reza Author-Email: farzanegan@uni-marburg.de Author-Workplace-Name: Department of the Middle East Economics, Philipps-University of Marburg, Center for Near and Middle Eastern Studies (CNMS), MACIE & CESifo, Marburg, Germany Author-Name: Schneider Friedrich Author-Email: friedrich.schneider@jku.at Author-Workplace-Name: Department of Economics, University of Linz, Linz, Austria Title: Resource Curse and Power Balance: Evidence from Iran Abstract: Empirical research shows that natural resources have a detrimental effect on economic growth, a phenomenon known as the “resource curse”. Competition between influence groups for access to the resource rents, that is, rent-seeking, is often blamed for this curse. In this article, we dig deeper into the link between political competition and the resource curse by studying the case of Iran from 1960 to 2007. We present a theoretical model demonstrating how the effect of rents on the economy depends on the balance of political power. The model shows that an increase in rents may lead to a sharp reduction in income when the distribution of power between influence groups is relatively balanced. The empirical evidence confirms the predictions of the model. Journal: Review of Middle East Economics and Finance Pages: 133-158 Volume: 9 Issue: 2 Year: 2013 Month: August DOI: 10.1515/rmeef-2012-0029 File-URL: https://doi.org/10.1515/rmeef-2012-0029 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:9:y:2013:i:2:p:133-158:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Couppey-Soubeyran Jézabel Author-Email: couppey@univ-paris1.fr Author-Workplace-Name: University of Paris 1, Centre d’Economie de la Sorbonne, Paris Author-Name: Héricourt Jérôme Author-Email: jerome.hericourt@univ-lille1.fr Author-Workplace-Name: EQUIPPE-Universités de Lille, Lille, Centre d’Economie de la Sorbonne – Université de Paris 1 and CEPII, Paris, France Title: The Impact of Financial Development on the Relationship between Trade Credit, Bank Credit, and Firm Characteristics: A Study on Firm-Level Data from Six MENA Countries Abstract: Using a database of more than 1,300 firms from six countries in the MENA region, we study the impact of financial development on the relationship between trade credit on the one hand and bank credit access and firm-level characteristics, especially financial health, on the other hand. Trade credit use increases with the difficulty for gaining access to bank credit, and indicators of the quality of the firm’s financial structure negatively influence the use of trade credit. Additional investigations tend to suggest that increased financial development significantly reduces the substitution relationship between trade credit and bank credit and more generally decreases the influence of most firm-level determinants for trade credit usage. These results are plausibly explained by a demand-driven story: when bank credit access gets increasingly difficult, or when financial health deteriorates, the demand for trade credit increases. Similarly, when financial development increases, firms have better access to bank credit, and impact of this variable (or financial health proxies) on the demand for trade credit becomes less or not significant. Journal: Review of Middle East Economics and Finance Pages: 197-239 Volume: 9 Issue: 2 Year: 2013 Month: August DOI: 10.1515/rmeef-2012-0048 File-URL: https://doi.org/10.1515/rmeef-2012-0048 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:9:y:2013:i:2:p:197-239:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Raboy David G. Author-Email: draboy@pattonboggs.com Author-Workplace-Name: Chief Economic Consultant, Patton Boggs LLP, Washington, DC, USA Author-Name: Basher Syed Abul Author-Email: syed.basher@gmail.com Author-Workplace-Name: Department of Research and Monetary Policy, Qatar Central Bank, Doha, Qatar Author-Name: Hossain Ishrat Author-Email: ishrat@qu.edu.qa Author-Name: Kaitibie Simeon Author-Email: kaitibie@qu.edu.qa Author-Workplace-Name: Department of Finance and Economics, College of Business and Economics, Qatar University, Doha, Qatar; Qatar National Food Security Programme, Doha, Qatar Title: More Efficient Production Subsidies for Emerging Agriculture in Arab Micro-States: A Conceptual Model Abstract: Import-dependent arid Arab micro-states such as those in the Persian Gulf are particularly vulnerable to food-security risk. Among the many remedial policy suggestions, some initiation or increase in domestic production is to insulate these countries from supply disruption, import price volatility, and high import prices. This article does not address the efficacy of domestic production but notes that such production will require government intervention in the form of production subsidies to mitigate market risk. The narrow focus of this article is to provide a conceptual structure of subsidies that avoids many previous problems in established subsidy systems. The model has two components: a calculation of the true economic cost of a unit of an agricultural product and a deficit payment that is calculated to bridge the gap between true economic cost and market remuneration. The structure of the deficit payment is crucial to the establishment of a beneficial incentive system but the article is limited to a few of many possible options. The deficit-payment option we suggest makes the most use of market signals, avoids perverse incentives, and provides a structure to encourage efficiency, quality enhancement, and product differentiation in agricultural products. The system is designed to be WTO compliant. A detailed numerical example is used for the economic price and simple analytics, and numeric examples are used to illustrate the incentive effects of deficit payments. Journal: Review of Middle East Economics and Finance Pages: 293-319 Volume: 9 Issue: 3 Year: 2013 Month: December DOI: 10.1515/rmeef-2012-0015 File-URL: https://doi.org/10.1515/rmeef-2012-0015 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:9:y:2013:i:3:p:293-319:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Razzak Weshah A. Author-Email: razzakw@gmail.com Author-Name: Bentour El M. Author-Workplace-Name: Arab Planning Institute, Kuwait City, Kuwait Title: Do Developing Countries Benefit from Foreign Direct Investments? An Analysis of Some Arab and Asian Countries Abstract: In addition to the widely-believed positive effects on growth, employment, and wages, foreign direct investments (FDI) are often perceived as sources of funds for development. Developing countries, especially low income and emerging economies, welcome FDIs because of their favorable budgetary implications. All of this resulted in increasing global FDIs. We discuss some specification and estimation problems that might affect the estimation of the rate of returns on FDI, and provide new figures for a number of FDI-receiving Arab countries. We compare the results to those of some Asian countries, and discuss the policy implications. There is evidence that Arab countries have, relatively, benefited from their efforts to open their economies, to reform their institutions and to attract FDIs. Journal: Review of Middle East Economics and Finance Pages: 357-388 Volume: 9 Issue: 3 Year: 2013 Month: December DOI: 10.1515/rmeef-2012-0031 File-URL: https://doi.org/10.1515/rmeef-2012-0031 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:9:y:2013:i:3:p:357-388:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Ben Salha Ousama Author-Email: oussama.bensalha@isgs.rnu.tn Author-Workplace-Name: National Engineering School of Gabes, University of Gabes, Gabes, Tunisia; International Finance Group-Tunisia, University of Tunis El Manar, ElManar, Tunisia Title: Economic Globalization, Wages and Wage Inequality in Tunisia: An ARDL Bounds Testing Approach Abstract: This article conducts an empirical investigation on the impact of economic globalization, that is, international trade and foreign direct investment (FDI), on the level and structure of real wages in Tunisia. In a first step, we look at the effects of economic globalization on the average real wage in the whole economy. Then, the same relationships are checked in manufacturing industries. In a second step, we assess the impacts of international trade and FDI on the evolution of wage inequality. To do this, the recently developed autoregressive distributed lag bounds testing approach to cointegration is conducted on annual data covering the period 1970–2009. This approach allows simultaneously investigating the long-run relationships as well as the short-run dynamic adjustments toward the equilibrium. Based on the econometric analysis, three main findings have been put forward. First, international trade positively affects the economy-wide average wage only in the long-run. On the contrary, FDI flows exert no effects. The second finding is that international trade and FDI positively affect only the most exporting industry in the country, that is, the textiles, clothing and leather industry. Finally, our results do not give support to the predictions of the Heckscher–Ohlin and Stolper–Samuelson theorem, since wefound weak empirical evidence that economic globalization reduces wage inequality between skilled and unskilled workers. Journal: Review of Middle East Economics and Finance Pages: 321-356 Volume: 9 Issue: 3 Year: 2013 Month: December DOI: 10.1515/rmeef-2012-0037 File-URL: https://doi.org/10.1515/rmeef-2012-0037 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:9:y:2013:i:3:p:321-356:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Hayo Bernd Author-Email: hayo@wiwi.uni-marburg.de Author-Name: Caris Tobias Author-Email: tobias.caris@gmail.com Author-Workplace-Name: Philipps-University Marburg, Universitaetsstr. 24, 35037 Marburg, Germany Title: Female Labour Force Participation in the MENA Region: The Role of Identity Abstract: We investigate why female labour market participation is low in the MENA region. Utilising Akerlof and Kranton’s (2000) “identity economics” approach, we show in a simple game-theoretic framework that women socialised in a traditional family environment violate their identities by taking a job. In the empirical analysis, we study the respective impact of two determinants of identity in the MENA region, Islam and cultural tradition. Employing two waves of the World Values Survey, we find significant evidence that identity affects female labour market participation. Moreover, our estimates suggest that in the MENA region, Muslim women do not participate in the labour market less than non-Muslim women, whereas those with strong traditional identities have a 5 percentage point lower probability of entering the labour market. Journal: Review of Middle East Economics and Finance Pages: 271-292 Volume: 9 Issue: 3 Year: 2013 Month: December DOI: 10.1515/rmeef-2013-0021 File-URL: https://doi.org/10.1515/rmeef-2013-0021 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:9:y:2013:i:3:p:271-292:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Zeitun Rami Author-Email: rami.zeitun@qu.edu.qa Author-Workplace-Name: Department of Finance and Economics, Qatar University, Doha, Qatar Title: Corporate Governance, Capital Structure and Corporate Performance: Evidence from GCC Countries Abstract: This study investigates the effect of ownership structure and concentration on firm performance for 203 companies from five GCC countries (Qatar, Kuwait, Saudi Arabia, Bahrain and Oman), using a panel data analysis for the period 2000–2010. The study further examines the effects of financial leverage and risk. Our results indicate that ownership structure affects firm performance in GCC countries. Government ownership affects firm performance ROA while foreign and institutional ownership are found not to be significant. The results also show that ownership concentration affects firm performance positively and significantly. A firm’s capital structure has no effect on performance. Furthermore, the study concludes that age and size have a positive and significant impact on corporate performance. Journal: Review of Middle East Economics and Finance Pages: 22 Volume: 10 Issue: 1 Year: 2014 Month: April DOI: 10.1515/rmeef-2012-0028 File-URL: https://doi.org/10.1515/rmeef-2012-0028 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:10:y:2014:i:1:p:22:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Emara Noha M. F. Author-Email: nemara@camden.rutgers.edu Author-Workplace-Name: Department of Economics, Rutgers University, 311 Armitage Hall N. 5th Street, Camden, NJ 08102, USA Title: Effect of Income Elasticity on MDG Health Indicators: The Case of MENA Countries Abstract: The health target is still considered one of the most challenging goals for most Middle East and North African (MENA) Countries. Using Panel Least Square with Regional Dummies (LSDV) for 20 MENA countries over the period 2000–2009, the study concludes that with less than 5 years for the Millennium Development Goals (MDGs) to be concluded, a significant acceleration in economic growth is required for the MENA countries to achieve their goals on reducing the under-five infant mortality rates (UFMR) and the maternal mortality rates (MMR) if these countries depended solely on economic growth. As a policy implication, MENA governments need to concentrate on developing and improving many areas including social and physical infrastructure as well as legal and financial institutions. Journal: Review of Middle East Economics and Finance Pages: 21 Volume: 10 Issue: 1 Year: 2014 Month: April DOI: 10.1515/rmeef-2012-0038 File-URL: https://doi.org/10.1515/rmeef-2012-0038 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:10:y:2014:i:1:p:21:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Brixiova Zuzana Author-Email: z.brixiova@afdb.org Author-Workplace-Name: African Development Bank, Tunis, Tunisia Author-Name: Egert Balazs Author-Email: balazs.egert@oecd.org Author-Workplace-Name: OECD, EconomiX at the University of Paris X-Nanterre; CESifo and William Davidson Institute at the University of Michigan Author-Name: Essid Thouraya Hadj Amor Author-Email: thourayaha@yahoo.fr Author-Workplace-Name: Department of Economics, Monastir University, Monastir, Tunisia Title: The Real Exchange Rate and External Competitiveness in Egypt, Morocco and Tunisia Abstract: Egypt, Morocco and Tunisia face challenges competing on the global markets, as shown by their relatively low and stagnant export shares. The limited export competitiveness has hampered external demand, growth and employment. Applying, for the first time to North Africa, the stock-flow approach to the real equilibrium exchange rate, this paper evaluates the countries’ real exchange rate misalignments in the past three decades. While Egypt experienced periods of substantial misalignment, the exchange rates in Morocco and Tunisia have broadly reflected the underlying fundamentals. In all three countries, structural factors are key to boosting exports, alongside avoiding sizeable future misalignments. Intra-regional trade – with both North Africa and the rest of the continent – together with greater orientation to fast growing emerging markets could also raise countries’ external competitiveness. Journal: Review of Middle East Economics and Finance Pages: 27 Volume: 10 Issue: 1 Year: 2014 Month: April DOI: 10.1515/rmeef-2013-0014 File-URL: https://doi.org/10.1515/rmeef-2013-0014 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:10:y:2014:i:1:p:27:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Imam Patrick Amir Author-Email: pimam@imf.org Author-Workplace-Name: Monetary and Capital Markets, International Monetary Fund, 700, 19th Street, NW, Washington, DC 20431, USA Author-Name: Jacobs Davina Author-Email: djacobs@imf.org Author-Workplace-Name: Department of Fiscal Affairs, International Monetary Fund, Washington, DC, USA Title: Effect of Corruption on Tax Revenues in the Middle East Abstract: This study estimates the impact of corruption on the revenue-generating capacity of different tax categories in the Middle East. This is done over a period preceding the Global Crisis and the Arab Spring, to avoid any biases brought about by these two far reaching events. We find that the low revenue collection as a share of GDP in the Middle East, compared to other middle-income regions is due in part to corruption, with certain taxes more affected than others. Taxes that require frequent interaction between the tax authority and individuals, such as taxes on international trade, seem to be more affected by corruption than most other types of taxation. This suggests that once political stability returns to the region, if governments need to raise more tax revenues in a way that minimizes distortions and maximizes social welfare, they should implement reforms that either reduce corruption or raise revenues from tax categories that are less susceptible to corruption. Possible reforms of the revenue system and administration are examined. Journal: Review of Middle East Economics and Finance Pages: 24 Volume: 10 Issue: 1 Year: 2014 Month: April DOI: 10.1515/rmeef-2014-0001 File-URL: https://doi.org/10.1515/rmeef-2014-0001 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:10:y:2014:i:1:p:24:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Grigorian David Author-Email: dgrigorian@imf.org Author-Workplace-Name: IMF – MCM, 700 19th Street NW, Washington, DC 20431, USA Author-Name: Kock Udo Author-Email: ukock@imf.org Author-Workplace-Name: IMF – MCD, 700 19th Street NW, Washington, DC 20431, USA Title: Inflation and Conflict in Iraq: The Economics of Shortages Revisited Abstract: Containing inflation has turned out to be one of the most challenging aspects of economic management in Iraq since the invasion in 2003. This paper posits that conventional as well as unconventional factors explain inflation dynamics in the recent past. We build a theoretical model based on the insights into the workings of socialist economies under supply shortages in Shleifer and Vishny model to help explain price dynamics. In the model, strategic behavior of the distribution monopolist results in fuel shortages, with implications for fuel and non-fuel inflation. A number of discrete adjustments of administered prices for fuel products since December 2005 offer an interesting experiment to help study this behavior using the Shleifer–Vishny model. Our estimates confirm presence of strategic behavior in price fuel price setting and show that inflation was influenced by shortages in fuel supplies and by violence. Journal: Review of Middle East Economics and Finance Pages: 22 Volume: 10 Issue: 2 Year: 2014 Month: August DOI: 10.1515/rmeef-2013-0039 File-URL: https://doi.org/10.1515/rmeef-2013-0039 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:10:y:2014:i:2:p:22:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Adnan Wifag Author-Email: z9578@zu.ac.ae Author-Workplace-Name: Assistant Professor of Economics, College of Business, Zayed University, Apt 202 Spark Building Al Falah Street, Abu Dhabi, UAE Title: Examining Industry Wage Differentials in the Palestinian Territories Abstract: It has been widely documented that there is a high level of inter-industry wage dispersion in the United States and several other developed countries. Unfortunately, due to the lack of data availability, industry wage differentials in developing countries have been examined in only a few studies and have been constrained by data limitations. Identifying the causes of industry wage differentials is crucial because it has policy implications toward mitigating wage inequality and unemployment. In this paper, I investigate industry wage differentials in the Palestinian territories – the West Bank and the Gaza Strip – using a rich dataset that allows cross-sectional and longitudinal analyses. I find that observed labor quality, unobserved labor quality, and labor market segmentation along the public and private sector represent the most suitable explanations for inter-industry wage dispersion in the Palestinian territories. Additionally, there is (limited) evidence of a shirking model especially in Gaza. Journal: Review of Middle East Economics and Finance Pages: 28 Volume: 10 Issue: 2 Year: 2014 Month: August DOI: 10.1515/rmeef-2013-0046 File-URL: https://doi.org/10.1515/rmeef-2013-0046 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:10:y:2014:i:2:p:28:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Kaehler Juergen Author-Email: juergen.kaehler@fau.de Author-Name: Weber Christoph S. Author-Email: christoph.weber@fau.de Author-Workplace-Name: Institute of Economics, University of Erlangen-Nuremberg, Kochstr. 