nep-ara New Economics Papers
on Arab World
Issue of 2009‒05‒02
four papers chosen by
Quentin Wodon
World Bank

  1. A Primer on Fiscal Analysis in Oil-Producing Countries By Daria Zakharova; Paulo A. Medas
  2. Extreme Bounds of Democracy By Martin Gassebner; Michael J. Lamla; James Raymond Vreeland
  3. Credit Market in Morocco: A Disequilibrium Approach By Nada Oulidi; Laurence Allain
  4. The Three Epochs of Oil By Eyal Dvir; Ken Rogoff

  1. By: Daria Zakharova; Paulo A. Medas
    Abstract: This paper proposes an integrated approach to fiscal policy analysis in oil producing countries (OPCs) geared towards addressing their unique and complex policy challenges. First, an accurate assessment of the fiscal stance in OPCs can be obscured by large and volatile oil revenue flows. Second, uncertain and volatile oil revenue flows can complicate the management of macroeconomic policies in these countries. Third, given the exhaustibility of oil reserves, OPCs need to address longer-term sustainability and intergenerational equity issues. The use of non-oil fiscal indicators, stress tests, medium-term frameworks, and permanent oil income models can greatly aid in addressing these challenges.
    Keywords: Fiscal policy , Oil producing countries , Oil revenues , Commodity price fluctuations , Nonoil sector , Revenue sources , Cross country analysis ,
    Date: 2009–03–19
  2. By: Martin Gassebner (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Michael J. Lamla (KOF Swiss Economic Institute, ETH Zurich, Switzerland); James Raymond Vreeland (Georgetown University, Edmund A. Walsh School of Foreign Service)
    Abstract: There are many stories of democracy but little consensus over which variables robustly determine its emergence and survival. We apply extreme bounds analysis to test the robustness of 59 factors proposed in the literature, evaluating over 3 million regressions. The most robust determinants of the transition to democracy are GDP growth (a negative eect), past transitions (a positive eect), and OECD membership (a positive eect). There is some evidence that fuel exporters and Muslim countries are less likely to see democracy emerge, although the latter finding is driven entirely by oil producing Muslim countries. Regarding the survival of democracy, the most robust determinants are GDP per capita (a positive effect) and past transitions (a negative effect). There is some evidence that having a former military leader as the chief executive has a negative effect, while having other democracies as neighbors has a reinforcing effect.
    Keywords: democracy, extreme bounds analysis, regime transition
    JEL: C23 F59 O11 P16 P48
    Date: 2009–04
  3. By: Nada Oulidi; Laurence Allain
    Abstract: In this paper we use a disequilibrium framework common in the “credit crunch†literature, first to examine whether the slow credit growth in Morocco during the rapid expansion of liquidity in the first half of the decade can be attributed to credit rationing, and second to investigate the role of asset price increases in the recent acceleration of credit growth. Our results do not support the credit rationing hypothesis in the first half of the decade. They do however, show that the recent increase in real estate prices stimulated credit supply and demand, with a stronger effect on the latter.
    Keywords: Credit expansion , Morocco , Asset prices , Real estate prices , Credit demand , Credit controls , Economic models ,
    Date: 2009–03–25
  4. By: Eyal Dvir (Boston College); Ken Rogoff (Harvard University)
    Abstract: We test for changes in price behavior in the longest crude oil price series available (1861-2008). We find strong evidence for changes in persistence and in volatility of price across three well defined periods. We argue that historically, the real price of oil has tended to be highly persistent and volatile whenever rapid industrialization in a major world economy coincided with uncertainty regarding access to supply. We present a modified commodity storage model that fully incorporates demand, and further can accommodate both transitory and permanent shocks. We show that the role of storage when demand is subject to persistent growth shocks is speculative, instead of its classic mitigating role. This result helps to account for the increased volatility of oil price we observe in these periods.
    Keywords: Oil Price, Oil Shocks, Storage, Structural Change
    JEL: E0 Q4 L7 N5
    Date: 2009–04–23

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