nep-ara New Economics Papers
on Arab World
Issue of 2010‒01‒30
nine papers chosen by
Quentin Wodon
World Bank

  1. Is there an Europeanisation of Turkish foreign policy? An addendum to the literature on EU candidates By Meltem Müftüler-Baç; Yaprak Gürsoy
  2. The relationship between output growth and inflation: Evidence from Turkey By Omay, Tolga; Aluftekin, Nilay; Karadagli, Ece C.
  3. The Guide to Islamic Economics, Banking, and Finance By Alsayyed, Nidal
  4. Economic Freedom and Foreign Direct Investment: How different are the MENA countries from the EU? By José Martins Caetano; António Bento Caleiro
  5. Exchange Rate Assessments: Methodologies for Oil Exporting Countries By Irineu E. Carvalho Filho; Rudolfs Bems
  6. The Spillover Effects of the Global Crisis on Economic Activity in MENA Emerging Market Countries-An Analysis Using the Financial Stress Index By Kenji Moriyama
  7. Workers' Remittances and Growth in MENA Labor Exporting Countries By Sufian Eltayeb Mohamed
  8. Islamic Financial Engineering and Methodology In Achieving Therapeutic Process of Global Financial System: Shari'Ah Objectives vs. Industry Practitioners By Alsayyed, Nidal
  9. The Housing Cycle in Emerging Middle Eastern Economies and its Macroeconomic Policy Implications By Samya Beidas-Strom; Weicheng Lian; Ashwaq Maseeh