4 (17), Erlangen, Bavaria D-91054, Germany Author-Name: Aref Haider Salahal-Din Author-Email: arefhaider@yahoo.com Author-Workplace-Name: Nawroz University, College of Administration & Economics, Duhok-Kurdistan Region, Iraq Title: The Iraqi Stock Market: Development and Determinants Abstract: The Iraqi stock market is a young and nascent market that began its operation in June 2004. This paper explains the development of the Iraq stock exchange (ISX). It is shown that some progress was achieved in its development but the market is still very small with less than 100 companies listed. Moreover, the determinants of the Iraqi stock market index are described. It is found that the ISX index is mainly driven by exchange rates, interest rates, the overall security situation as measured by an index for civilian deaths from violence, electricity as a proxy for economic activity, and the price index. Finally, this paper shows that the market still lacks efficiency. While the lack of efficiency is no surprise shortly after the opening of a market, it is noteworthy that the market is still inefficient after the introduction of electronic trading and an increase in liquidity. Journal: Review of Middle East Economics and Finance Pages: 25 Volume: 10 Issue: 2 Year: 2014 Month: August DOI: 10.1515/rmeef-2013-0053 File-URL: https://doi.org/10.1515/rmeef-2013-0053 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:10:y:2014:i:2:p:25:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Demirguc-Kunt Asli Author-Email: ademirguckunt@worldbank.org Author-Name: Klapper Leora Author-Email: lklapper@worldbank.org Author-Workplace-Name: Development Research Group, World Bank, Washington, DC, USA Author-Name: Randall Douglas Author-Email: drandall@worldbank.org Author-Workplace-Name: Finance & Markets Global Practice, World Bank, Washington, DC, USA Title: Islamic Finance and Financial Inclusion: Measuring Use of and Demand for Formal Financial Services among Muslim Adults Abstract: In recent years, the Islamic finance industry has attracted the attention of policymakers and international donors as a possible channel through which to expand financial inclusion, particularly among Muslim adults. Yet cross-country, demand-side data on actual usage and preference gaps in financial services between Muslims and non-Muslims have been scarce. This paper uses novel data to explore the use of and demand for formal financial services among self-identified Muslim adults. In a sample of more than 65,000 adults from 64 economies (excluding countries where less than 1% or more than 99% of the sample self-identified as Muslim), the analysis finds that Muslims are significantly less likely than non-Muslims to own a formal account or save at a formal financial institution after controlling for other individual- and country-level characteristics. But the analysis finds no evidence that Muslims are less likely than non-Muslims to report formal or informal borrowing. Finally, in an extended survey of adults in five North African and Middle Eastern countries with relatively nascent Islamic finance industries, the study finds little use of Sharia-compliant banking products, although it does find evidence of a hypothetical preference for Sharia-compliant products among a plurality of respondents despite higher costs. Journal: Review of Middle East Economics and Finance Pages: 42 Volume: 10 Issue: 2 Year: 2014 Month: August DOI: 10.1515/rmeef-2013-0062 File-URL: https://doi.org/10.1515/rmeef-2013-0062 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:10:y:2014:i:2:p:42:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Emara Noha M.F. Author-Email: noha.emara@rutgers.edu Author-Workplace-Name: Rutgers University – Camden, 311 N. Fifth St, Camden, NJ 08102, USA Title: Income Elasticity and the Gender Gap: A Challenging MDG for the MENA Countries Abstract: The gender equality target is still considered one of the most challenging goals for most Middle East and North African (MENA) Countries. Using panel least square with regional dummies (LSDV) for 22 MENA countries over the period 1990–2007, the study concludes that with less than 5 years for the Millennium Development Goals (MDGs) to be concluded, a significant acceleration in economic growth is required for the MENA countries to achieve the gender goal if these countries depended solely on economic growth. As a policy implication, the increase in economic growth in the MENA countries needs to be complemented with other factors boosting the achievability of the gender equality such as the government spending on education, infrastructure, and encouragement of international trade. All three factors proved to have a statistical significant and important impact on closing the gender gap. Journal: Review of Middle East Economics and Finance Pages: 29 Volume: 10 Issue: 3 Year: 2014 Month: December DOI: 10.1515/rmeef-2012-0034 File-URL: https://doi.org/10.1515/rmeef-2012-0034 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:10:y:2014:i:3:p:29:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Samman Hatem Author-Email: hatem.samman@gmail.com Author-Workplace-Name: Saudi Arabian General Investment Authority, P.O. Box 5927, Riyadh 11432, Saudi Arabia Author-Name: Shahnawaz Sheikh Author-Email: sshahnawaz@csuchico.edu Author-Workplace-Name: Economics Department, California State University, Chico, CA 95929, USA Title: Financial Services and the GATS in the GCC: Problems and Prospects Abstract: One objective of the General Agreement on Trade in Services (GATS) of the World Trade Organization is to achieve financial services liberalization in member countries. We assess the implications of such liberalization commitments in the banking sectors of the Gulf Cooperation Council (GCC) countries. After providing an overview of the GCC banking sector, we discuss the GATS provisions relevant to financial services. Liberalization commitments and exemptions of these countries under the agreement are also presented. Using the observation that spikes in oil prices are accompanied with expansion in credit availability, we develop a simple model to formally explore the consequences of opening up the banking sector. Our analysis considers the possible policy impact on the domestic banking industry as well as a non-tradable sector that is driven by local entrepreneurship. Our investigation suggests that while high oil prices facilitate credit availability, they also enable governments to more easily and better subsidize employment in the public sector. This more attractive outside option then serves as a deterrent to risk-taking entrepreneurs which could stunt the growth of the non-tradable sector. A liberalized banking sector could mitigate this outcome as well as other institutional inefficiencies in lending, but also brings with it the vulnerability to global financial crises. Journal: Review of Middle East Economics and Finance Pages: 24 Volume: 10 Issue: 3 Year: 2014 Month: December DOI: 10.1515/rmeef-2013-0050 File-URL: https://doi.org/10.1515/rmeef-2013-0050 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:10:y:2014:i:3:p:24:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Bargawi Hannah Author-Email: hb19@soas.ac.uk Author-Workplace-Name: Department of Economics, SOAS, University of London, London WC1H 0XG, UK Title: Economic Policies, Structural Change and the Roots of the “Arab Spring” in Egypt Abstract: This paper analyses the economic challenges facing Egypt in the post-Mubarak period, demonstrating the ways in which economic policy choices over the 2000s have contributed to the economic and social outcomes witnessed in the run up to the 2011 uprisings. The article investigates three specific policy areas and demonstrates their role in reducing employment opportunities, eroding wages and facilitating the creation of an increasingly unequal economic and social structure in Egypt. The three policy areas addressed by the article are (i) the general misplaced fiscal focus on expenditure-reduction rather than revenue-enhancement and the lack of progressive revenue growth; (ii) the manipulation and use of subsidies in Egypt to appease the populous instead of fostering employment generation; (iii) the failure to adequately promote employment-intensive investment. Journal: Review of Middle East Economics and Finance Pages: 28 Volume: 10 Issue: 3 Year: 2014 Month: December DOI: 10.1515/rmeef-2014-0034 File-URL: https://doi.org/10.1515/rmeef-2014-0034 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:10:y:2014:i:3:p:28:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Yeldan A. Erinc Author-Email: yeldane@bilkent.edu.tr Author-Workplace-Name: Department of Economics, Bilkent University, Ankara 06800, Turkey Author-Name: Kolsuz Gunes Author-Email: gunes.kolsuz@bilkent.edu.tr Author-Workplace-Name: Department of Political Science, Bilkent University, Ankara, Turkey Author-Name: Unuvar Burcu Author-Email: burcu.unuvar@yasar.edu.tr Author-Workplace-Name: Department of Economics, Yasar University, İzmir, Turkey Title: What to Smooth: Rate of Interest or the Foreign Exchange? Turkish Monetary Policy under Turbulent Times Abstract: This paper studies the new monetary stance of the Central Bank of Republic of Turkey (CBRT) during the Great Recession. We note that characteristics of the post-1997 “Great Moderation” revealed interest rate smoothing as a valid policy option for the inflation targeting central banks. Utilizing econometric analysis on a general form of a Taylor Rule, we search for the relative weights of the objective function of the CBRT over Jan 2010–Dec 2013. We find that over the Great Recession, the CBRT’s focus on “interest smoothing” had been maintained; and yet the burden of adjustment fell disproportionately on the foreign exchange markets. Furthermore, weak credibility of the CBRT, lack of a simple policy rule, and noisy policy communications evidence that pre-requisites of the interest rate smoothing are not being fulfilled. Inevitable sharp policy corrections that follow smoothing periods proved insufficient against the voluminous global flows. Journal: Review of Middle East Economics and Finance Pages: 15 Volume: 10 Issue: 3 Year: 2014 Month: December DOI: 10.1515/rmeef-2014-0036 File-URL: https://doi.org/10.1515/rmeef-2014-0036 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:10:y:2014:i:3:p:15:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Hecan Mehmet Author-Email: mehmet.hecan@usak.org.tr Author-Workplace-Name: Center for Middle Eastern and African Studies, USAK, Ankara, Turkey Title: Alessandro Romagnoli and Luisa Mengoni: The Economic Development Process in the Middle East and North Africa Journal: Review of Middle East Economics and Finance Pages: 5 Volume: 10 Issue: 3 Year: 2014 Month: December DOI: 10.1515/rmeef-2014-0044 File-URL: https://doi.org/10.1515/rmeef-2014-0044 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:10:y:2014:i:3:p:5:n:5 Template-Type: ReDIF-Article 1.0 Author-Name: Farooq Omar Author-Email: omar.farooq.awan@gmail.com Author-Workplace-Name: Department of Management, American University in Cairo, Cairo 11835, Egypt Author-Name: Tabine Sonia Author-Email: s.tabine@aui.ma Author-Workplace-Name: School of Business Administration, Al Akhawayn University in Ifrane, Hassan II Avenue, Ifrane 53000, Morocco Title: Agency Problems and the Choice of Auditors: Evidence from the MENA Region Abstract: What determines the choice of auditors in the MENA region? This paper uses the data from Morocco, Egypt, Saudi Arabia, United Arab Emirates, Jordan, Kuwait and Bahrain and shows that the extent of agency problems in a firm dictates what sort of auditors are chosen by a firm. Our results show that high dividend payout ratios are negatively related to the appointment of one of the big-four auditors. High payout ratios are synonymous to low agency problems and thus firms feel lesser need for having one of the big-four auditors. We also show that high ownership concentration – a proxy for high agency problem – is positively related to firm’s decision of having one of the big-four auditors. High ownership concentration exacerbates agency problems between insiders and outsiders and thus induces firms to appoint one of the big-four auditors to mitigate agency problems. We also document that increased operational complexity and transactional complexity leads to hiring of one of the big-four auditors by a firm. We argue that complexity hinders investor’s ability to understand firm’s information and thus introduces agency problems. Being aware of agency problems, firms hire one of the big-four auditors to alleviate some of these problems. Journal: Review of Middle East Economics and Finance Pages: 79-97 Volume: 11 Issue: 1 Year: 2015 Month: April DOI: 10.1515/rmeef-2012-0036 File-URL: https://doi.org/10.1515/rmeef-2012-0036 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:11:y:2015:i:1:p:79-97:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Sarsour Shaker Author-Email: ssartawi@gmail.com Author-Workplace-Name: Public Finance, Research and Monetary Policy Department, Palestine Monetary Authority, P.O. Box 452, Al-Bireh, Ramallah, Occupied Palestinian Territory Author-Name: Daoud Yousef Author-Email: yd272@yahoo.com Author-Workplace-Name: Department of Economics, Faculty of Business and Economics, Birzeit University, Box 14, Birzeit, Occupied Palestinian Territory Title: The Efficiency of the Banking System in Occupied Palestinian Territory (OPT) 2000–2009 Abstract: This study estimates the cost (technical) efficiency of the banking system in Occupied Palestinian Territory (OPT), using a panel of 18 banks during the period 2000–2009. Estimates have been obtained using the stochastic frontier approach. The analyses were extended to cover bank ownership (foreign and local), type (Islamic and commercial) and bank size. Results indicate that the overall cost (technical) efficiency of banks in the OPT is declining during the period of research. The mean of cost and technical efficiency was found to deteriorate through the years. Cost efficiency declined from 0.730 in 2000 to 0.666 in 2009, while technical efficiency declined from 0.733 to 0.713 during the same period. Moreover, the lower allocative efficiency (incorrect input mix rather than utilization or wasting resources) is the main cause of the decline in cost efficiency over the period of analysis. In addition, large banks have lower cost efficiency, which indicates the presence of diseconomies of scale for banks in OPT. Journal: Review of Middle East Economics and Finance Pages: 55-77 Volume: 11 Issue: 1 Year: 2015 Month: April DOI: 10.1515/rmeef-2014-0005 File-URL: https://doi.org/10.1515/rmeef-2014-0005 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:11:y:2015:i:1:p:55-77:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Tayem Ghada Author-Email: g.tayem@ju.edu.jo Author-Workplace-Name: Department of Finance, School of Business, The University of Jordan, Amman 11942, Jordan Title: Does Foreign Ownership Increase Firms’ Productivity? Evidence from Firms Listed on Amman Stock Exchange Abstract: The purpose of this paper is to investigate the impact of foreign ownership on the production efficiency of firms listed on the Amman Stock Exchange using hand-collected, firm-level data. Arab countries have been performing poorly in attracting foreign direct investment (FDI) inflows in comparison to other developing countries, and hence, they may be missing out on growth and development opportunities. Jordan, however, has been one of the most successful Arab countries in attracting FDI inflows relative to its economic size. Therefore, Jordan offers an ideal setting to examine the benefits of foreign ownership in the region. However, this study fails to find evidence supporting the notion that foreign ownership enhances production efficiency. This finding calls into question the economic viability of investment incentives designed to attract foreign investors. Journal: Review of Middle East Economics and Finance Pages: 25-54 Volume: 11 Issue: 1 Year: 2015 Month: April DOI: 10.1515/rmeef-2014-0024 File-URL: https://doi.org/10.1515/rmeef-2014-0024 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:11:y:2015:i:1:p:25-54:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Majbouri Mahdi Author-Email: mmajbouri@babson.edu Author-Workplace-Name: Babson College, 231 Forst St., Wellesley, Massachusetts 02457, USA Title: Female Labor Force Participation in Iran: A Structural Analysis Abstract: Low female labor force participation (FLFP) rate in Iran, at the time that women’s education has been rising and their fertility rates have been falling, has remained a puzzle. By estimating elasticities of participation and hours with respect to wages (the extensive and intensive margins), this paper tries to shed some light on this puzzle. Using a structural estimation and controlling for selection, it depicts that the elasticity of women’s participation in the labor force with respect to wages is quite large, especially for married women. Based on this, one may argue that women’s participation is very sensitive to wages. But this is not consistent with the stylized facts about FLFP in Iran. The plausible implication of such elasticities, however, is that non-participating women have potential wages close to the wages of those who participate. Therefore, lower potential wages cannot be the factor that strongly dissuades women from participation. Instead, anticipated factors, such as labor market institutions and preferences, could be the underlying force hindering women from participation. The low FLFP rate can be explained better in light of these findings. The implications for policy and research are discussed. Journal: Review of Middle East Economics and Finance Pages: 1-23 Volume: 11 Issue: 1 Year: 2015 Month: April DOI: 10.1515/rmeef-2014-0042 File-URL: https://doi.org/10.1515/rmeef-2014-0042 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:11:y:2015:i:1:p:1-23:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Zouache Abdallah Author-Email: zouache@univ-st-etienne.fr Author-Workplace-Name: Sciences Po Lille and CLERSE (UMR 8019), 84 rue de Trévise, 59000 Lille Author-Name: Belarbi Yacine Author-Workplace-Name: Centre de Recherches en Economie Appliquée pour le Développement (CREAD), University of Bouzareah, Rue El Afghani, Algiers, Algeria Title: Regional Employment Growth and Spatial Dependencies in Algeria Abstract: An analysis of the determinants of Algerian industrial employment growth in a framework that includes a spatial dependency effect reveals that there is no convergence process between the Algerian regions. Nonetheless, a convergence club gathering three wilayates appears when spatial heterogeneity of industrial employment growth is considered. Furthermore, our paper demonstrates that the hydrocarbon and the construction and public works sectors did not have externality effects on local industrial employment growth. Accordingly, Algerian public plans had some impact on unemployment, but mainly on informal unemployment through the support of the construction and public work sector. Journal: Review of Middle East Economics and Finance Pages: 183-206 Volume: 11 Issue: 2 Year: 2015 Month: August DOI: 10.1515/rmeef-2013-0061 File-URL: https://doi.org/10.1515/rmeef-2013-0061 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:11:y:2015:i:2:p:183-206:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Saadaoui Zied Author-Email: zied.saadaoui@fsegs.rnu.tn Author-Workplace-Name: Department of Economics Faculté des Sciences Économiques et de Gestion de Sfax, University of Sfax, Campus Universitaire Route de l’aéroport, km 4, Sfax 3018, Tunisia Title: The Cyclical Behaviour of Bank Capital Buffers: An Empirical Evidence for MENA Banking Systems Abstract: Bank exposure to systemic shocks induced the Basel Committee on Banking Supervision to introduce a countercyclical capital buffers’ requirement in its new regulatory framework (Basel III). But is this macro-prudential tool useful for Middle East and North African countries (MENA) countries’ banking systems? Should it be implemented in a homogenous way for all banks in these countries? Trying to give plausible answers to these questions weakly debated in the literature for the case of MENA banking systems, this study uses an enough representative sample of commercial banks based in 15 MENA countries. Estimating a partial adjustment framework using system generalized method of moments (GMM) with Windmeijer’s correction, we show that large banks and banks with high market power are more inclined to behave in a countercyclical way than small banks and banks with low market power. These results are robust to several sensitivity checks. Accordingly, we think that the implementation of countercyclical capital buffers in the MENA region should take into consideration bank-specific characteristics like size and market power. Journal: Review of Middle East Economics and Finance Pages: 145-182 Volume: 11 Issue: 2 Year: 2015 Month: August DOI: 10.1515/rmeef-2013-0067 File-URL: https://doi.org/10.1515/rmeef-2013-0067 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:11:y:2015:i:2:p:145-182:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Raggl Anna K. Author-Email: anna.raggl@wu.ac.at Author-Workplace-Name: Research Institute for Human Capital and Development, Wittgenstein Centre for Demography and Global Human Capital, Vienna University of Economics and Business, Vienna, Austria Title: Determinants of Total Factor Productivity in the Middle East and North Africa Abstract: A decomposition of output growth rates of Middle Eastern and North African countries shows that the contributions of human capital-augmented labor and physical capital to output growth are comparably small and stable over time and that in most countries a considerable share of output growth is attributed to growth in total factor productivity. This paper empirically assesses the determinants of total factor productivity in the Middle East and North Africa region between 1980 and 2009. The findings suggest that human capital is not only an input factor of production but also a quantity that changes the efficiency by which existing input factors are used. Domestic innovations appear to be efficient only if a certain level of educational attainment is reached by a country. In addition, human capital contributes to the ability of efficient adoption of technology from abroad and allows a faster catch-up with technological leaders. Globalization, in combination with a (comparably low) threshold endowment of human capital, is estimated to increase total factor productivity in Middle Eastern and North African countries. Journal: Review of Middle East Economics and Finance Pages: 119-143 Volume: 11 Issue: 2 Year: 2015 Month: August DOI: 10.1515/rmeef-2014-0017 File-URL: https://doi.org/10.1515/rmeef-2014-0017 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:11:y:2015:i:2:p:119-143:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Iqbal Farrukh Author-Email: fiqbalus@gmail.com Author-Name: Kiendrebeogo Youssouf Author-Email: ykiendrebeogo@worldbank.org Author-Workplace-Name: World Bank, 1818 H Street NW, Washington DC 20433, USA Title: Public Spending and Education Attainment in the Middle East and North Africa Abstract: The Middle East and North Africa (MENA) region has performed the