nep-ara New Economics Papers
on Arab World
Issue of 2009‒02‒22
four papers chosen by
Quentin Wodon
World Bank

  1. The Financial Crisis of 2008 and the Developing Countries By Naude, Wim
  2. Oil Prices and Real Exchange Rates in Oil-Exporting Countries: A Bounds Testing Approach By Jahan-Parvar, Mohammad R.; Mohammadi, Hassan
  3. World Oil: Market or Mayhem? By James L. Smith
  4. An Empirical Investigation of Stock Market Behavior in the Middle East and North Africa By Cheng, Ai-ru; Jahan-Parvar, Mohammad R.; Rothman, Philip

  1. By: Naude, Wim
    Abstract: Following the financial crisis that broke in the US and other Western economies in late 2008, there is now serious concern about its impact on the developing countries. The world media almost daily reports scenarios of gloom and doom, with many predicting a deep global recession. This paper critically discusses this and concludes that as far as the developing countries are concerned, a bit more optimism may be warranted. Although without doubt there are particular countries that will be adversely affected, there will also be countries that may be less affected, may avoid recession, and may recover sooner than expected. Six major reasons for this conclusion are discussed. Without this resilience in the developing world, prospects for the world?s richer countries would be much bleaker. Finally, some options available to the developing countries for minimizing the impact of the crisis are discussed. The crisis accentuates the urgent need for accelerating financial development in developing countries, both through domestic financial deepening, domestic resource mobilization, and reform of the international financial system.
    Keywords: financial crisis, developing countries, development finance, financial development
    Date: 2009
  2. By: Jahan-Parvar, Mohammad R.; Mohammadi, Hassan
    Abstract: We test the validity of the Dutch disease hypothesis by examining the relationship between real oil prices and real exchange rates in a sample of fourteen oil exporting countries. Autoregressive distributed lag (ARDL) bounds tests of cointegration support the existence of a stable relationship between real exchange rates and real oil prices in all countries, suggesting a strong support for the Dutch disease hypothesis.
    Keywords: Oil Prices; Real Exchange Rates; Dutch Disease; Cointegration; Autoregressive Distributed Lags.
    JEL: C32 F37 C52 F31
    Date: 2008–12–28
  3. By: James L. Smith
    Abstract: The world oil market is regarded by many as a puzzle. Why are oil prices so volatile? What is OPEC and what does OPEC do? Where are oil prices headed in the long run? Is “peak oil” a genuine concern? Why did oil prices spike in the summer of 2008, and what role did speculators play? Any attempt to answer these questions must be informed and disciplined by economics. Such is the purpose of this essay: to illuminate recent developments in the world oil market from the perspective of economic theory.
    Date: 2008–09
  4. By: Cheng, Ai-ru; Jahan-Parvar, Mohammad R.; Rothman, Philip
    Abstract: This paper studies excess market returns in the relatively understudied nancial markets of nine Middle Eastern and North African (MENA) countries within the context of three variants of the Capital Asset Pricing Model: the static international CAPM; the constant-parameter intertemporal CAPM; and a Markov-switching intertemporal CAPM which allows for the degree of integration with international equity markets to be time-varying. On the whole we nd that: (1) Israel and Turkey are most strongly integrated with world nancial markets; (2) in most other MENA markets examined there is primarily local pricing of risk and evidence of a positive risk-return trade-o; and (3) there is substantial time variation in the weights on local and global pricing of risk for all of these markets. Our results suggest that investment in many of these markets over the sample studied would have provided returns uncor- related with global markets, and thus would have served as nancial instruments with which portfolio diversication could have been improved.
    Keywords: Middle Eastern and North African (MENA); GARCH; CAPM; Markov switching; segmentation; integration; emerging markets
    JEL: G12 G15 C22
    Date: 2009–02–05

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