nep-ara New Economics Papers
on Arab World
Issue of 2010‒03‒28
three papers chosen by
Quentin Wodon
World Bank

  1. Constraints on Trade in the MENA region By Hirut Wolde; Rina Bhattacharya
  2. The Cyclicality of Fiscal Policy in the Middle East and Central Asia:Is the Current Crisis Different? By Yasser Abdih; Pablo Lopez-Murphy; Agustin Roitman; Ratna Sahay
  3. Fiscal Policy in Oil Producing Countries During the Recent Oil Price Cycle By Pablo Lopez Murphy; Mauricio Villafuerte

  1. By: Hirut Wolde; Rina Bhattacharya
    Abstract: In this paper we estimate gravity models to see whether trade volumes of countries in the MENA region are significantly lower than what would be expected given their economic, cultural and geographical characteristics. Our empirical results show that the variables used in standard gravity models cannot explain a significant part of MENA's trade performance, particularly on exports. We then go on to 'augment' the standard gravity model with relevant variables from the World Bank's Business Enterprise surveys. Our results further show that these variables, and in particular transport constraints and inefficiencies in customs clearance processes, are important in explaining the MENA region's underperformance in trade.
    Keywords: Cross country analysis , Customs administration , Economic models , Exports , Imports , Labor supply , Middle East , North Africa , Private sector , Skilled labor , Tariff structures , Trade liberalization , Trade policy , Transport ,
    Date: 2010–02–04
  2. By: Yasser Abdih; Pablo Lopez-Murphy; Agustin Roitman; Ratna Sahay
    Abstract: The countries of the Middle East and North Africa, and the Caucasus and Central Asia have the highest output volatility in the world. Fiscal policy is a powerful tool that can help dampen the business cycles. This paper analyzes the cyclical properties of fiscal policy in the region during the past four decades and explores whether the response during the current global economic crisis is different in 2009. Across a sample of 28 countries, we find that fiscal policy has typically amplified the business cycles and that it has been more procyclical in good times than in bad times. However, the response to the current crisis has differed from the past in that about half of the countries responded countercyclically in 2009. Going forward, the fiscal space during downturns varies widely across countries, depending on the level of debt, access to capital markets, and natural resource wealth. Not surprisingly, the oil exporters have more fiscal room than oil importers, although there are some oil importers that still have room to respond countercyclically in bad times.
    Date: 2010–03–18
  3. By: Pablo Lopez Murphy; Mauricio Villafuerte
    Abstract: This paper presents a detailed analysis of the average fiscal policy responses of oil producing countries (OPCs) to the recent oil price cycle. We find that OPCs worsened their non-oil primary balances substantially during 2003-2008 driven by an increase in primary spending. However, this trend was partially reversed when oil prices went down in 2009. We also find evidence that fiscal policy has been procyclical and has hence exacerbated the fluctuations in economic activity. In addition, we estimate that a small reduction in oil prices could lead to very large financing needs in the near future. Finally, we show that long-term fiscal sustainability positions in OPCs have worsened.
    Keywords: Business cycles , Commodity price fluctuations , Cross country analysis , Fiscal policy , Fiscal sustainability , Nonoil sector , Oil prices , Oil producing countries , Oil production , Oil revenues ,
    Date: 2010–02–02

This nep-ara issue is ©2010 by Quentin Wodon. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.