best among all regions in improving education attainment over the past four decades (1970–2010). Using econometric analysis, we show that this was due in large part to a convergence process in which countries that had low levels of education in 1970 increased their stocks much faster than those with higher initial education. Since MENA had the second lowest education stock among all regions in 1970, it benefited substantially from convergence over the next four decades. We also show that MENA obtained a comparative edge from having had the highest rate of public spending on education among all developing country regions. Such spending, however, was of middling efficiency and did little to produce education of good quality. Journal: Review of Middle East Economics and Finance Pages: 99-118 Volume: 11 Issue: 2 Year: 2015 Month: August DOI: 10.1515/rmeef-2015-0020 File-URL: https://doi.org/10.1515/rmeef-2015-0020 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:11:y:2015:i:2:p:99-118:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Farrag Noha Author-Email: n.farrag646@gmail.com Author-Workplace-Name: Canadian International College; German University in Cairo, New Cairo, Egypt Author-Name: Lang Günter Author-Email: guenter.lang@the-klu.org Author-Workplace-Name: Kühne Logistics University, Hamburg, Germany Title: Is Bigger Better for Egyptian Banks? An Efficiency Analysis of the Egyptian Banks during a Period of Reform 2000–2006 Abstract: This study contributes to the banking efficiency literature by using a three input–five output stochastic frontier translog cost function specification to investigate cost efficiency, scale economies, and technological progress in the Egyptian banking sector. The study analyzes the efficiency of Egyptian banks in the period 2000–2006 which witnessed major regulatory and structural changes. The analysis is based on a panel data of 34 commercial banks representing about 75% of the banking sector in Egypt. The results show that the banks suffer significantly from internal X-inefficiency with an average cost reduction potential of 12%. Increasing economies of scale are found to exist up to a bank size of about EGP30 bn, implying that all but the four largest banks in Egypt could reduce their average costs by growth. Surprisingly, Egyptian commercial banks did not benefit from technological change; instead they faced a negative dynamics of the cost frontier. Further regression analysis conducted to explain the different efficiency levels of the banks revealed a positive impact of size, growth, and merger activities on efficiency, which implies bigger is better for Egyptian Banks. Journal: Review of Middle East Economics and Finance Pages: 225-248 Volume: 11 Issue: 3 Year: 2015 Month: December DOI: 10.1515/rmeef-2014-0037 File-URL: https://doi.org/10.1515/rmeef-2014-0037 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:11:y:2015:i:3:p:225-248:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Matta Samer Author-Email: smatta@worldbank.org Author-Workplace-Name: World Bank – Macroeconomics & Fiscal Management Global Practice, Bourrie House, Allenby Street Down Town, Beirut, Beirut, Lebanon Title: New Coincident and Leading Indexes for the Lebanese Economy Abstract: Weak economic statistics in Lebanon impede economic analysis and decision making. This paper presents a new coincident index and a leading index for the Lebanese economy. A new methodology, based on the National Bureau of Economic Research–Conference Board approach, was used to construct these indexes. The indexes can be used as monthly proxies for the evolution of real gross domestic product with a relatively small time lag (four to five months). Notwithstanding the relatively small sample period, the results reveal promising statistical properties that should make these new indexes valuable coincident and leading (one-year ahead) indexes for analyzing the dynamics of the Lebanese economy. However, given limitations on the length of the gross domestic product time series in Lebanon, the accuracy of these indexes in tracking the business cycle of the Lebanese economy is expected to improve over time as more data points become available. Journal: Review of Middle East Economics and Finance Pages: 277-303 Volume: 11 Issue: 3 Year: 2015 Month: December DOI: 10.1515/rmeef-2014-0039 File-URL: https://doi.org/10.1515/rmeef-2014-0039 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:11:y:2015:i:3:p:277-303:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Hanedar Avni Önder Author-Email: onderhanedar@gmail.com Author-Workplace-Name: Department of Economics, Faculty of Business, Dokuz Eylül University, Kaynaklar Yerleşkesi Buca, İzmir 35370, Turkey Title: Foreign Bank Entry in the Late Ottoman Empire: The Case of the Imperial Ottoman Bank Abstract: Before 1900, there were few foreign banks in the Ottoman Empire. The most important foreign bank was the Imperial Ottoman Bank. Many rival foreign banks established a presence over time, which could have undermined the power of the Imperial Ottoman Bank due to greater competition. This article examines how rival foreign banks affected the Imperial Ottoman Bank branches, using data on profits of these branches between 1895 and 1914. Empirical findings do not indicate that rival bank branches were related to lower profits for Imperial Ottoman Bank branches in the respective markets. Journal: Review of Middle East Economics and Finance Pages: 207-223 Volume: 11 Issue: 3 Year: 2015 Month: December DOI: 10.1515/rmeef-2015-0009 File-URL: https://doi.org/10.1515/rmeef-2015-0009 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:11:y:2015:i:3:p:207-223:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Ghosh Saibal Author-Email: saibalghosh@rbi.org.in Author-Workplace-Name: Reserve Bank of India, Mumbai, India 400 00 Title: Provisioning, Bank Behavior and Financial Crisis: Evidence from GCC Banks Abstract: The debate on bank capital regulation has in recent years devoted specific attention to the role that bank loan loss provisions play as a part of the overall minimum capital regulatory framework. Using data for 1996–2011, we find evidence in favor of both capital management and signaling behavior by GCC banks. Islamic banks appear to engage less in such behavior as compared to their non-Islamic counterparts. Journal: Review of Middle East Economics and Finance Pages: 249-275 Volume: 11 Issue: 3 Year: 2015 Month: December DOI: 10.1515/rmeef-2015-0024 File-URL: https://doi.org/10.1515/rmeef-2015-0024 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:11:y:2015:i:3:p:249-275:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Gani Azmat Author-Email: azmat@squ.edu.om Author-Name: Al-Muharrami Saeed Author-Email: muharami@squ.edu.om Author-Workplace-Name: Department of Economics and Finance, College of Economics and Political Science, P.O. Box 20. Al Khod 123, Muscat, Oman Title: The Effect of Institutional Quality on Bank Lending in the Gulf Cooperation Council Countries Abstract: This paper examines the effect of institutional quality on lending by banks in Gulf Cooperation Council (GCC) group of countries. The methodology included the estimation of a reduced form regression equation utilizing cross country data for a range of variables capturing institutional quality. The empirical findings provide evidence that conventional institutional quality measured by: the time taken to enforce a contract, regulatory quality, the rule of law and government effectiveness; are inversely correlated with the lending by the banks, among other factors. Interestingly, our findings revealed that Sharia financing legislation to be positive and statistically significantly correlated with bank lending. Our main policy implication is that strengthening the domestic conventional institutional quality in the GCC countries is vital in order to facilitate effective lending by banks. Journal: Review of Middle East Economics and Finance Pages: 55-63 Volume: 12 Issue: 1 Year: 2016 Month: April DOI: 10.1515/rmeef-2015-0032 File-URL: https://doi.org/10.1515/rmeef-2015-0032 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:12:y:2016:i:1:p:55-63:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Weber Christoph S. Author-Email: christoph.weber@fau.de Author-Name: Nickol Philipp Author-Workplace-Name: Institute of Economics, University of Erlangen-Nuremberg, Kochstr. 4 (17), D-91054 Erlangen, Germany Title: More on Calendar Effects on Islamic Stock Markets Abstract: There is a long tradition in detecting anomalies of the Efficient Market Hypothesis. Among these are calendar anomalies, first described by French back in 1980. Whilst there is a plethora of studies for well-developed stock markets, there is still a lack of comprehensive studies for some small or emerging financial markets. It is particularly interesting to test not only for calendar effects in the conventional Gregorian calendar but also in other calendars like the Hijri calendar. Thus, the aim of this study is to provide a comprehensive analysis of calendar anomalies on Islamic stock markets. Firstly, we deliver a complete literature review of previous studies dealing with calendar effects on Islamic stock markets showing that there is still a lack of consensus about the effects. Secondly, we analyse whether there are any seasonal patterns in stock markets’ returns by conventional estimation techniques. Thirdly, we study whether those calendar effects are still apparent when we control for volatility clustering. In fact, there is evidence for calendar anomalies on all stock markets. However, those effects are prone to changes when different models or distributions are used. One should, therefore, be careful when interpreting calendar effects on Islamic stock markets. The evidence for theories put forward when analysing Western stock markets is – at best – mild. Journal: Review of Middle East Economics and Finance Pages: 65-113 Volume: 12 Issue: 1 Year: 2016 Month: April DOI: 10.1515/rmeef-2015-0039 File-URL: https://doi.org/10.1515/rmeef-2015-0039 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:12:y:2016:i:1:p:65-113:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Harb Georges Author-Email: gharb@ndu.edu.lb Author-Workplace-Name: Faculty of Business Administration and Economics, Notre Dame University, P.O. Box 72, Zouk Mikael, Zouk Mosbeh, Lebanon Author-Name: Shady Nora Abou Author-Email: nora.aboushady@feps.edu.eg Author-Workplace-Name: Faculty of Economics and Political Science, Cairo University, P.O. Box 12613, Al Orman, Giza, Egypt Title: Arab Trade Dynamics after the Implementation of the Pan Arab Free Trade Area (1998–2012) Abstract: With the entry into force of the Pan Arab Free Trade Area (PAFTA) in 2005, intra-Arab trade became tariff free, completing the trade liberalization process started in 1998. Making use of data covering the 1998–2012 period, we estimate the impact of PAFTA on intra-Arab trade in manufactured goods using a gravity model and applying panel data estimation techniques. Results suggest that PAFTA has increased intra-members’ trade by nearly 20 %. We also examine potential changes in the trends of Arab countries’ imports of manufactured goods from their main providers after the entry into force of PAFTA. In this respect, there is some evidence of an increase in Arab countries’ imports from Asia from 2005 onwards, in relation to the 1998–2004 period. Journal: Review of Middle East Economics and Finance Pages: 1-29 Volume: 12 Issue: 1 Year: 2016 Month: April DOI: 10.1515/rmeef-2015-0041 File-URL: https://doi.org/10.1515/rmeef-2015-0041 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:12:y:2016:i:1:p:1-29:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Azar Samih Antoine Author-Email: samih.azar@haigazian.edu.lb Author-Workplace-Name: Faculty of Business Administration and Economics, Haigazian University, Mexique Street, Kantari, Beirut, Lebanon Title: Taxing Interest on Deposits: Theoretical and Empirical Analysis for the Case of Lebanon Abstract: In most countries, taxes on interest income are subsumed under the general income tax structure. In Lebanon, there is a departure from such a policy, and these taxes are not imposed as part of taxable income but are levied at source on interest from deposits at commercial banks. As a result, this necessitates the derivation of a theoretical model on the subject of this tax that must be applicable to Lebanon. This is the first intent of this paper. As such, the paper develops a model that attempts to maximize the tax revenue from a given tax rate and to minimize the deadweight loss from this tax. From this theory, the relevant parameters that affect the optimal tax rate are found to be the interest rate elasticities of deposit supply and demand. Assuming, as the case for Lebanon indicates, that the interest elasticity of demand for deposits is infinite, and conditioning on other exogenous variables, the own and cross interest elasticities of deposit supply are estimated by advanced econometric techniques. The results show that the optimal tax rates differ markedly for the two denominations of deposits, the one in Lebanese pounds and the one in foreign currency. The optimal tax rate is higher for the latter, and both rates are much higher than the actual rate, or even the proposed rate. The paper concludes that, although tax authorities in Lebanon can theoretically raise substantially the tax rate in order to increase tax revenues, other economic and political considerations limit to a large degree the liberty of implementing such a raise. Journal: Review of Middle East Economics and Finance Pages: 31-54 Volume: 12 Issue: 1 Year: 2016 Month: April DOI: 10.1515/rmeef-2016-0019 File-URL: https://doi.org/10.1515/rmeef-2016-0019 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:12:y:2016:i:1:p:31-54:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Kaya Abdullah Author-Email: akaya@masdar.ac.ae Author-Name: Tsai I-Tsung Author-Email: itsai@masdar.ac.ae Author-Workplace-Name: Masdar Institute of Science and Technology, Abu Dhabi, UAE Title: Inclusive Economic Institutions in the Gulf Cooperation Council States: Current Status and Theoretical Implications Abstract: While the social conflict theory (SCT) suggests that absolute monarchies will not tolerate inclusive economic institutions, the Gulf Cooperation Council (GCC) countries have regularly achieved above global average ratings for property rights protection, entry barriers, disruptive wealth redistribution and corruption. This paper discusses the extent to which GCC states have potential to further improve their institutional quality. We explore whether inclusive economic institutions may emerge in GCC states, such as: (1) regional economic integration and competition which alleviate rulers’ capability to expropriate private property and ease entry barriers to the market, (2) rulers of resource rich economies sustain political power with control of natural resources as opposed to the extraction of private property; and (3) prospect of long-term gain for the ruler incentivizes the adoption of a market-based economy. Strong state involvement in manufacturing and the monopoly of some services, the effect of tribalism in economic affairs and the distribution of resources, as well as a sponsorship system for foreign workers in these states may all impede the development of a truly competitive and free economy. Keywords: political and economic institutions, Gulf Cooperation Council, rentier states Journal: Review of Middle East Economics and Finance Pages: 139-173 Volume: 12 Issue: 2 Year: 2016 Month: August DOI: 10.1515/rmeef-2015-0015 File-URL: https://doi.org/10.1515/rmeef-2015-0015 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:12:y:2016:i:2:p:139-173:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Lebdaoui Hind Author-Email: hind.encg@gmail.com Author-Name: Wild Joerg Author-Email: joerg.wild@gmail.com Author-Workplace-Name: School of Finance, Shanghai University of University of Economics, Shanghai, Shanghai, China Title: Islamic Banking and Financial Development Abstract: Abstract With the growing number of Islamic banks worldwide, much ink has been spilled on heated debate about its merits and ability to improve the financial sector. In order to buttress the subject matter of this debate, this paper investigate the link between Islamic banking assets share and the financial development. Using five different proxies of financial development from 22 countries for the period between 2000 and 2013, this research employs the generalized method of moments to cope with the endogeneity problem, and concludes that the share of Islamic banking is positively associated with the banking sector activity as measured by private credit. The competition of banking sector intensifies in countries with higher Islamic bank shares resulting in smaller net interest margin, whereas the structure of the financial sector does not change. A financial sector index composite regression showed that in general, financial development is positively linked to the Islamic banking presence. These findings provide empirical evidence that Islamic banking presence benefits financial development in Muslim countries. Keywords: Islamic finance, Islamic banking presence, financial development, GMM, PCA Journal: Review of Middle East Economics and Finance Pages: 201-224 Volume: 12 Issue: 2 Year: 2016 Month: August DOI: 10.1515/rmeef-2015-0018 File-URL: https://doi.org/10.1515/rmeef-2015-0018 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:12:y:2016:i:2:p:201-224:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Osorio Rodarte Israel Author-Email: iosoriorodarte@worldbank.org Author-Name: Lofgren Hans Author-Workplace-Name: The World Bank Group – Development Prospects Group, 1818 H St NW MC2-550A, Washington, DC 20433, USA Title: Product Space Perspective on Structural Change in Morocco Abstract: Drawing on international trade data, this paper uses the product space approach to analyze changes in Morocco’s goods exports in 1990–2010 and future export priorities. The level and moderate growth of Morocco’s gross domestic product match the predictions of product space analysis, informed by changes in the income potential of Morocco’s export basket, reflecting relatively strong capabilities in products with a relatively low potential to contribute to income growth and diversification. Morocco’s peripheral position in the product space points to the difficulty of diversification into more sophisticated products. Encouraging changes since 1990 include the development of a revealed comparative advantage in medium- and high-tech manufactures. However, the number of goods involved is relatively small and this transformation has not sufficed to raise per capita growth to the average for middle-income countries. Among sectors, high growth is likely for phosphate-based fertilizer exports. However, phosphates are hampered by low income and diversification potentials. Along with various other manufactured products, electronics and the automotive industry are promising sectors that may offer more lasting positive contributions. Beyond goods, policy makers should also consider the potential contributions of service exports, which in recent years have enjoyed rapid growth. Keywords: structural change, product space, morocco, economic policy Journal: Review of Middle East Economics and Finance Pages: 175-200 Volume: 12 Issue: 2 Year: 2016 Month: August DOI: 10.1515/rmeef-2016-0003 File-URL: https://doi.org/10.1515/rmeef-2016-0003 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:12:y:2016:i:2:p:175-200:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Bakker Femke E. Author-Name: Rotondi Valentina Author-Email: valentina.rotondi@unicatt.it Title: Vote for Your Family! Particularism, Support for Democracy and Support for Shari’a in the Arab World Abstract: This paper examines the micro-foundations of the relationship between political particularism, support for democracy and support for Shari’a in the Arab World. Our hypotheses suggest that particularism reduces support for democracy whilst it increases support for Shari’a since, at the individual-level, in-group (family/clan) obligations are more binding than obligations towards the state (universal). We test our hypotheses using data from the Arab Barometer. Results suggest that, even when allowing for the correlation of the error terms, particularism significantly increases support for Shari’a whilst it decreases support for democracy. Our results are robust to alternative specifications of the model and to the use of techniques aimed at addressing the potential endogeneity of particularism. Keywords: support for democracy, political culture, Arab world, Particularism Classification-JEL: Z10, O10, O17 Journal: Review of Middle East Economics and Finance Pages: 115-137 Volume: 12 Issue: 2 Year: 2016 Month: August DOI: 10.1515/rmeef-2016-0004 File-URL: https://doi.org/10.1515/rmeef-2016-0004 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:12:y:2016:i:2:p:115-137:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Sweidan Osama D. Author-Email: osweidan@uaeu.ac.ae Author-Workplace-Name: College of Business and Economics, Department of Economics and Finance, United Arab Emirates University, P.O. Box 15551, Al-Ain, UAE Title: Political Instability and Economic Growth: Evidence from Jordan Abstract: This paper explores the link between political instability and economic growth in Jordan, which is a lower middle-income country located at the heart of the Middle East. Historically, this region has been living under protracted wars, clashes, violence and terrorist attacks. We can expect these events to influence economic growth via their effect on government spending. We employ two econometric techniques: ARDL model (OLS) and Kalman filter (ML) and use data over the period 1967–2009. We find political instability has a statistically significant negative effect on economic growth as well as on real