  1. By: Meltem Müftüler-Baç; Yaprak Gürsoy
    Abstract: When Turkey began its accession negotiations with the European Union on 3 October 2005, this constituted an important turning point for Turkey’s relations with the EU and for Turkish socio-political transformation. This paper poses the following questions; is there a Europeanisation of Turkish foreign policy as a result of Turkey’s accession negotiations with the EU? If so, then what are the main areas and limits in which Europeanisation of Turkish foreign policy has occurred? This paper answers these questions by providing a background on Europeanisation, firstly by differentiating between the member states and the candidate countries, and secondly by analysing the Europeanisation of Turkish foreign policy through an investigation of the changes in Turkish foreign policy since 1999 with regards to the CFSP, NATO-EU cooperation and Middle Eastern neighbors.
    Keywords: CFSP/ESDP; enlargement; Europeanization
    Date: 2009–12–15
  2. By: Omay, Tolga; Aluftekin, Nilay; Karadagli, Ece C.
    Abstract: In this study, a bi-variate Generalized Autoregressive Conditional Heteroscedasticty model is used in order to investigate the Granger causality relationships between output growth, inflation rate and their uncertainties. Our test results show that the existence of Granger-causality is observed from nominal uncertainty to inflation, from nominal uncertainty to real uncertainty, from output growth to real uncertainty, from output growth to nominal uncertainty and from inflation to nominal uncertainty. These findings prove that theoretical predictions of Cuikerman and Meltzer (1986), Okun (1971) and Friedman (1977) are valid for the period 1986:6-2007:1 for Turkey. On the other hand, ‘Short-run Phillips Curve’ and ‘Taylor Effect’ have proven empirically to be invalid for Turkey for this sample period. Moreover, we deduce that Turkish inflation is affected by the output growth through the nominal uncertainty channel.
    Keywords: Inflation; output growth; uncertainty; Granger-Causality; bi-variate GARCH.
    JEL: C32 E31 E00
    Date: 2009–09–10
  3. By: Alsayyed, Nidal
    Abstract: A full array of frequently asked questions and their Shari’ah approved answers in today’s modern Islamic Economics, Finance, and Banking.
    Keywords: Musharakah; Sukuk; Musharakah; Murabahah; Ijarah; bequest; Waqf; Contracts; Mudarabah; Sale; Leasing; Islamic Economics; Islamic Banking; Islamic Finance
    JEL: K42 E50 F21 Z11 B00
    Date: 2009–12–11
  4. By: José Martins Caetano (Department of Economics, University of Évora); António Bento Caleiro (Department of Economics, University of Évora)
    Abstract: The risk perceived by investors is crucial in the decision to invest, in particular when it concerns a foreign country. The investment risk associated is a multi-faceted element given that it reflects many aspects that are relevant to (foreign) investors, such as the level of transparency, corruption, rule of law, governance, etc. In this paper we consider the level of economic freedom, as provided by the ?Heritage Foundation?, for the most recent years, in order to analyse how is this measure of risk related to the inward foreign direct investment performance index, as provided by the UNCTAD. Given the subjectivity of risk an appropriate methodology consists on using fuzzy logic clustering, which is applied in the paper in order to verify how different the MENA region is from the set of EU-member states. The results show that economic freedom and inward FDI are positively associated, in particular in the cluster of countries that present a higher economic freedom. Of particular interest is the result that some MENA countries belong to the same cluster of most of the EU-countries.
    Keywords: Economic Freedom, European Union (EU) countries, Foreign Direct Investment, Fuzzy Clustering, Institutions, Middle East North Africa (MENA) countries
    JEL: C49 E22 F21
    Date: 2009
  5. By: Irineu E. Carvalho Filho; Rudolfs Bems
    Abstract: Are the current account fluctuations in oil-exporting countries "excessive"? How should their real exchange rate respond to the evolution of external (and domestic) fundamentals? This paper proposes methodologies tailored to the specific features of oil-exporting countries that help address these questions. Price-based methodologies (based on the time series of real effective exchange rates) identify a strong link between the real exchange rate and the terms of trade, but have relatively limited explanatory power. On the other hand, an empirical model of the current account, which fits oil exporting countries' data well, and an intertemporal model that takes into account the stock of oil reserves provide useful benchmarks for oil exporters' external balances.
    Keywords: Commodity price fluctuations , Current account , Economic models , Exchange rates , Fiscal policy , Oil exporting countries , Oil prices , Oil revenues , Real effective exchange rates ,
    Date: 2009–12–18
  6. By: Kenji Moriyama
    Abstract: The estimated spillover of the global crisis to emerging market (EM) economies in the Middle East and North Africa (MENA) indicates that nearly two-thirds of the increased financial stress in MENA EM countries after the Lehman shock is attributable to direct or indirect spillovers of financial stress in advanced economies. Moreover, the estimated models suggest that the increased financial stress and slowdown in economic activity in advanced economies can explain about half of the drop in real GDP growth in MENA EM countries after the Lehman shock.
    Keywords: Cross country analysis , Economic growth , Economic models , Emerging markets , Financial crisis , Fiscal policy , Global Financial Crisis 2008-2009 , Middle East , Monetary policy , North Africa , Regional shocks , Spillovers ,
    Date: 2010–01–11
  7. By: Sufian Eltayeb Mohamed (Aristotle University of Thessaloniki)
    Abstract: This paper presents an empirical examination of effects of workers’ remittance on economic growth in a sample of 7 remittance-receiving MENA countries. In order to empirically analyze the impact of remittances we estimate growth equations using a set of 7 MENA labor exporting countries during the period 1975-2006. A standard growth models are estimated using both fixed-effects and random effects models. The empirical results show the support of the fixed –effects method as the random effects model is rejected in statistical tests. The results show the support for the view that remittances have a positive impact on growth both directly and indirectly through their interactions with financial and institutional channels.
    Keywords: Remittances, Economic Growth, Panel Data, Fixed effects, MENA Countries
    JEL: C3 F3 F22
    Date: 2009
  8. By: Alsayyed, Nidal
    Abstract: Islamic Financial Engineering and Economics is the Shari’ah unique approach to formulate the parameters that any firm should use or attempt to minimize the risk adherent to any legal asset investment. Such attempts will hopefully bridge the gap in awareness on the part of Muslim economists and conventional practitioners. Our hybrid quantitative /qualitative research paper explores other less known, understood, and documented Islamic capital market instruments, such as Islamic derivatives. Shari’ah objectives towards derivatives, such as forwards, futures and options are yet to be matched for a possible compliant practical application in the implementation of such risk management tools. Islamic derivatives have been created and are now being used in the Islamic financial industry. These derivatives like other Islamic products use Shari’ah approved contracts and instruments, such as, inter alia, wa’ ad, Salam, and Murabahah. The structure of the Islamic derivatives uses a combination of the above mentioned contracts. Unlike Sukuk there are no standards that have been passed by AAOIFI. This means that Shari’ah parameters have not been standardized for the industry on these instruments. Increasing the transparency of these products would ensure adherence to Shari’ah and open up the market to better governance and comprehension. Which will result in; the standardization, identification, and examination of the various Islamic derivative products that are being offered in the market under the umbrella of Shari’ah provisions and as applied by practitioners.
    Keywords: Islamic Financial Engineering; Islamic Economics; Global Financial Crisis; Islamic Derivatives; fiqh mu'malat;
    JEL: B40 Y40 E42 A23 C63 B22 A10 M21
    Date: 2009–12–10
  9. By: Samya Beidas-Strom; Weicheng Lian; Ashwaq Maseeh
    Abstract: This paper examines housing finance and housing price dynamics in selected emerging Middle Eastern economies over the past two decades. It finds that (i) mortgage markets have experienced rapid development, which has led to lower private per capita consumer spending volatility this decade; (ii) a downward price correction occurred in the housing market after 2007, which appears to have bottomed out; (iii) the rental market appears to be largely determined by region-specific economic fundamentals-a youthful working-age population and wealth variables; and (iv) a segregation between self-owned house and rental price dynamics exists in this region, rendering the former more sensitive to the business cycle.
    Keywords: Business cycles , Consumption , Cross country analysis , Economic models , Emerging markets , Household credit , Housing , Housing prices , Middle East and Central Asia , North Africa , Price increases , Real estate prices ,
    Date: 2009–12–30

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