government expenditures. Keywords: political instability, growth rate of real income per capita, real government spending, Jordan, ordinary least squares, Kalman filter Classification-JEL: C13, O40, O43 Journal: Review of Middle East Economics and Finance Pages: 279-300 Volume: 12 Issue: 3 Year: 2016 Month: December DOI: 10.1515/rmeef-2015-0025 File-URL: https://doi.org/10.1515/rmeef-2015-0025 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:12:y:2016:i:3:p:279-300:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Kodithuwakku Sarath Author-Email: sarathsk@squ.edu.om Author-Name: Boughanmi Houcine Author-Email: boughanh@squ.edu.om Author-Workplace-Name: Department of Natural Resource Economics, Sultan Qaboos University, P.O. Box 34. Pc 123, Al-Khoudh, Muscat, Sultanate of Oman Author-Name: Weerahewa Jeevika Author-Email: jeevikaw@pdn.ac.lk Author-Workplace-Name: Department of Agricultural Economics and Business Management, University of Peradeniya, Peradeniya, Sri Lanka Title: Food and Agricultural Trade in the GCC: An Opportunity for South Asia? Abstract: The purpose of the present study is to assess the export potential of food and agricultural items from South Asian Association for Regional Cooperation (SAARC) countries to the Gulf Cooperation Council (GCC) countries. We investigated the pattern of trade between the two regions using trade indices and trade data for HS 1–24 categories and also estimated a gravity equation to determine the factors affecting bilateral trade. We extracted UN ComTrade data on exports from the Trademap and the WITS database was used to retrieve data in trade intensities. The results of the descriptive analysis show that India has an advantageous position to achieve more gains from increasing GCC-SAARC food and agricultural trade. The results of the estimation of the gravity equation indicate that the conventional trade cost variables have significant effects on total and food and agricultural trade and India have the highest potential for increasing food and agricultural exports to GCC countries. Further economic cooperation between the GCC and India in the form of a regional integration scheme would enhance trade and food security in the region. Keywords: gravity model, agricultural trade, GCC and South Asia Classification-JEL: F1 (trade), F2 (international factor movements and international business), Q1 (agriculture) Journal: Review of Middle East Economics and Finance Pages: 301-330 Volume: 12 Issue: 3 Year: 2016 Month: December DOI: 10.1515/rmeef-2016-0010 File-URL: https://doi.org/10.1515/rmeef-2016-0010 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:12:y:2016:i:3:p:301-330:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Jarmuzek Mariusz Author-Email: mjarmuzek@imf.org Author-Name: Mesa Puyo Diego Author-Email: dmesapuyo@imf.org Author-Name: Nakhle Najla Author-Email: nnakhle@imf.org Author-Workplace-Name: International Monetary Fund, Washington, DC 20431-0001, USA Title: Designing a Fiscal Framework for a Prospective Commodity-producer: Options for Lebanon Abstract: Lebanon is expected to have gas resources in its Mediterranean basin, and these could turn the country into a natural gas producer over the next decade. Lebanon’s economy and institutions will thus need to adapt to the challenges and opportunities that such change will bring. In this paper, we address how Lebanon’s fiscal framework will need to be reformulated to take into account potential resource revenue. Designing a fiscal regime appropriately is an absolute prerequisite to make sure that the government can receive a fair share of the resources while investors face appropriate incentives to invest and develop the sector. This step should be followed by setting macro-fiscal anchors and supporting institutions. The prospective framework should be focused on ensuring fiscal sustainability and intergenerational equity, given the estimated relatively short horizon of Lebanon’s gas resources. Strong institutional arrangements also need to underpin the prospective framework, to ensure that the pace of resource wealth’s use is set in line with Lebanon’s capacity constraints. Keywords: fiscal policy, commodity producers, resource revenue management Journal: Review of Middle East Economics and Finance Pages: 257-278 Volume: 12 Issue: 3 Year: 2016 Month: December DOI: 10.1515/rmeef-2016-0032 File-URL: https://doi.org/10.1515/rmeef-2016-0032 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:12:y:2016:i:3:p:257-278:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Haddad Eduardo Amaral Author-Email: ehaddad@usp.br Author-Workplace-Name: Departamento de Economia – FEA, NEREUS – The University of Sao Paulo Regional and Urban Economics Lab, Av. Prof. Luciano Gualberto, 908, FEA I, 05508–900 – Cidade Universitária, São Paulo, Brasil Author-Name: Okuyama Yasuhide Author-Email: okuyama@kitakyu-u.ac.jp Author-Workplace-Name: Graduate School of Social System Studies, University of Kitakyushu, Kitakyushu, Japan Title: Spatial Propagation of the Economic Impacts of Bombing: The Case of the 2006 War in Lebanon Abstract: This paper assesses the economic effects of the July 2006 War in Lebanon. We estimate the economy-wide impacts on the Lebanese regions resulting from the reduction of physical capital stocks using the estimated damages associated with the bombing events. In doing that, we are able to derive the estimates of the short-run economic costs of the War related to the structural break in the availability of economic infrastructure in the country. A discussion on resiliency is also introduced showing how the lack of redundancy in the country’s infrastructure is associated with stronger higher-order negative effects. Moreover, we show how international trade can act as a shock absorber. Keywords: Middle East, Lebanon, disasters, July 2006 War, impact analysis, resiliency Classification-JEL: Q54, R13 Journal: Review of Middle East Economics and Finance Pages: 225-256 Volume: 12 Issue: 3 Year: 2016 Month: December DOI: 10.1515/rmeef-2016-0035 File-URL: https://doi.org/10.1515/rmeef-2016-0035 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:12:y:2016:i:3:p:225-256:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Balli Hatice Ozer Author-Email: h.ozer-balli@massey.ac.nz Author-Workplace-Name: Associate Professor in Economics, School of Economics and Finance, College of Business, Massey University, Room QB 3.44, Quadrangle Building B, Albany, New Zealand Author-Name: Kouhbor Mohammad Amin Author-Email: aminkuhbor@yahoo.com Author-Workplace-Name: Assistant Professor in Economics, Department of Economics, College of Marine Managements and Economic, Khorramshahr University of Marine Science and technology, Khorramshahr, Iran (the Islamic Republic of) Author-Name: Jean Louis Rosmy Author-Email: rosmy.jeanlouis@viu.ca Author-Workplace-Name: Professor and Chair, Department of Economics, Vancouver Island University, 900 Fifth St, Nanaimo, BC V9R 5S5, Nanaimo, Canada Title: Towards Understanding Vegetables Consumption Behaviour in Iran: A Full Box-Cox Double-Hurdle Application Abstract: Using Iran’s 2010–2011 household survey data on income and expenditure, this paper estimates the demand for vegetable consumption. Based on the Vuong’s (1989) Likelihood Ratio Test for Model Selection and Non-Nested Hypothesis, a full Box-Cox double-hurdle model adjusted for heteroskedasticity, dependency, and normality was estimated to uncover factors underlying Iranian households’ decisions to purchase and consume vegetables. Results show that all demographic, socioeconomic, and geographical variables significantly explain vegetable consumption behaviour in Iran. A positive relationship exists between educational attainment and the decision to purchase and consume vegetables. As well, households’ size and average age exert a statistically significant positive effect on vegetable consumption. Keywords: consumer behaviour, food policy, limited dependent variables model, vegetables demand Journal: Review of Middle East Economics and Finance Pages: 12 Volume: 13 Issue: 1 Year: 2017 Month: April DOI: 10.1515/rmeef-2016-0017 File-URL: https://doi.org/10.1515/rmeef-2016-0017 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:13:y:2017:i:1:p:12:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Abbasi Hossein A. Author-Email: abbasi@econ.umd.edu Author-Workplace-Name: Economics Department, University of Maryland, 3114 Tydings Hall, 7343 Preinkert Dr., College Park, MD20742, USA Author-Name: Karimi Seyed M. Author-Email: skarimi2@uw.edu Author-Workplace-Name: Department of Interdisciplinary Arts and Sciences, University of Washington Tacoma, GWP 228, Box 358436, 1900 Commerce Street, Tacoma, WA98402, USA Title: Children’s Gender and Men’s Income: Evidence from Iran Abstract: In many societies, men work for more hours and acquire higher wages if they have sons versus daughters. Gender bias, higher returns to male children’s human capital, and higher costs of raising male children are hypothesized to explain this behavior. Among these, gender bias has received stronger support from empirical studies. Using a four-year panel dataset, we show that a different institutional setting may make men respond to their children’s gender differently. We study men’s income in a dotal society, Iran, where families are expected to provide dowry for their marrying daughters. We show that, in contrast to the findings in developed countries, Iranian men earn more income when they have daughters versus sons, and we argue that the institution of marriage is the major reason for this unconventional finding. Keywords: children’s gender, man’s income, marriage, dotal society Classification-JEL: J12, J13, J16, J22, J24 Journal: Review of Middle East Economics and Finance Pages: 19 Volume: 13 Issue: 1 Year: 2017 Month: April DOI: 10.1515/rmeef-2016-0028 File-URL: https://doi.org/10.1515/rmeef-2016-0028 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:13:y:2017:i:1:p:19:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Hosny Amr Author-Email: ahosny@imf.org Author-Workplace-Name: IMF, Washington, DC, USA Title: Political Stability, Firm Characteristics and Performance: Evidence from 6,083 Private Firms in the Middle East Abstract: Using firm-level data from an EBRD/EIB/WB joint survey covering more than 6,000 private firms in eight countries in the Middle East and North Africa, this paper (i) examines the relationship between firm characteristics and their perception of the effect of political instability on their operations and (ii) tests whether political instability has had a negative effect on firm performance. Using ordered and binary probit/logit models, we find that (i) export-oriented and larger-sized firms are more likely to report political instability as a sever obstacle to their operations. Using OLS and an endogenous treatment linear regression models, we find that (ii) the perception of political instability is negatively associated with firm performance, and after correcting for endogeneity it can even have a negative causal effect on firms’ sales and employment growth, all else held constant. Results are largely robust to different specifications and econometric methods. Keywords: political stability, treatment effects, Middle East, World Bank Enterprise Surveys Classification-JEL: L25 Journal: Review of Middle East Economics and Finance Pages: 21 Volume: 13 Issue: 1 Year: 2017 Month: April DOI: 10.1515/rmeef-2017-0005 File-URL: https://doi.org/10.1515/rmeef-2017-0005 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:13:y:2017:i:1:p:21:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Çınar Tuğrul Author-Email: tugrul.cinar@dpu.edu.tr Author-Workplace-Name: Department of Economics, Faculty of Economics and Administrative Sciences, Dumlupınar University, 43100, Kütahya, Turkey Title: Spatial Dimensions of Sectoral Labor Productivity Convergence in Turkey: A Spatial Panel Data Approach Abstract: The purpose of this study is to investigate spatial dimensions of interregional labor productivity convergence in Turkey between 2005 and 2011 period in three sector disaggregation. We employed spatial panel data approach to investigate the absolute and conditional beta convergence. Annual gross value added per worker data has been used as labor productivity proxy for 26 sub-regions. Analysis results show us that absolute and conditional convergence is highly significant for all agriculture, industry and services sector and also in sectors total. We also found that, while industry, services and sectors total show significant spatial dependency, there is no strong evidence of spatial interaction in agriculture sector for Turkey. Structural problems of Turkish agriculture sector are considered to be the main reasons behind this finding. Keywords: regional convergence, labor productivity, beta convergence, spatial panel data analysis Journal: Review of Middle East Economics and Finance Pages: 14 Volume: 13 Issue: 1 Year: 2017 Month: April DOI: 10.1515/rmeef-2017-0006 File-URL: https://doi.org/10.1515/rmeef-2017-0006 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:13:y:2017:i:1:p:14:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Kandil Magda Author-Email: magda.kandil@cbuae.gov.ae Author-Workplace-Name: Research and Statistics, Central Bank of the United Arab Emirates, Abu Dhabi, United Arab Emirates Author-Name: Mirzaie Ida A. Author-Email: mirzaie.1@osu.edu Author-Workplace-Name: Department of Economics, The Ohio State University, 1945 N. High Street, Columbus, OH 43210-1120, USA Title: Iran’s Inflationary Experience: Demand Pressures, External Shocks, and Supply Constraints Abstract: This paper studies determinants of inflation in Iran. The buildup of international reserves has accelerated during the episode of higher oil price. The associated increase in government spending has limited contribution to capacity building and pronounced inflationary pressures, which accelerated at the beginning of the Iran-Iraq war in 1980, and eased at the end of the war in 1988. Accommodating monetary stance has proven to be an important determinant of inflation, both in the long and in the short-runs. In the long-run, depreciation of the rial increases the cost of intermediate goods, increasing inflationary pressures with limited significant effect on output. In contrast, depreciation could boost competitiveness of non-energy exports, in support of higher demand and output growth in the short-run. For policy implications, priorities going forward should be in place to direct both public and private resources toward relaxing binding capacity constraints, capitalizing on oil resources in Iran and the prospects of the positive implications of lifting sanctions in the context of the recent nuclear agreement between Iran and the G5+1 countries. Keywords: inflation, import price, domestic policies, oil wealth, exchange rate Classification-JEL: E61, E62, E63, E32, E21 Journal: Review of Middle East Economics and Finance Pages: 19 Volume: 13 Issue: 2 Year: 2017 Month: August DOI: 10.1515/rmeef-2016-0018 File-URL: https://doi.org/10.1515/rmeef-2016-0018 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:13:y:2017:i:2:p:19:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Kaitibie Simeon Author-Email: kaitibie@qu.edu.qa Author-Name: Haq Munshi Masudul Author-Email: masud@qu.edu.qa Author-Workplace-Name: Department of Finance and Economics, College of Business and Economics, Qatar University, P.O. Box 2713, Doha, Qatar Author-Name: Rakotoarisoa Manitra A. Author-Email: manitra.rakotoarisoa@fao.org Author-Workplace-Name: Trade and Markets Division Economic and Social Development Department, Food and Agriculture Organization of the United NationsRoom D-835 Viale delle Terme di Caracalla-00153, Rome, Italy Title: Analysis of Food Imports in a Highly Import Dependent Economy Abstract: This analysis of food imports used an enhanced gravity model of trade, with food imports from approximately 136 countries from 2004 to 2014. Using improved panel data techniques, we show that total income, inflation in the food exporting country, corruption perception in the food exporting country, trade openness in the food exporting economy, GCC membership are important determinants of food imports by Qatar. In addition, we show that Qatari food imports mostly originate in countries with, on average, similar economic sizes. Finally, Qatar’s factor endowment is dissimilar to those of most of its trading partners, a situation that potentially fosters international food trade in accordance with the Heckscher–Ohlin theory of trade. Keywords: determinants of trade, food imports, gravity model, food security, Qatar Classification-JEL: F14, Q18, O5 Journal: Review of Middle East Economics and Finance Pages: 12 Volume: 13 Issue: 2 Year: 2017 Month: August DOI: 10.1515/rmeef-2016-0033 File-URL: https://doi.org/10.1515/rmeef-2016-0033 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:13:y:2017:i:2:p:12:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Miyajima Ken Author-Email: kmiyajima@imf.org Author-Workplace-Name: MCM, IMF, Washington, DC, USA Title: An Empirical Investigation of Oil-Macro-financial Linkages in Saudi Arabia Abstract: Against the backdrop of low oil prices, oil-macro-financial linkages in Saudi Arabia are analyzed by applying panel econometric frameworks (multivariate and vector autoregression) to macro- and micro-level data for 9 banks spanning 1999–2014. Lower growth of oil prices and nonoil private sector output leads dampen credit and deposit growth and lift nonperforming loan ratios. Positive feedback loops within bank balance sheets in turn dampen economic activity. U.S. interest rates are not found to be a key determinant. The banking system remains strong at present, but policy makers should monitor its health with the important macro-financial feedback loops in mind. Keywords: macro-financial linkages, nonperforming loans, panel vector autoregression Classification-JEL: C63, E44, G21, G28 Journal: Review of Middle East Economics and Finance Pages: 15 Volume: 13 Issue: 2 Year: 2017 Month: August DOI: 10.1515/rmeef-2017-0018 File-URL: https://doi.org/10.1515/rmeef-2017-0018 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:13:y:2017:i:2:p:15:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Abdelkader Hossam Eldin Mohammed Author-Email: drhos620@commerce.asu.edu.eg Author-Workplace-Name: Ain Shams University-Faculty of Commerce, Economic Department, Cairo, Egypt Title: Political Instability and Economic Growth in Egypt Abstract: This paper explores the relationship between political instability and economic growth in Egypt. The literature claims there is a relationship between political instability and economic performance. Empirical studies, however, show different results for different world regions, different countries, and different periods. Studies concerning the effect of political instability on the economic growth path are rich with cases from several countries, but do not include developing countries, such as Egypt. This paper investigates the robust relationship between economic growth in Egypt and political instability in the last five decades. We examine time-series data from 1972 to 2013, using the Cointegration approach to determine the short-term and long-term relationships. Consequently, we use an Error-Correction Model (ECM) to estimate the relationship between economic growth and political instability in Egypt. The results show that the impact of political instability on economic growth is negative and significant for all indexes of political instability used in the case of Egypt. The results have implications for policymakers who are planning for the economic growth of the country in the short- and long-term. Keywords: political instability, economic growth, cointegration, ECM Classification-JEL: O40, C220 Journal: Review of Middle East Economics and Finance Pages: 11 Volume: 13 Issue: 2 Year: 2017 Month: August DOI: 10.1515/rmeef-2017-0019 File-URL: https://doi.org/10.1515/rmeef-2017-0019 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:13:y:2017:i:2:p:11:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Kandil Magda Elsayed Author-Email: magda.kandil@cbuae.gov.ae Author-Workplace-Name: Research and Statistics Department, Central Bank of the UAE, Abu Dhabi, United Arab Emirates Author-Name: Markovski Minko Author-Email: minko.markovski@cbuae.gov.ae Author-Workplace-Name: Central Bank of the UAE, Abu Dhabi, United Arab Emirates Title: The Impact of Ownership on Corporate Performance: The Case of the UAE Abstract: This study attempts to identify whether government ownership has an effect on corporate performance, such as Return on Assets (ROA), Price to Book value, and Profits for a sample of 102 listed companies on the UAE stock exchanges and a subsample of 17 banks listed on the same bourses over a period of 31 quarters. In the case of the sample of 102 companies, government ownership has a positive impact on some of the corporate performance indicators, as well in the banking subsample. In addition, the analysis evaluates the impact of state ownership on debt accumulated across the two samples. The results indicate that state ownership reduced the need to accumulate debt in general across the larger sample. However, focusing on banks, state ownership facilitates borrowing and accumulating debt. The results point to the positive effect of state ownership on corporate performance. Further, state ownership eases constraints on banks’ borrowing as it boosts confidence in the outlook, facilitating higher ratings and cheaper sources of funding. In the case of the UAE, similar to some other countries, where there is a strong trend toward government ownership in listed companies and banks, it has a positive effect on their performance for the period 2008–2016, i. e., there is a positive relationship between the block-holder ownership and firms’ performance, subject to efficiency control measures. Keywords: state ownership, firm performance, United Arab Emirates, emerging markets Classification-JEL: G30, G32, G39 Journal: Review of Middle East Economics and Finance Pages: 25 Volume: 13 Issue: 3 Year: 2017 Month: December DOI: 10.1515/rmeef-2017-0013 File-URL: https://doi.org/10.1515/rmeef-2017-0013 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:13:y:2017:i:3:p:25:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Abbas Shujaat Author-Email: shujaat.abbass@gmail.com Author-Workplace-Name: Department of Economics, Institute of Business Management, Karachi, Pakistan Author-Name: Waheed Abdul Author-Email: waheedku@yahoo.com Author-Workplace-Name: University of Bahrain, College of Business Administration, Department of Economics and Finance, Sakhir, Bahrain Title: Import Determinants and Potential Markets: A Panel Data Gravity Modelling Analysis for Bahrain Abstract: This study investigates macroeconomic determinants of import flow and explores potential import markets for Bahrain using an augmented gravity model on panel data of 42 trading partners, from 2000 to 2016. The result of panel generalized least square estimation technique shows that the core variables support the theory of the basic gravity model. The estimated results of the augmented variables show that the imports of Bahrain are more responsive to income of trading partners, gross domestic product, and export flow; whereas, negatively determined by the relative price. The findings of dummy variables show that there is a significant role of common language and Gulf economic integration on imports of Bahrain. The results of the import potential analysis show that Bahrain has exceeded its import potential from most of its Asian trading partners; however, positive import potential exists in Africa and America and some selected Middle Eastern and European markets. Keywords: import flow, economic integration, gravity model, panel data Classification-JEL: C23, F12, F14, F15 Journal: Review of Middle East Economics and Finance Pages: 7 Volume: 14 Issue: 1 Year: 2018 Month: April DOI: 10.1515/rmeef-2017-0017 File-URL: https://doi.org/10.1515/rmeef-2017-0017 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:14:y:2018:i:1:p:7:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Awdeh Ali Author-Email: ali.awdeh@ul.edu.lb Author-Workplace-Name: Faculty of Economics and Business Administration, Lebanese University, Beirut, Lebanon Title: Long-run and Short-run Monetary Policy Transmission Channels in Lebanon Abstract: This research detects the existence of monetary policy transmission mechanisms in Lebanon through which the actions of the central bank propagate. By adopting co-integration analysis and VECM frameworks, and by exploiting monthly data between January 1994 and December 2016, the research revealed the existence of a long-run interest rate channel, affecting both resident private sector deposits and credit to the private sector. Another short-run capital channel was revealed, affecting total credit provided by the banking sector. Additionally, the empirical results show that (1) deposit inflows are not attracted by high interest rates, but stimulated by confidence provided by large foreign currency reserves held by the central banks; (2) non-residents deposit inflows could represent a substitute for local credit; (3) banks pass-through any increase in funding cost to borrowers; and (4) an increase in external interest rates may trigger deposit outflows. Keywords: monetary policy transmission channels, currency peg, interest rates, vector error correction model Classification-JEL: E51, E52, E58 Journal: Review of Middle East Economics and Finance Pages: 26 Volume: 14 Issue: 1 Year: 2018 Month: April DOI: 10.1515/rmeef-2017-0023 File-URL: https://doi.org/10.1515/rmeef-2017-0023 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:14:y:2018:i:1:p:26:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Gezici Armağan Author-Email: agezici@keene.edu Author-Workplace-Name: Keene State College, Keene, NH, USA Author-Name: Orhangazi Özgür Author-Email: ozgur.orhangazi@khas.edu.tr Author-Workplace-Name: Kadir Has University, Istanbul, Turkey Author-Name: Yalçın Cihan Author-Email: cihan.yalcin@tcmb.gov.tr Author-Workplace-Name: Central Bank of the Republic of Turkey, Ankara, Turkey Title: Exports and Financing Constraints Evidence from Turkey Abstract: This paper examines the link between financing constraints and firm exporting behavior through an in-depth study of the Turkish manufacturing firms between 1996 and 2013. Utilizing a rich firm-level data set, we test for both ex-ante and ex-post links between exports and financing constraints to tackle potential selection biases and endogeneity problems. We find a positive and statistically significant export premium for financing constraints in general. In further testing we show that there is no significant evidence of pre-entry premium, while we find that financing constraints faced by exporting firms are eased once they start exporting, confirming an improvement in the financial conditions of export starters compared to non-exporters. Keywords: financing constraint, international trade, exports, Turkey, propensity score matching Classification-JEL: D22, O16, F14 Journal: Review of Middle East Economics and Finance Pages: 11 Volume: 14 Issue: 1 Year: 2018 Month: April DOI: 10.1515/rmeef-2017-0024 File-URL: https://doi.org/10.1515/rmeef-2017-0024 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:14:y:2018:i:1:p:11:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Wu Fengyu Author-Name: Nugent Jeffrey B. Author-Email: nugent@usc.edu Author-Workplace-Name: Economics, University of Southern California, Los Angeles, CA, USA, 90089-0001 Title: Explaining Gender Differences in Socioeconomic and Political Objectives in the Middle East Abstract: The purpose of this article is identify and explain gender differences in eight important socioeconomic attitudes and political priorities among randomized samples of both males and females in 21 countries of the broadly defined Middle East. The attitudes and political priorities examined include the low status of women, lack of democracy, absence of a competitive private sector, income inequality and reliance on the military. In each case decomposition methods are used to divide these differences into those due to differences in the underlying characteristics of males and females and those due to differences in the effect of those characteristics Keywords: socioeconomic values, economic policy preferences, gender differences, decomposing gender differences, Arab and Non Arab Countries of the Middle East Journal: Review of Middle East Economics and Finance Pages: 22 Volume: 14 Issue: 1 Year: 2018 Month: April DOI: 10.1515/rmeef-2017-0031 File-URL: https://doi.org/10.1515/rmeef-2017-0031 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:14:y:2018:i:1:p:22:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Kunčič Aljaž Author-Email: aljaz.kuncic@gmail.com Author-Workplace-Name: Unit on 2030 Agenda, Social Development Division, United Nations Economic and Social Commission for Western Asia, Beirut, Lebanon Title: SDG-Specific Country Groups: Subregional Analysis of the Arab Region Abstract: This paper examines a classification system for grouping the Arab countries together based on characteristics most relevant to sustainable development goals (SDGs). It analyzes SDGs in Arab countries with cluster analysis, identifies the most appropriate decomposition of the region for each of the SDGs separately and describes the characteristics of the unique SDG performance groups. The results show that countries move often from a better to a worse group or vice versa, implying that different and SDG-specific subregional groups should be used for work on each individual SDG. Examining the overlap of cluster memberships by countries through a network perspective further identifies the most tightly knit country groups. The implications of findings are relevant for informative monitoring of SDGs on the subregional level, as well as policy recommendation sharing for and between similar countries, and enhancing peer learning capacity. Keywords: Arab, clustering, SDGs, sustainable development goals, sustainable development, ESCWA, LAS, MENA, network Classification-JEL: C38, B40, A19, Q01, C45 Journal: Review of Middle East Economics and Finance Pages: 22 Volume: 14 Issue: 2 Year: 2018 Month: August DOI: 10.1515/rmeef-2017-0020 File-URL: https://doi.org/10.1515/rmeef-2017-0020 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:14:y:2018:i:2:p:22:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Öge Güney Pelin Author-Email: pelinoge@hacettepe.edu.tr Author-Workplace-Name: Economics, Hacettepe Universitesi, Ankara, Turkey Title: Uncovered Interest Rate Parity: The Turkish Evidence Abstract: This paper presents an empirical investigation of the uncovered interest parity (UIP) between the Turkish Lira (TRY)/US Dollar (USD) and Turkish Lira/Euro (EUR). Our results do not provide evidence supporting the UIP hypothesis for either case. Moreover, the estimates imply causality from the TRY/USD exchange rate return to the interest rate differential. Accordingly, the Turkish Central Bank (CBRT) may respond by increasing the domestic interest rate to a depreciation of the TRY against the USD . By taking this type of action, it can be concluded that the CBRT tried to control capital movements. This result supports (McCallum, Bennett T. 1994. “A Reconsideration of the Uncovered Interest Parity Relationship.” Journal of Monetary Economics 33 (1): 105–132.)’s argument, which advances the behavior of the monetary policy as a reason for the failure of the UIP condition. Keywords: uncovered interest parity, exchange rates, ARDL Classification-JEL: E4, E5 Journal: Review of Middle East Economics and Finance Pages: 11 Volume: 14 Issue: 2 Year: 2018 Month: August DOI: 10.1515/rmeef-2017-0025 File-URL: https://doi.org/10.1515/rmeef-2017-0025 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:14:y:2018:i:2:p:11:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Bulut Levent Author-Email: lbulut@valdosta.edu Author-Workplace-Name: Valdosta State University, Harley Langdale, Jr. College of Business Administration, Department of Economics and FinanceValdosta, United States of America Author-Name: Dogan Can Author-Email: cdogan@radford.edu Author-Workplace-Name: College of Business and Economics, Department of Economics, Radford University, Radford, VA, USA Title: Google Trends and Structural Exchange Rate Models for Turkish Lira–US Dollar Exchange Rate Abstract: In this paper, we use Google Trends data to proxy macro fundamentals that are related to two conventional structural determination of exchange rate models: purchasing power parity model and the monetary exchange rate determination model. We assess forecasting performance of Google Trends based models against random walk null on Turkish Lira–US Dollar exchange rate for the period of January 2004 to August 2015. We offer a three-step methodology for query selection for macro fundamentals in Turkey and the US. In out-of-sample forecasting, results show better performance against no-change random walk predictions for specifications both when we use Google Trends data as the only exchange rate predictor or augment it with exchange rate fundamentals. We also find that Google Trends data has limited predictive power when used in year-on-year growth rate format. Keywords: exchange rate, Google query selection, Google Trends, Meese-Rogoff Puzzle, Turkish Lira Classification-JEL: C53, F31, F37 Journal: Review of Middle East Economics and Finance Pages: 12 Volume: 14 Issue: 2 Year: 2018 Month: August DOI: 10.1515/rmeef-2017-0026 File-URL: https://doi.org/10.1515/rmeef-2017-0026 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:14:y:2018:i:2:p:12:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Noureldin Diaa Author-Email: diaa.noureldin@aucegypt.edu Author-Workplace-Name: Department of Economics, American University in Cairo, AUC Avenue, P.O. Box 74, New Cairo11835, Egypt Title: Much Ado about the Egyptian Pound: Exchange Rate Misalignment and the Path Towards Equilibrium Abstract: This paper estimates Egypt's equilibrium real exchange rate and exchange rate misalignment based on economic fundamentals over the period 2001Q3–2017Q3. Focusing on the more recent period, we find that the Egyptian pound was undervalued by about 22.3% in 2017Q1 due to overshooting its equilibrium value after floating the currency in 2016Q4. The currency undervaluation then declined to 18.5% in 2017Q3 driven by an increase in the real effective exchange rate due to a surge in domestic inflation. With regard to the determinants of the equilibrium real exchange rate, we find the productivity differential (vis-à-vis Egypt's trade partners) and trade openness to be the most significant factors. We also provide projections for the equilibrium real exchange rate and exchange rate misalignment until 2020Q4, which reveal that the exchange rate undervaluation will be dissipating fast due to high inflation. If the nominal exchange rate stabilizes at its level in 2017Q3 (17.73 pounds per US dollar), the currency will be overvalued by 13.1% in 2020Q4. Given the uncertainty surrounding the projections, a forecast combination approach is also presented. Finally, the paper highlights the implications of the empirical findings for the conduct of monetary policy in Egypt. Keywords: equilibrium real exchange rate, exchange rate misalignment, economic fundamentals, cointegration, structural break Classification-JEL: C22, C51, E37 Journal: Review of Middle East Economics and Finance Pages: 19 Volume: 14 Issue: 2 Year: 2018 Month: August DOI: 10.1515/rmeef-2018-0002 File-URL: https://doi.org/10.1515/rmeef-2018-0002 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:14:y:2018:i:2:p:19:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Awdeh Ali Author-Email: ali.awdeh@ul.edu.lb Author-Workplace-Name: Lebanese University, Beirut, Lebanon Title: Financing for Development in the MENA Region Abstract: Financing for Development was addressed by the international community since more than 25 years, when the Monterrey Consensus of the International Conference on Financing for Development (Monterrey, Mexico, March 2002) urged mobilising and increasing the effective use of financial resources to fulfil the internationally agreed Millennium Development Goals. In 2015, a new Development Agenda was designed and was based on the Development Finance. Consequently, the efficient exploitation of traditional and innovative finance resources in economic, social and human development has become a global top priority. This study analyses the impact of 7 resources of financial flows on 6 socio-economic variables in a sample of 19 MENA countries over the period 1991–2015 to test the efficient exploitation of these resources in development. The results show that government spending and official development assistance are the most important factor in boosting development in the MENA region. International trade plays a limited role in financing development, whereas foreign direct investment has the least effect on MENA development. Keywords: financing for development, MENA region, panel data Journal: Review of Middle East Economics and Finance Pages: 14 Volume: 14 Issue: 3 Year: 2018 Month: December DOI: 10.1515/rmeef-2017-0036 File-URL: https://doi.org/10.1515/rmeef-2017-0036 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:14:y:2018:i:3:p:14:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Hundt Steffen Author-Email: steffen.hundt@bwl.tu-freiberg.de Author-Name: Horsch Andreas Author-Email: andreas.horsch@bwl.tu-freiberg.de Author-Workplace-Name: Investment & Finance, Technische Universitat Bergakademie Freiberg, Freiberg, Germany Title: The Effects of Sanctions on the Lending Policy and the Value of International Banks: the Case of Iran Abstract: After being in force for several years, sanctions against Iran were partly lifted on 16 January 2016, reopening business options for the financial industry. This paper investigates whether a breach of internationally imposed economic sanctions had a negative impact on the value of a bank that decided to implicitly or explicitly violate those sanctions. Using event study methodology, our analysis provides evidence that a breach of Iran-related sanctions by foreign banks caused considerable wealth reductions for their shareholders who finally bear the corresponding fining-costs. The results also show that bank shareholders do not perceive the lifting of sanctions as being good news, implying that they lost faith in their bank’s ability to establish a sufficient compliance and due diligence system for Iran-related transactions. Finally, the study shows that the announced fining for a breach of sanctions does not induce spillover effects to non-fined banks. Thus, the study provides important insights on reasons of the current shortage of foreign lending toward Iran. Keywords: Iran, compliance, sanction, credit crunch, event study, abnormal returns Classification-JEL: F51, G14, G15, G21, G32 Journal: Review of Middle East Economics and Finance Pages: 13 Volume: 14 Issue: 3 Year: 2018 Month: December DOI: 10.1515/rmeef-2018-0010 File-URL: https://doi.org/10.1515/rmeef-2018-0010 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:14:y:2018:i:3:p:13:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Lichtenberg Frank R Author-Email: frl1@columbia.edu Author-Workplace-Name: Columbia University, New York, NY 10027, USA Title: The Impact of New Drug Launches on Longevity Growth in Nine Middle Eastern and African Countries, 2007–2015 Abstract: This study provides econometric evidence about the impact that new chemical entity (NCE) launches had on premature mortality from 17 diseases in 9 Middle Eastern and African countries during the period 2007–2015. Keywords: longevity, mortality, pharmaceutical, growth, innovation Journal: Review of Middle East Economics and Finance Pages: 15 Volume: 14 Issue: 3 Year: 2018 Month: December DOI: 10.1515/rmeef-2018-0017 File-URL: https://doi.org/10.1515/rmeef-2018-0017 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:14:y:2018:i:3:p:15:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Ebaid Ali Author-Email: ali.h.alenzi@gmail.com Author-Workplace-Name: Economic Programme, School of Social Sciences, Universiti Sains Malaysia, 11800 Gelugor, Penang, Malaysia Author-Name: Bahari Zakaria Author-Workplace-Name: Centre for Islamic Development Management Studies (ISDEV), Universiti Sains Malaysia, 11800 Gelugor, Penang, Malaysia Title: The Nexus between Government Expenditure and Economic Growth: Evidence of the Wagner’s Law in Kuwait Abstract: This study is the first attempt to examine the validity of the Wagner’s law hypothesis by employing time-series data over the period from 1970 to 2015 in Kuwait. In this paper, the causal relationship between government expenditure and economic growth is tested by conducting the Granger non-causality test developed by (Toda, H. Y., and T. Yamamoto. 1995. “Statistical Inference in Vector Autoregressions with Possibly Integrated Processes.” Journal of Econometrics 66 (1): 225–250.) and (Dolado, J. J., and H. Lütkepohl. 1996. “Making Wald Tests Work for Cointegrated VAR Systems.” Econometric Reviews 15 (4): 369–386.). The empirical results support the unidirectional causality running from government spending to economic growth. This occurs only when real government expenditure per capita is a proxy for state activity and real gross domestic product (GDP) per capita is a measure of economic growth. This implies that Wagner’s law does not apply for Kuwait’s economy, and the Keynesian proposition of government spending as a policy instrument that encourages and leads economic growth is supported by the data used. Keywords: Wagner’s law, TYDL Granger non-causality test, Kuwait, government expenditure, economic growth Classification-JEL: H5, H500 Journal: Review of Middle East Economics and Finance Pages: 9 Volume: 15 Issue: 1 Year: 2019 Month: April DOI: 10.1515/rmeef-2017-0001 File-URL: https://doi.org/10.1515/rmeef-2017-0001 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:15:y:2019:i:1:p:9:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Mbazia Nadia Author-Email: nadia7mbazia@gmail.com Author-Workplace-Name: Faculty of Economic Sciences and Management of Tunis, University of Tunis El Manar, Tunis, Tunisia Author-Name: Djelassi Mouldi Author-Workplace-Name: Higher School of Economics and Business of Tunis, University of Tunis, Tunis, Tunisia Title: Housing Prices and Money Demand: Empirical Evidence in Selected MENA Countries Abstract: This paper examines the links between housing and money empirically in a money demand framework for a panel of five Middle East and North Africa (MENA) countries using quarterly data from 2007Q3 to 2014Q4 with the inclusion of house prices as a variable representing the developments in housing markets. We applied the Pool Mean Group Estimation technique to estimate the long-run and short-run dynamic relationships in money demand model. Empirical results provide the evidence that higher house prices lead to a rise in M2 demand in long-run and short-run estimations. This finding may explain the importance influence of the house price developments on monetary policy in MENA countries. The results confirm that the cross-country heterogeneity of money holdings is also connected with structural features of the housing market. Keywords: money demand, housing, panel data, MENA countries Classification-JEL: E41, E52, C33 Journal: Review of Middle East Economics and Finance Pages: 18 Volume: 15 Issue: 1 Year: 2019 Month: April DOI: 10.1515/rmeef-2017-0034 File-URL: https://doi.org/10.1515/rmeef-2017-0034 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:15:y:2019:i:1:p:18:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Boughanmi Houcine Author-Email: boughanh@squ.edu.om Author-Workplace-Name: Department of Natural Resource Economics, Sultan Qaboos University, Muscat, Oman Author-Name: Al-Riyami Said Author-Workplace-Name: Ministry of Commerce and Industry, Muscat, Oman Title: Service Trade Liberalization in Oman: International Commitments and Trade Performance Abstract: The service sector constitutes an important and a growing sector of the global economy as well as in the Arab region. In Oman, the service sector accounts for the highest share in the sectoral composition of the GDP and constitutes a crucial component of the overall policy of economic diversification. The objective of this paper is to investigate the extent of service trade liberalization in Oman as reflected in its international trade commitments, and analyze its trade performance using an adapted version of the gravity model within the context of the wider Arab region. The analysis shows that Oman has the third most extensive GATS commitments in the Arab region, which have been consolidated and improved upon under USA–Oman FTA. Results from the gravity analysis indicate that WTO membership has a significant effect in enhancing service exports, while the variable US-FTA has a correct sign but a non-significant effect. Trade potential calculation shows that comparatively Oman has a quite significant export potential among the Arab countries indicating that it could potentially increase its exports more than what is actually traded. A trade liberalization scenario, in which countries reduce their trade restrictiveness index to the most liberal country in the region indicates that the GCC countries like Kuwait, Qatar and Oman would benefit the most from service liberalization with an increase in export values of, respectively, 89 %, 87 % and 75 % compared d to the base year. Keywords: service, gravity model, Oman, WTO Journal: Review of Middle East Economics and Finance Pages: 12 Volume: 15 Issue: 1 Year: 2019 Month: April DOI: 10.1515/rmeef-2018-0004 File-URL: https://doi.org/10.1515/rmeef-2018-0004 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:15:y:2019:i:1:p:12:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Dakhlallah Kassim Author-Email: kmsdakh@gmail.com Author-Workplace-Name: Eagle and Peers International Consultants, Dubai, United Arab Emirates Title: Reserve Adequacies and the Determinants of Foreign Exchange Reserves – Empirical Analysis through the Vector Error Correction Model: The Case of Lebanon Abstract: Investigating the causes and motives for reserves’ accumulation in a highly dollarized small open economy such as that of Lebanon is of extreme importance, especially since fluctuations in foreign reserves have been demonstrated to be a leading cause of economic and financial instability. For an emerging economy such as that of Lebanon, which is subject to internal and external shocks, the accumulation and holding of reserves signal, among other things, credibility and financial strength. Therefore, identifying the factors that determine the level of reserves in the long and short term is crucial for the stability of the entire economy. For an in-depth understanding of those factors, this study employs the vector error correction model (VECM), which helps distinguish between short- and long-term effects. The results indicate that currency substitution has the most significant impact on reserves in the short and long terms, while the trade balance and the real effective exchange rate have substantial effects but only in the long terms. The study also reveals that the reserves held by the central bank fulfil all the reserves’ adequacy criteria and are in alignment with the reserves’ adequacy ratios. Keywords: Lebanese central bank, foreign reserves in Lebanon, foreign reserves management, adequacies of foreing reserves in Lebanon, error correction model Journal: Review of Middle East Economics and Finance Pages: 17 Volume: 15 Issue: 2 Year: 2019 Month: August DOI: 10.1515/rmeef-2017-0033 File-URL: https://doi.org/10.1515/rmeef-2017-0033 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:15:y:2019:i:2:p:17:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Kalaitzi Athanasia S. Author-Email: a.kalaitzi@lse.ac.uk Author-Workplace-Name: Middle East Centre, London School of Economics and Political Science, Room PAN.10.01, Pankhurst House, Clement’s Inn, LondonWC2A 2AZ, UK Author-Name: Chamberlain Trevor W. Author-Email: chambert@mcmaster.ca Author-Workplace-Name: DeGroote School of Business, McMaster University, 1280 Main Street West, Hamilton, OntarioL8S 4M4, Canada Title: Further Evidence on Export-Led Growth in the United Arab Emirates: Are Non-Oil Exports or Re-Exports the Key to Economic Growth? Abstract: This study investigates the relationships between exports and economic growth in the United Arab Emirates. Understanding these relationships is important for purposes of establishing appropriate growth and development policies and strategies. The study uses an augmented Cobb–Douglas production function to examine the causality between non-oil exports, re-exports and economic growth over the period 1981–2012. To investigate the existence of a long-run relationship between the variables, the study performs the Johansen cointegration test, while the direction of the short-run causality is examined by applying the Granger causality test in a vector error correction model framework. A modified Wald test in an augmented vector autoregressive model is applied in order to find the direction of the long-run causality. This research provides evidence in support of an indirect short-run uni-directional causality from economic growth to re-exports, through physical capital accumulation and imports. As for long-run causality, the results show that a bi-directional causality exists between re-exports and economic growth in the UAE. Keywords: diversification, re-exports, economic growth, causality, UAE Classification-JEL: O47, F43, C22 Journal: Review of Middle East Economics and Finance Pages: 15 Volume: 15 Issue: 2 Year: 2019 Month: August DOI: 10.1515/rmeef-2019-0007 File-URL: https://doi.org/10.1515/rmeef-2019-0007 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:15:y:2019:i:2:p:15:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Akçay Selçuk Author-Email: selcuk19@hotmail.com Author-Workplace-Name: Afyon Kocatepe Universitesi, Afyonkarahisar03200, Turkey Title: Does Oil Price Asymmetrically Impact Remittance Outflows? The Case of Oman Abstract: The mechanism by which oil price affects remittance outflows is not well understood and investigated. Using non-linear autoregressive distributed lag model (Shin, Yu, and. Greenwood-Nimmo. 2014. “Modelling Asymmetric Cointegration and Dynamic Multipliers in a Nonlinear ARDL Framework.” In Festschrift in Honor of Peter Schmidt, vol. 44, edited by R. C. Sickles, and W. C. Horrace, 281–314. New York: Springer New York. https://doi.org/10.1007/978-1-4899-8008-3_9), this study mainly seeks to investigate the asymmetric impact of oil prices on remittance outflows over the period from 1975 to 2015, for an oil-based economy, Oman. The results of the study reveal that changes in oil price are asymmetrically associated with remittance outflows in both short and long run. Furthermore, the response of remittance outflows to developments in oil prices is different in a way that positive shocks in oil prices promote remittance outflows, while negative shocks have no significant impact. Keywords: oil price, remittances, NARDL, Oman Classification-JEL: C32, F22, O53 Journal: Review of Middle East Economics and Finance Pages: 9 Volume: 15 Issue: 2 Year: 2019 Month: August DOI: 10.1515/rmeef-2019-0012 File-URL: https://doi.org/10.1515/rmeef-2019-0012 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:15:y:2019:i:2:p:9:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Chibi Abderrahim Author-Email: chibirahim@yahoo.fr Author-Name: Chekouri Sidi Mohamed Author-Email: cheksidimed@yahoo.fr Author-Workplace-Name: Faculty of Economics, University Centre of Maghnia, Maghnia, Algeria Author-Name: Benbouziane Mohamed Author-Email: mbenbouziane@yahoo.fr Author-Workplace-Name: Faculty of Economics and Management, Tlemcen University, Tlemcen, Algeria Title: The Impact of Fiscal Policy on Economic Activity over the Business Cycle: An Empirical Investigation in the Case of Algeria Abstract: In this paper, we aim to analyze whether the effect of fiscal policy on economic growth in Algeria differs throughout the business cycle. To tackle this question, we use a Markov Switching Vector Autoregressive (MSVAR) framework. We find evidence of asymmetric effects of fiscal policy through regimes, defined by the state of the business cycle (recession and boom). The results show small positive government spending and revenue multipliers in the short term in both regimes. Most importantly, fiscal policy shocks have a stronger impact in times of economic recession than in times of expansion, which confirm the hypothesis of asymmetric effects. However, the impact of government spending is stronger than the impact of public revenue during recession periods. In addition, fiscal policy decision-makers interact with Anti-Keynesian view (pro-cyclical). Our results imply that there is something to gain by using the "right instrument" at the "right time". Keywords: fiscal policy, economic activity, nonlinear effect, MSVAR model Classification-JEL: C32, E32, E62 Journal: Review of Middle East Economics and Finance Pages: 23 Volume: 15 Issue: 3 Year: 2019 Month: December DOI: 10.1515/rmeef-2016-0014 File-URL: https://doi.org/10.1515/rmeef-2016-0014 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:15:y:2019:i:3:p:23:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Kandil Magda Elsayed Author-Email: magda.kandil@cbuae.gov.ae Author-Name: Markovski Minko Author-Email: minko.markovski@cbuae.gov.ae Author-Workplace-Name: Research and Statistics Department, Central Bank of the UAE, Abu Dhabi, United Arab Emirates Title: UAE Banks’ Performance and the Oil Price Shock: Evidence across Conventional and Islamic Banks Abstract: This study attempts to identify whether the oil price fall to a “new normal” in mid-September 2014 has had an impact on banks’ performance in the UAE, such as Return on Assets (ROA) and Return on Equity (ROE) in addition to credit and deposit growth. The sample is for a sample of 22 national banks in the country over a period of 15 quarters. The oil price fall has had a negative impact on all four banking indicators. In addition, the analysis evaluates the difference in ROA, ROE and credit and deposit growth by bank type, conventional vs. Islamic banks, across the sample of 22 banks. The results indicate that Islamic banks have a higher lending and deposit growth rates, however conventional banks tend to have better indicators of performance. Further, the oil price fall has impacted banks’ performance adversely, and the growth of assets and liabilities as a result of the slowdown in economic activity, fiscal consolidation, and decreasing levels of employment and corporate profitability. Further, Islamic banks, judged by lending and deposit growth, have managed to tailor their products to cater to a growing demand. However growth objectives appear to have reduced the margins of return in Islamic banks, compared to conventional banks. Keywords: Islamic banks, conventional banks, United Arab Emirates, oil price fall, banks’ performance, loans, deposits Classification-JEL: E02, E31, E51, G01, G21, G29, Q43 and Q49 Journal: Review of Middle East Economics and Finance Pages: 23 Volume: 15 Issue: 3 Year: 2019 Month: December DOI: 10.1515/rmeef-2019-0005 File-URL: https://doi.org/10.1515/rmeef-2019-0005 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:15:y:2019:i:3:p:23:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Harrathi Nizar Author-Email: nharrathi@gmail.com Author-Name: Alhoshan Hamed M. Author-Workplace-Name: King Saud University, College of Business Administration, P.O. Box 71115, 11587, Riyadh, Saudi Arabia Title: Validity of the Expectations Hypothesis of the Term Structure of Interest Rates: The Case of Saudi Arabia Abstract: We examine and test the validity of the expectation hypothesis of the term structure (EHTS) of interest rates in Saudi Arabia using the traditional single equation approach, Campbell and Shiller methodology, Error Correction Model, and monthly data over the period June 1983 to December 2014. The results of the single equation approach indicate that the test of validity of the expectation hypothesis cannot be rejected for all maturities. We also find that the validity of the EHTS of interest rates is supported through the stationarity of the term spreads between short- and long-term interest rates. Moreover, the cointegration test reveals the existence of a cointegration relationship between short- and long-term interest with (1−1) $\left(1-1\right)$ cointegrating vector, suggesting the validity EHTS of interest rates. Policy implications based on the empirical results suggest that the transparency of monetary policy in Saudi Arabia and the effective role of the Saudi Arabian Monetary Authority (SAMA) in conducting monetary policy increase the predictive power of market participants of future movements of short-term interest rates. Keywords: term structure of interest rates, expectations hypothesis, Campbell and Shiller methodology, cointegration, vector autoregression Classification-JEL: E43, C22, G12 Journal: Review of Middle East Economics and Finance Pages: 18 Volume: 16 Issue: 1 Year: 2020 Month: April File-URL: https://doi.org/10.1515/rmeef-2019-0009 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:16:y:2020:i:1:p:18:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: El-Haddad Amirah Author-Email: amirah.el-haddad@die-gdi.de Author-Workplace-Name: Sustainable Economic and Social Development Department, Stabilization and Development in the Middle East and North Africa, German Development Institute, Tulpenfeld 6, D-53113, Bonn, Germany Title: Picking Winners: Identifying Leading Sectors for Egypt and Tunisia Using the Product Space Methodology Abstract: The structural transformation of countries moves them towards more sophisticated, higher-value products. Network analysis, using the Product Space Methodology (PSM), guides countries towards leading export sectors. The identification process rests on two pillars: (1) available opportunities, that is, products in the product space that the country does not yet export which are more sophisticated than its current exports; and (2) the stock of a country’s accumulated productive knowledge and the technical capabilities that, through spillovers, enable it to produce slightly more sophisticated products. The PSM points to a tradeoff between capabilities and complexity. It identifies very basic future products that match the two countries’ equally basic capabilities. Top products are simple animal products, cream and yogurt, modestly sophisticated plastics, metals and minerals such as salt and sulphur for Egypt; and slightly more sophisticated products such as containers and bobbins (plastics) and broom handles and wooden products for Tunisia, which is the more advanced of the two countries. A more interventionist approach steers the economy towards maximum sophistication, thus identifying highly complex manufactured metals, machinery, equipment, electronics and chemicals. Despite pushing for economic growth and diversification, these sectors push urban job creation and require high-skill workers, with the implication that low-skilled labour may be pushed into unemployment or into low-value informal jobs. A middle ground is a forward-looking strategy that takes sectors’ shares in world trade into account. Keywords: picking winners, industrial policy, product space methodology, Egypt, Tunisia, manufacturing Journal: Review of Middle East Economics and Finance Pages: 80 Volume: 16 Issue: 1 Year: 2020 Month: April File-URL: https://doi.org/10.1515/rmeef-2019-0015 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:16:y:2020:i:1:p:80:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Aziz Omar Ghazy Author-Email: omar.aziz@imc.edu.au Author-Workplace-Name: Australian National Institute of Management and Commerce (IMC), Sydney, NSW, Australia Title: Does Bank Profitability Stimulate Economic Growth in the Arab Region? Abstract: This study empirically investigates the impact of bank profitability, as a complementary measure of financial development, on growth in the Arab countries between 1985 and 2016. Using a generalized method of moments (GMM) estimation to test the impact of the bank profitability on growth, this study utilises two variables in the econometric model which are return on assets and return on equity. This study reveals that both variables of bank profitability are positive and significant. This confirms that the bank profitability, beside other financial development variables, has positive impact on the growth. This study points out some important implications based on this result. Keywords: bank profitability indicator, financial development, economic freedom, GMM, G01, G21, C23, C36, O16, O40 Journal: Review of Middle East Economics and Finance Pages: 14 Volume: 16 Issue: 2 Year: 2020 Month: August DOI: 10.1515/rmeef-2019-0017 File-URL: https://doi.org/10.1515/rmeef-2019-0017 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:16:y:2020:i:2:p:14:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Sayed Adham Author-Email: sadham@hust.edu.cn Author-Workplace-Name: Huazhong University of Science and Technology, School of Economics, Wuhan, China Title: Is there a Kuznets Curve in the Arab Region? An Empirical Investigation Abstract: This paper presents an empirical study of the Kuznets curve in Arab countries using a dataset from 12 Arab countries over the period between 1990 and 2015. The analysis is carried out by employing a panel data method, mainly the fixed-effect and interactive fixed-effect models, which take into account the economic integration of countries, and the frequent political, financial and social shocks. Our results show that the Kuznets curve does not characterize economic development in the Arab region and that trade, urbanization and education positively impact income inequality. Keywords: Arab world, economic growth, income inequality, Kuznets curve, factor model Classification-JEL: O15, C33, N35 Journal: Review of Middle East Economics and Finance Pages: 17 Volume: 16 Issue: 2 Year: 2020 Month: August DOI: 10.1515/rmeef-2020-0001 File-URL: https://doi.org/10.1515/rmeef-2020-0001 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:16:y:2020:i:2:p:17:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Makdissi Paul Author-Email: paul.makdissi@uottawa.ca Author-Workplace-Name: Department of Economics, University of Ottawa, Ottawa, ON, Canada Author-Name: Seif Edine Mohamad Author-Workplace-Name: Budget Directorate, Government of Lebanon, Ministry of Finance, Beirut, Lebanon Title: Is the Elimination of Food Subsidies the Right Policy to Address Lebanon’s Public Finance Crisis? Abstract: In this paper, we use a positional dominance approach to assess the desirability of eliminating food subsidies in Lebanon. The analysis is based on aggregate information from the 2004 to 2005 National Survey of Households Living Conditions. We use this aggregate information on expenditure patterns to reconstruct rough estimates of s-concentration curves and efficiency-cost ratio sets. Evidences suggest that the Lebanese government should probably find other avenues to reduce the fiscal deficit. Keywords: inequality, Lebanon, taxation, H23, I31 Journal: Review of Middle East Economics and Finance Pages: 17 Volume: 16 Issue: 2 Year: 2020 Month: August DOI: 10.1515/rmeef-2020-0016 File-URL: https://doi.org/10.1515/rmeef-2020-0016 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:16:y:2020:i:2:p:17:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Ben Jelili Riadh Author-Email: riadh@dhaman.org Author-Workplace-Name: Research & Country Risk Analysis Department, The Arab Investment and Export Credit Guarantee Corporation “DHAMAN”, Arab Organizations Headquarters Building, P.O. Box 23568, Safat 13096, State of Kuwait Title: Do Default Loss Risks Matter for Arab Exports? Evidence from a Gravity Modelling Approach Abstract: In the literature, it has been common to use credit risk scores to investigate impacts of external sources of risk and political institutions on foreign investment location choice-decisions. However, only a few studies have specifically examined the relationship between importing country’s credit risk scores and exports. Side stepping the limited availability of statistics on ECAs activities in the Arab countries, this paper investigates empirically the relationship between merchandise exports and credit scores of importing countries. Based on a gravity equation augmented with the risks of default on international payments, measured by intra-country risk ratings, the principal contribution of the present research is to scrutinize the impact of commercial and political risks on merchandise trade in the Arab region. The findings suggest that in the absence of insurance contracts against the risk of defaulting payments, firms are more likely to export to countries with higher prior probabilities to secure payments. It logically follows that provisions of export credit guarantees well targeted towards reducing buyer risks are likely to boost-up exports. Keywords: export, export credit insurance, default risk, Arab countries, gravity model Classification-JEL: C23, F13, F14 Journal: Review of Middle East Economics and Finance Pages: 22 Volume: 16 Issue: 3 Year: 2020 Month: December DOI: 10.1515/rmeef-2019-0013 File-URL: https://doi.org/10.1515/rmeef-2019-0013 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:16:y:2020:i:3:p:22:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Fakih Ali Author-Email: afakih@lau.edu.lb Author-Name: Ghazzawi Nancy Author-Email: nancy.ghazzawi@lau.edu.lb Author-Workplace-Name: Department of Economics, Lebanese American University, Beirut, Lebanon Author-Name: Ghazalian Pascal Author-Email: pascal.ghazalian@uleth.ca Author-Workplace-Name: University of Lethbridge, Department of Economics, T1K 3M4, Lethbridge, Alberta, Canada Title: The Effects of Power Outages on the Performance of Manufacturing Firms in the MENA Region Abstract: Power supply in developing countries is often characterized by unreliability and inefficiency, resulting in disruption costs for operating firms. The extents of power outages in the Middle East and North Africa (MENA) region are more significant compared to other geo-economic regions. This paper examines the effects of power outages on the performance of manufacturing firms in the MENA region using a firm-level dataset derived from the World Bank’s Enterprise Surveys (WBES) database. Firm performance is represented by sales, employment, and productivity growth rates. The extents of power outages are depicted by objective measures characterizing durations and frequencies of power outages, and by perception-based measures reflecting firms’ perceived severity of power outages. The results emphasize the adverse consequences of power outages for the performance of manufacturing firms in the MENA region. They also suggest that different patterns of power outages have varying implications for firm performance, and that the effects of power outages exhibit variations with firm size. Keywords: firm performance, firm productivity, MENA region, power outages, power supply Classification-JEL: D22, D24, L94, Q49 Journal: Review of Middle East Economics and Finance Pages: 28 Volume: 16 Issue: 3 Year: 2020 Month: December DOI: 10.1515/rmeef-2020-0011 File-URL: https://doi.org/10.1515/rmeef-2020-0011 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:16:y:2020:i:3:p:28:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Barthelmess Benedikt Author-Email: benedikt.barthelmess@sciencespo.fr Author-Name: Langlois Jean Author-Workplace-Name: Non-Resident Fellow, Research Center in Applied Economics for Development, Algiers, Algeria Title: SME Financing in MENA: A Quantitative and Qualitative Analysis of Multilateral and Bilateral Development Lenders’ Intermediated Lending Practices Abstract: This paper documents for the first time the considerable increase of bilateral and multilateral financial institutions’ support to small- and medium-sized enterprises (SMEs) in the Middle East and North Africa (MENA), following the political unrest and civil strife across the region since 2011. Focusing upon intermediated lending, the main financing channel, it assesses the underlying economic logic and implementation of this kind of SME financing. It is found that SMEs’ contribution to economic development is insufficiently well understood and, to some extent, has been misinterpreted, which implies that development banks’ lending operations lack appropriate targeting to achieve economic and social lending objectives. A review of the academic literature on financial exclusion and development finance, moreover, concludes that the lenders’ reliance upon large, often foreign-owned, commercial banks is not likely to achieve the desired developmental impact. Keywords: development bank, job creation, innovation Journal: Review of Middle East Economics and Finance Pages: 032 Volume: 16 Issue: 3 Year: 2020 Month: December DOI: 10.1515/rmeef-2020-0013 File-URL: https://doi.org/10.1515/rmeef-2020-0013 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:16:y:2020:i:3:p:032:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Orhun Eda Author-Email: eda.orhun@zu.ac.ae Author-Workplace-Name: College of Business, Zayed University, Khalifa City Campus, Abu Dhabi, United Arab Emirates Author-Name: Adnan Wifag Author-Workplace-Name: New York University (NYU) Abu Dhabi Campus, NYU Abu Dhabi, United Arab Emirates Author-Name: Alawad Mouawiya Author-Workplace-Name: Zayed University, Dubai, United Arab Emirates Title: Determinants of Early Retirement in the UAE Abstract: The purpose of this paper is to analyze the retirement behavior of UAE nationals by understanding the socio-economic characteristics of early retirees and identifying the main determinants of early retirement. Accordingly, a survey study is created and deployed for current employees and retirees affiliated with Abu Dhabi Retirement and Pension Benefit Fund (ADRPBF). The survey was designed to reach 100 retirees and 200 currently active workers from those registered at the ADRPBF. The survey was conducted by employing the online survey method and face-to-face interviews. The total number of respondents is around 244, with a total response rate of 81.33%. Some factors related to the psychosocial work environment play a significant role in the early retirement decision of Emiratis. These factors are stress level, autonomy level and authority level at work. In addition to these, the level of work environment comfortability and life-work balance seem to also affect the early retirement decision. In general, the results indicate that higher the stress level, lower the level of autonomy and authority; higher the early retirement decision within the Emirati workforce. Last but not least, the likelihood of early retirement increases significantly if employees face a work-related health problem. Initiatives at the government and company level to adjust the working conditions for the capacity of elderly people shall be considered. Healthy living campaigns and sport programs might be launched to reduce work-related health problems and consequently early retirement. Our work is the first comprehensive study exploring the early retirement decision of the UAE nationals. One limitation of our study is the limited number of participants in the survey. Future work that will include a higher number of participants and supplementary questions to cover more job features (physical workload, other psychosocial factors) might be helpful. Keywords: early retirement, psychosocial determinants, UAE workforce, work environment Classification-JEL: J26, J32 Journal: Review of Middle East Economics and Finance Pages: 57-69 Volume: 17 Issue: 2 Year: 2021 Month: August DOI: 10.1515/rmeef-2020-0044 File-URL: https://doi.org/10.1515/rmeef-2020-0044 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:17:y:2021:i:2:p:57-69:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Awdeh Ali Author-Email: ali.awdeh@ul.edu.lb Author-Name: El Moussawi Chawki Author-Email: chawmoussawi@ul.edu.lb Author-Workplace-Name: Lebanese University, Beirut, Lebanon Author-Name: Hamadi Hassan Author-Email: hhamadi@ndu.edu.lb Author-Workplace-Name: Notre Dame University, Louaize, Lebanon Title: Market Structure and Bank Conduct in the MENA Region Abstract: The Middle East North Africa (MENA) region is witnessing a wave of bank consolidations, with many mega-mergers taking place in the Gulf Cooperation Council (GCC) countries. These will result in creating large banks, reducing the number of market players and increasing market concentration; which is already high. A further increase in concentration may raise concerns about the resulting dominance of large banks and the consequences on their pricing behaviour. The interrelationships between market structure and pricing behaviour is summarised by the popular model of industrial economics called the structure–conduct–performance (SCP) model. Consequently, we test the prevalence of this model in a sample of 15 MENA banking sectors to detect the possible existence of an impact running particularly from the structure of banking markets to the pricing behaviour (power) of banks in order to predict a possible emergence of oligopolistic behaviour following bank consolidations. Using a two-stage least squares model, we found a positive and significant impact of market concentration on bank pricing, suggesting that an further increase in MENA banking markets’ concentration may boost banks pricing power and persuade them to increase their returns at the expense of their customers. Keywords: concentration, Herfindahl-Hirschman Index, Lerner Index, market power, MENA region Journal: Review of Middle East Economics and Finance Pages: 97-110 Volume: 17 Issue: 2 Year: 2021 Month: August DOI: 10.1515/rmeef-2020-0032 File-URL: https://doi.org/10.1515/rmeef-2020-0032 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:17:y:2021:i:2:p:97-110:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Bitar Joseph Author-Email: josephbitar@hotmail.fr Author-Workplace-Name: Independent Economic Advisor, Paris, France Title: The Monetary Crisis of Lebanon Abstract: Above its traditional currency and debt crisis features, Lebanon’s ongoing crisis sheds the light on the inherent weakness of dollarized monetary systems. This crisis can be seen as a monetary crisis, as the country’s dollarized banking system’s liquidity and solvency problems led to the loss of the “moneyness” of its dollar denominated deposits. We analyze the different dimensions of this crisis and we make policy recommendations, inspired by the experience of the Argentine 2001–2002 convertibility crisis. Finally, we look into the redistributive implications of different conversion scenarios. Keywords: dollarization, monetary crisis, currency crisis, emerging markets, Lebanon Classification-JEL: E42, E63, F33, G01 Journal: Review of Middle East Economics and Finance Pages: 71-96 Volume: 17 Issue: 2 Year: 2021 Month: August DOI: 10.1515/rmeef-2020-0050 File-URL: https://doi.org/10.1515/rmeef-2020-0050 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:17:y:2021:i:2:p:71-96:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Farag Markos Author-Email: markos.magdy@feps.edu.eg Author-Name: Zaki Chahir Author-Email: chahir.zaki@feps.edu.eg Author-Workplace-Name: Department of Economics, Faculty of Economics and Political Science, Cairo University, Cairo, Egypt Title: Price and Income Elasticities of Natural Gas Demand in Egypt: A Bound Test Approach Abstract: This paper provides short and long-run estimates of price and income elasticities of Egypt’s natural gas demand using the ARDL bounds testing approach to cointegration over the period 1983–2015. The results show that the long-run income and price elasticities, in absolute values, are greater than their counterparts in the short run. This result is due to the fact that consumers can modify their consumption habits and plans in the long run as a response to changes in the income or the price. Moreover, natural gas demand is more responsive to changes in income than changes in price in both the short and long run. Finally, the study examines the causality relationship between natural gas consumption and economic growth for the gas-consuming sectors in Egypt. The results indicate that there is no causal relationship between the two variables for the electricity, petroleum, and household sectors in the short-run. By contrast, there is a unidirectional causality running from natural gas consumption to the economic activity of the transportation sector and a unidirectional causality running from economic activity to natural gas consumption by the industry sector. Keywords: elasticity, income, natural gas demand, price Classification-JEL: Q32, Q41, Q43 Journal: Review of Middle East Economics and Finance Pages: 27-55 Volume: 17 Issue: 1 Year: 2021 Month: April DOI: 10.1515/rmeef-2020-0028 File-URL: https://doi.org/10.1515/rmeef-2020-0028 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:17:y:2021:i:1:p:27-55:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Al-Asadi Mohammad Author-Email: mohammad.alasadi@rub.de Author-Workplace-Name: Institute of Development Research and Development Policy, Ruhr University Bochum, Bochum, Germany Title: Financing Resources for Reconstruction in Severely Conflict-affected Countries Abstract: Countries emerging from armed conflict face tremendous challenges in restoring peace and development. One of the most serious challenges in this regard is mobilizing adequate resources for financing the reconstruction process. In many post-conflict countries, the resort to external financing resources becomes inevitable. This paper aims to understand how conflict intensity shapes the financing modalities in the post-conflict phase. The study uses statistical inference to compare the differences in key financing resources between two groups of post-conflict developing countries with different conflict intensity. The results show that countries severely affected by the conflict rely more heavily on external financing resources compared to countries moderately affected by the conflict. In particular, foreign aid, foreign investments, and external debt were significantly higher in the severely affected countries relative to moderately affected ones. The differences in most external financing resources between the two groups become more obvious when accounting for major income categories differences. The results were robust for different levels of conflict severity. Keywords: financing reconstruction, post-conflict recovery, conflict intensity, foreign aid, external borrowing Journal: Review of Middle East Economics and Finance Pages: 1-25 Volume: 17 Issue: 1 Year: 2021 Month: April DOI: 10.1515/rmeef-2020-0025 File-URL: https://doi.org/10.1515/rmeef-2020-0025 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:17:y:2021:i:1:p:1-25:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Giovanis Eleftherios Author-Email: egiovanis@adu.edu.tr Author-Workplace-Name: Department of Public Finance, Nazilli Faculty of Economics and Administrative Sciences, Aydın Adnan Menderes University, Cumhuriyet, 09860İsabeyli/Nazilli/Aydın, Turkey Author-Name: Ozdamar Oznur Author-Email: oznur.ozdamar@bakircay.edu.tr Author-Workplace-Name: Department of Economics, Faculty of Economics and Administrative Sciences, Izmir University Bakırcay, Izmir, Turkey Author-Name: Akilotu Eda Author-Email: edadundar23@hotmail.com Author-Workplace-Name: Aydın Adnan Menderes University, Social Science Institute, Aydin, Turkey Title: The Effect of the Regional “Income Tax Withholding Allowance” and “Social Security Premium Support” Programmes on Labour Outcomes in Turkey Abstract: This paper examines the employment effects of the “Income tax withholding allowance” and “Social security premium support” programmes implemented in Turkey in 2012. The programmes aim to provide incentives to firms and generate employment opportunities for groups in targeted regions in the Eastern part of Turkey. The analysis relies on detailed micro-level data derived by the Household Labour Force Survey in 2008–2016. We apply the difference-in-differences (DID) method, and we use as treated subjects the respondents located in the regions affected by the policy. Moreover, we propose the propensity score matching approach within the DID framework to reduce the possible selection bias. The findings show a positive impact of the programme on employment, wages, the number of working hours and labour force participation, but we find a negative effect on the probability of being employed in a permanent job for the treated group. Keywords: difference-in-differences, Eastern Turkey, regional employment support programmes, labour outcomes, propensity score matching Journal: Review of Middle East Economics and Finance Pages: 111-138 Volume: 17 Issue: 3 Year: 2021 Month: December DOI: 10.1515/rmeef-2020-0040 File-URL: https://doi.org/10.1515/rmeef-2020-0040 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:17:y:2021:i:3:p:111-138:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Cheratian Iman Author-Name: Goltabar Saleh Author-Workplace-Name: Economics Research Group, Academic Center for Education, Culture, and Research (ACECR), Tarbiat Modares University, Tehran, Iran Author-Name: Farzanegan Mohammad Reza Author-Email: farzanegan@uni-marburg.de Author-Workplace-Name: Economics of the Middle East Research Group, Center for Near and Middle Eastern Studies (CNMS) and School of Business and Economics, Philipps-Universität Marburg, Deutschhausstr. 12, 35032 Marburg, Germany Title: The Asymmetric Impact of Oil Prices on Unemployment in the MENA Region Abstract: We examine the effects of oil prices on unemployment rates in the Middle East and North Africa (MENA) over the period of 1991–2017. Using the panel nonlinear autoregressive distributed lag (panel NARDL) model, the results show that in the long run, positive changes of oil prices exert a positive (increasing) impact on the unemployment rate. However, negative changes in oil prices have a significant decreasing effect on the unemployment rate in the MENA region. We also find that the short run changes in oil prices do not show a significant effect on unemployment rates. Our findings are robust to an alternative measure of oil rents per capita and in line with predictions of the resource curse hypothesis. Countries with higher dependency on natural resource rents experience, on average, a slower long run economic growth rate (and thus higher unemployment rates), compared with countries with lower dependency. Keywords: oil rents, unemployment, resource curse, MENA, panel NARDL, Q43, E24 Journal: Review of Middle East Economics and Finance Pages: 175-204 Volume: 17 Issue: 3 Year: 2021 Month: December DOI: 10.1515/rmeef-2021-0004 File-URL: https://doi.org/10.1515/rmeef-2021-0004 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:17:y:2021:i:3:p:175-204:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Dadakas Dimitrios Author-Email: ddadakas@uoi.gr Author-Workplace-Name: Department of Economics, University of Ioannina, Panepistimioupoli, 45110, Ioannina, Greece Title: Trade Potential in Arab Nations: The Case of the GCC and PAFTA Abstract: We examine trade flows for Arab nations concentrating on the Gulf Cooperation Council (GCC) and Pan-Arab Free Trade Area (PAFTA) areas, to identify opportunities to enhance intra-Arab trade and facilitate regional integration. We employ panel data for the years 2003–2017 and a structural gravity model together with an “aggregate” trade potential measure that treats the GCC and PAFTA areas as single countries. Results suggest that, by 2015, intra-area trade had reached maximum capacity for both blocs. Potential to trade also reached capacity with many of the largest Free Trade Areas around the world, however, opportunities for trade expansion that still exist with the MERCOSUR and ASEAN, as well as many distinct destinations, can assist in strategic planning to enhance integration efforts. Keywords: GCC, PAFTA, free trade agreements, trade potential, structural gravity, F1, C33 Journal: Review of Middle East Economics and Finance Pages: 139-174 Volume: 17 Issue: 3 Year: 2021 Month: December DOI: 10.1515/rmeef-2020-0038 File-URL: https://doi.org/10.1515/rmeef-2020-0038 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:17:y:2021:i:3:p:139-174:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Benbachir Saad Author-Email: benbachirsaad@gmail.com Author-Name: Chraibi Assya Author-Email: chraibiassya@gmail.com Author-Workplace-Name: Department of Management science, Faculty of Legal, Economic and Social Sciences Agdal, Mohammed V University, P.O Box 721, Nations Unies Avenue, Agdal, Rabat, Morocco Author-Name: Harit Satt Author-Email: h.satt@aui.ma Author-Workplace-Name: Department of Accounting and Finance, School of Business and Administration, Al Akhawayn University, P.O Box 104, Hassan II Avenue, 53000, Ifrane, Morocco Title: Impact of Oil Price Shocks on MENA Countries Stock Markets: Event Study Methodology Abstract: The purpose of this paper is to examine the linkage between a sample of six oil-importing and oil-exporting MENA countries and oil price shocks over the period 2002–2020. The event study methodology is used to examine the behavior of stock prices around an event to measure its value under the efficient market theory. The findings suggest that the dataset used and the results are robust proven by overall statistically significant results for the eight events considered. The 2008 global financial crisis had the largest impact on stock markets on the event day. The nature and duration of response are also found to vary across different events and countries. Thus the practical implications of this paper are to suggest that investors should learn to better assess oil shocks by taking into account differences in country specific policies, government effectiveness and monetary policy. Keywords: oil price shocks, oil-exporting countries, oil-exporting countries, event study methodology, stock market index Journal: Review of Middle East Economics and Finance Pages: 1-27 Volume: 18 Issue: 1 Year: 2022 Month: April DOI: 10.1515/rmeef-2020-0045 File-URL: https://doi.org/10.1515/rmeef-2020-0045 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:18:y:2022:i:1:p:1-27:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Kalaitzi Athanasia Stylianou Author-Email: a.kalaitzi@lse.ac.uk Author-Workplace-Name: Middle East Centre, London School of Economics and Political Science, WC2A 2AZ, London, UK Author-Name: Kherfi Samer Author-Workplace-Name: Department of Economics, American University of Sharjah, Sharjah, UAE Author-Name: Alrousan Sahel Author-Workplace-Name: Ministry of Finance, Dubai, UAE Author-Name: Katsaiti Marina-Selini Author-Workplace-Name: Department of Innovation in Government and Society, United Arab Emirates University, Al Ain, UAE Title: Are Non-Primary Exports the Source for Further Economic Growth in the UAE? Abstract: This paper investigates whether non-primary exports directly or indirectly cause economic growth in the United Arab Emirates (UAE). This study performs the Johansen test to examine the presence of co-integration between the variables in an augmented production function. The Granger causality test is performed to investigate the short-run causality between non-primary exports and economic growth, while the long-run causality is investigated by employing the Toda and Yamamoto procedure. The empirical analysis indicates that the variables are co-integrated, and that short-run causality runs from non-primary exports to economic growth; results exhibit no evidence of direct causality from non-primary exports to economic growth in the long-run. Keywords: economic growth, non-primary exports, Granger causality, UAE Journal: Review of Middle East Economics and Finance Pages: 29-51 Volume: 18 Issue: 1 Year: 2022 Month: April DOI: 10.1515/rmeef-2021-0015 File-URL: https://doi.org/10.1515/rmeef-2021-0015 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:18:y:2022:i:1:p:29-51:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Dakhlallah Kassim M. Author-Email: dakhlk@sage.edu Author-Workplace-Name: School of Management, Russell Sage College – Albany, 140 New Scotland Avenue, Albany, NY 12208-3423, USA Title: Economic Reform, Fiscal Rules, and the Nonlinear Autoregressive Distributed Lag Bounds Test Model. Evidence from the United Arab Emirates Abstract: The study demonstrates that UAE Vision 2021 was effective, evidenced by the outcomes of the historical growth accounting model and the nonlinear autoregressive distributed lag bounds test model. Additionally, the study finds, among other things, that during the UAE Vision 2021, a sudden change in fiscal policy, whether expansionary or contractionary, proved effective, particularly in the long run and that a sudden change in crude oil price has a limited impact on the economy; however, investment in physical capital showed mixed results. Moreover, the nonlinear autoregressive distributed lag bounds test model demonstrates the nonlinearity of the relationships between crude oil price, investment in physical capital, and fiscal policy vis-à-vis economic performance. The model demonstrates that crude oil price, fiscal policy, and investment in physical capital are cointegrated with economic performance, reverting to long-run equilibrium in the aftermath of a shock. Hence, the study recommends the adoption of fiscal rules, specifically targeting the structural primary balance. The targeting smooths the underlying commodity price, reduces procyclicality, improves sovereign wealth funds, and cushions the economy from external shocks. Keywords: economic reform, fiscal rules, NARDL, macroeconomic stabilization, stabilization funds, UAE Vision 2021 Classification-JEL: E62, E63, E65, E66, O4, C2 Journal: Review of Middle East Economics and Finance Pages: 53-79 Volume: 18 Issue: 2 Year: 2022 Month: August DOI: 10.1515/rmeef-2021-0023 File-URL: https://doi.org/10.1515/rmeef-2021-0023 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:18:y:2022:i:2:p:53-79:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Awdeh Ali Author-Email: ali.awdeh@ul.edu.lb Author-Workplace-Name: Lebanese University, Beirut, Lebanon Title: The Impact of Financial Development and Institutional Quality on Environmental Conditions: Evidence from the MENA Region Abstract: The literature on the association between financial development and environment quality covers many dimensions. Nonetheless, the role of governance and institutional quality in this relationship has been highlighted moderately. Consequently, this research aims at extending the existing literature on the impact of financial development on CO2 emission, by integrating the role of institutional quality in the financial development-carbon emission nexus. By adopting a panel dataset of 20 MENA countries between 2002 and 2018 and using dynamic GMM models, the study examines firstly the impact of institutional quality on carbon emissions and revealed the important role of government effectiveness and quality of regulation in preserving environment quality. Furthermore, the paper tests how the combination of financial development and institutional quality can change the dynamic of their separate control ability on pollution. The results show indeed that their impact on CO2 emissions is amplified and changes from non-Granger cause type to Granger cause type. Keywords: CO2 emissions, financial development, institutional quality, dynamic GMM model, MENA region Classification-JEL: F36, G28, O43, Q56 Journal: Review of Middle East Economics and Finance Pages: 81-105 Volume: 18 Issue: 2 Year: 2022 Month: August DOI: 10.1515/rmeef-2022-0006 File-URL: https://doi.org/10.1515/rmeef-2022-0006 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:18:y:2022:i:2:p:81-105:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Albinali Abdulla Ahmed Author-Email: aalbinali@hbku.edu.qa Author-Workplace-Name: College of Islamic Studies, Hamad Bin Khalifa, Doha, Qatar Author-Name: Ghosh Saibal Author-Email: emailsaibal@gmail.com Author-Workplace-Name: Qatar Central Bank, Doha, Qatar Title: Interbank Connections, Bank Risk and Returns Abstract: Using data on MENA country-banks, we study how interbank connections affect bank risk and returns. The findings indicate that interbank connections are determinantal to bank stability in the MENA region during periods of crisis, supportive of contagion effects. There is also a dampening impact on profitability. Over and above, the evidence for Islamic banks is supportive of contagion effects during the crisis, although their profitability is higher as well. Furthermore, macroprudential policies appear to exert a salutary impact on bank behavior, although this impact differs across the response variable: being effective for credit exposures with profits as the outcome and for funding exposure when non-performing loan ratio is the outcome variable. Keywords: interconnections, interbank, banking, MENA, macroprudential Classification-JEL: G21, E58, P51 Journal: Review of Middle East Economics and Finance Pages: 171-193 Volume: 18 Issue: 3 Year: 2022 Month: December DOI: 10.1515/rmeef-2021-0024 File-URL: https://doi.org/10.1515/rmeef-2021-0024 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:18:y:2022:i:3:p:171-193:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Ghazalian Pascal L. Author-Email: pascal.ghazalian@uleth.ca Author-Workplace-Name: Department of Economics, University of Lethbridge, Lethbridge, AB, T1K 3M4, Canada Title: The Arab Spring and Its Implications for FDI Inflows to the MENA Region Abstract: The Arab Spring (AS) marked an unprecedented event in the Middle East and North Africa (MENA) region, and it generated political and economic uncertainties and triggered violent conflicts and political rifts. This paper empirically examines the short-run and long-run effects of the AS on foreign direct investment (FDI) inflows to the MENA region and to individual MENA countries. The empirical analysis is implemented through the generalized method of moments (GMM) estimator for dynamic panel models, using different empirical specifications. The benchmark results show that the AS has led to important reductions in FDI inflows to the MENA region. A more detailed empirical analysis reveals significant variations in the AS effects on FDI inflows across MENA countries and it underscores distinct patterns over different time periods. These findings imply that governments in the MENA region are required to maintain political stability, and to adopt distinctive policies that lessen the adverse implications of the AS and that set favorable conditions for FDI inflows in the post-COVID-19 pandemic era. Keywords: Arab Spring, conflict, Foreign Direct Investment (FDI), Middle East and North Africa (MENA), political uncertainty Classification-JEL: F20, F21, F23, F51, D74 Journal: Review of Middle East Economics and Finance Pages: 107-138 Volume: 18 Issue: 3 Year: 2022 Month: December DOI: 10.1515/rmeef-2022-0010 File-URL: https://doi.org/10.1515/rmeef-2022-0010 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:18:y:2022:i:3:p:107-138:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Eldeep City Author-Email: city_eldeep2016@feps.edu.eg Author-Name: Zaki Chahir Author-Email: chahir.zaki@feps.edu.eg Author-Workplace-Name: Economics Department, Faculty of Economics and Political Science, Cairo University, Cairo, 11274, Egypt Title: COVID-19 Impact and Policy Response: A General Equilibrium Approach for Egypt Abstract: The economic impacts of COVID-19 were negative across nations but with different degrees depending on the timing, degree of containment measures and the extent of dependency on the world economy. Moreover, the policy response has been heterogeneous across different countries, but mainly addressing urgent and short-term problems without addressing the structural problems that led to the vulnerability of these countries in crisis times. Thus, the objective of this paper is threefold. First, it distinguishes between the supply and demand effects of COVID-19. Second, we examine the key differences between the short and long terms effects of the policies that were adopted. Finally, we modify the model to include the informal labor that was highly affected by the pandemic, and we relax the assumption of perfect competition and replicate the simulations under an imperfect competitive framework in order to see how reforms pertaining to competition policies can alter the adopted policies. To do so, we use a dynamic CGE model calibrated on the Egyptian Social Accounting Matrix of 2014/2015. Our findings show how the Egyptian economy has been relatively vulnerable to external shocks that affect its sources of foreign currency. Yet, most of the effects are temporary and vanish in the long run. Imperfect competition in commodity markets would increase the adverse effects of the pandemic and undermine the effectiveness of public policies. Keywords: CGE, stabilization policies, informal workers, imperfect competition, Egypt Classification-JEL: D58, E63, P41 Journal: Review of Middle East Economics and Finance Pages: 139-170 Volume: 18 Issue: 3 Year: 2022 Month: December DOI: 10.1515/rmeef-2022-0004 File-URL: https://doi.org/10.1515/rmeef-2022-0004 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:18:y:2022:i:3:p:139-170:n:4 Template-Type: ReDIF-Article 1.0 Author-Name: Hegazi Nourhan Author-Workplace-Name: PhD Student, Cairo University, Giza, Egypt Author-Name: Noureldin Diaa Author-Workplace-Name: Economist, Research Department, International Monetary Fund, 700 19th Street NW, Washington, DC 20431, USA Author-Name: Zaki Chahir R. Author-Email: chahir.zaki@feps.edu.eg Author-Workplace-Name: Professor of Economics & Director of the French Section, Department of Economics, Faculty of Economics and Political Science, Cairo University, 11274, Cairo, Egypt Title: What Drives Business Cycles in Egypt? An Analysis of Coincident and Leading Indicators Abstract: The paper proposes a chronology for the Egyptian economy by detecting phases of expansions and recessions during the period (2002–2019). It examines the cyclical behavior of variables that are considered potentially useful in measuring or predicting aggregate economic activity. To do so, we combine the National Bureau of Economic Research (NBER) approach together with time series analysis techniques to select the variables best suitable to play the role of coincident and leading indicators. This methodology is found to be the most appropriate when there is no well-established reference chronology as a benchmark for the cyclical analysis, which is the case of Egypt. As a result, two composite indexes are constructed: 1) the composite index of coincident economic indicators (CEI), which can be considered an adequate measure for the Egyptian business cycle; 2) the composite index of leading economic indicators (LEI) that shows good performance in anticipating aggregate economic activity in Egypt. Moreover, the empirical results indicate that total employment, consumption, and investment move coincidently with the reference cycle, while exchange rate and interest rate variables lead the reference cycle and have strong predictive power for economic activity in Egypt. Keywords: aggregate economic activity, business cycles, coincident indicators, cyclical properties, leading indicators Classification-JEL: E32 Journal: Review of Middle East Economics and Finance Pages: 37-99 Volume: 19 Issue: 1 Year: 2023 Month: April DOI: 10.1515/rmeef-2022-0015 File-URL: https://doi.org/10.1515/rmeef-2022-0015 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:19:y:2023:i:1:p:37-99:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Hrenko Zachary Author-Name: Nugent Jeffrey B. Author-Email: nugent@usc.edu Author-Workplace-Name: University of Southern California, Los Angeles, USA Title: Collateral Reforms and Access to Finance: Evidence from the West Bank and Gaza and Their Firms Abstract: This paper examines the impact of an important financial reform, namely a collateral reform extending the assets, which could qualify as collateral for bank loans to the firms’ own equipment and moveable assets, so as to increase the access to such credit by small private firms. The reform studied was undertaken in the Palestinian territories of West Bank and Gaza (WBG) in the Middle East and North Africa (MENA) region where bank credit and financial markets have been especially heavily constrained. First, we apply two different synthetic control techniques to panel data covering both pre- and postreform years from both the WBG and a sample of comparable countries that did not undertake collateral reform. The results from both synthetic control methods show that such credit increased significantly after the reform in WBG but not in the nonreformed comparator countries. Then, we use comparable firm-level data obtained from a panel of all available firms in WBG from the Enterprise Survey of the World Bank, both 3 years before and 3 years after the reform to trace the impacts of the reform on various financial and other outcomes at the firm level. Despite the other difficulties that WBG was going through over the period, we find considerable evidence at the firm level that this collateral reform has been effective in stimulating credit, investment, and employment growth, especially among small firms, underscoring its potential for use by other low- and middle-income countries. Keywords: collateral reform, access to finance, synthetic control techniques Classification-JEL: L51, N25 Journal: Review of Middle East Economics and Finance Pages: 1-35 Volume: 19 Issue: 1 Year: 2023 Month: April DOI: 10.1515/rmeef-2022-0019 File-URL: https://doi.org/10.1515/rmeef-2022-0019 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:19:y:2023:i:1:p:1-35:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Mahmoud Ali Israa Ali Author-Name: Ghoneim Hebatallah Author-Email: hebatallah.ghoneim@guc.edu.eg Author-Workplace-Name: Department of Economics, German University in Cairo, Cairo, Egypt Author-Name: Smolny Werner Author-Workplace-Name: Faculty of Mathematics and Economics, Ulm University, Ulm, Germany Title: Oil Prices Pass-Through to Domestic Inflation: Symmetric Versus Asymmetric Pass-Through Abstract: This paper analyses the world oil price pass-through to Egypt’s domestic inflation rate. The paper adopts the augmented Phillips curve framework and further extends it to consider the growing body of empirical evidence, suggesting that oil prices may have asymmetric effects on inflation. Accordingly, the paper examines and compares the symmetric and the asymmetric oil price pass-through to domestic inflation in the short run and the long run. A linear ARDL-ECM and the bounds cointegration tests are applied as well as a nonlinear asymmetric NARDL model and Wald tests for short-run and long-run asymmetries. The sample consists of quarterly data covering the period from 2001 Q3 to 2019 Q2. The results show that, in the short run, the pass-through of world oil prices to the Egyptian domestic inflation rate is symmetric and of small magnitude. However, on the long-run, oil price pass-through to inflation appears to be nonlinear and asymmetric, specifically, declining oil prices lead to a fall in domestic inflation that is more significant than the rise in inflation caused by rising oil prices. Keywords: augmented Phillips curve, Egypt, inflation, oil prices, pass-through effect Classification-JEL: C22, E31, Q4 Journal: Review of Middle East Economics and Finance Pages: 131-151 Volume: 19 Issue: 2 Year: 2023 Month: August DOI: 10.1515/rmeef-2023-0003 File-URL: https://doi.org/10.1515/rmeef-2023-0003 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:19:y:2023:i:2:p:131-151:n:2 Template-Type: ReDIF-Article 1.0 Author-Name: Lemaire Thibault Author-Email: thibault.lemaire@etu.univ-paris1.fr Author-Workplace-Name: International Monetary Fund, Washington, D.C., USA Title: Civil Conflicts and Exchange Rate Misalignment: Evidence from MENA and Arab League Members Abstract: For more than a decade, civil conflicts intensity has been high in the Middle East and North Africa, yet the monetary and financial impacts of such episodes have received relatively little attention. Using macroeconomic and conflict panel data for Arab League members, Iran and Turkey during the period 1970–2018, this paper constructs a country-specific real exchange rate misalignment index and adopts an instrumental variable approach to show that civil conflicts lead to real exchange rate overvaluations in the region: a 1 unit increase in civil conflict intensity leads to a 0.24 unit increase in the RER misalignment index. The results suggest that upward pressures on the real exchange rate, such as inflation resulting from physical capital and output loss, dominate. Economic policy during post-conflict transitions should mitigate this effect by incorporating a strategy to realign the currency. Keywords: exchange rate misalignment, civil conflict, Middle East & North Africa, emerging and developing countries Classification-JEL: C23, D74, E32, F31, F41 Journal: Review of Middle East Economics and Finance Pages: 101-130 Volume: 19 Issue: 2 Year: 2023 Month: August DOI: 10.1515/rmeef-2022-0001 File-URL: https://doi.org/10.1515/rmeef-2022-0001 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:19:y:2023:i:2:p:101-130:n:3 Template-Type: ReDIF-Article 1.0 Author-Name: Gholipour Hassan F. Author-Email: h.fereidouni@westernsydney.edu.au Author-Workplace-Name: School of Business, Western Sydney University, Sydney, Australia Author-Name: Goodell John W. Author-Email: johngoo@uakron.edu Author-Workplace-Name: College of Business, The University of Akron, Akron, USA Author-Name: Cheratian Iman Author-Email: cheratian@acecr.ac.ir Author-Name: Goltabar Saleh Author-Email: goltabar@acecr.ac.ir Author-Workplace-Name: Economics Research Group, Academic Center for Education, Culture, and Research (ACECR), Tarbiat Modares University, Tehran, Iran Author-Name: Lahmar Oumaima Author-Email: oumaima.lahmar@uning.it Author-Workplace-Name: Department of Management, University of Bergamo, Bergamo, Italy Title: Gender Differences in Business Record Keeping and Planning: Evidence from Informal Enterprises in Iraq Abstract: Business record keeping, along with business planning, are foundational steps in businesses moving from informal stature to contributing to the capitalization of assets. Thus, the transitioning of informal businesses to business record keeping and planning is significant for economic development. The purpose of this study is to investigate whether there is a relationship between the gender of informal business owners and their engagement in business record keeping and planning in an emerging economy. We take advantage of a unique data set on informal enterprises in Iraq to show that women, versus male, leaders of informal businesses are more likely to adopt business record keeping and formal business planning. Following the foundational theories of Max Weber (Gerth and Mills 2014), we attribute our results to groups that are excluded from dominant relationship networks relying more on rational bureaucracy. Results will be of great interest to scholars and policymakers interested in the impacts of gender differences on financial development. Keywords: informal enterprises, gender differences in business, women as leaders, economic development Classification-JEL: Z10, D01, D14, D21 Journal: Review of Middle East Economics and Finance Pages: 187-208 Volume: 19 Issue: 3 Year: 2023 Month: December DOI: 10.1515/rmeef-2023-0017 File-URL: https://doi.org/10.1515/rmeef-2023-0017 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:19:y:2023:i:3:p:187-208:n:1 Template-Type: ReDIF-Article 1.0 Author-Name: Muktad Abdalla Author-Email: baida2020@yahoo.com Author-Workplace-Name: Department of Economics, Colorado State University, 1600 W Plum St, Apt 28M, 80523-1019, Fort Collins, CO, USA Title: Democracy, Corruption and Economic Growth Post-Arab Spring in Tunisia and Libya Abstract: This paper uses the synthetic control method to analyze the repercussions of the Arab Spring on the economic growth, corruption levels, and democracy of Tunisia and Libya. The study covered the years 2003–2018, and I utilized panel data from Tunisia, Libya, and 56 developing countries that were unaffected by the Arab revolution. I excluded countries with incomplete data, those directly impacted by the Arab Spring, and countries affected by external shocks like natural disasters or conflicts. All the data used in this analysis was obtained from the World Bank Open Data and the Varieties of Democracy (V-Dem) project. The findings indicate that the Arab Spring had adverse effects on economic growth in both Tunisia and Libya, in comparison to what would have been expected based on their synthetic control counterparts. On the other hand, the results demonstrate a significant increase in democracy and anti-corruption in both countries following the Arab Spring. Keywords: Arab Spring, democracy, corruption, economic growth, synthetic control method Classification-JEL: C01, D74, E02, O1, O43, P16 Journal: Review of Middle East Economics and Finance Pages: 153-186 Volume: 19 Issue: 3 Year: 2023 Month: December DOI: 10.1515/rmeef-2023-0010 File-URL: https://doi.org/10.1515/rmeef-2023-0010 File-Format: text/html Handle: RePEc:bpj:rmeecf:v:19:y:2023:i:3:p:153-186:n:3