nep-ara New Economics Papers
on Arab World
Issue of 2011‒05‒14
seven papers chosen by
Quentin Wodon
World Bank

  1. An Analysis of Political and Institutional Power Dispersion: The Case of Turkey By Ibrahim Tutar; Aysit Tansel
  2. The Turkish Wage Curve : Evidence from the Household Labor Force Survey (Türkiye’de Ücret Egrisi: Hanehalki Isgücü Anketi’nden Bulgular) By Badi H. Baltagi; Yusuf Soner Baskaya; Timur Hulagu
  3. الخيارات وإدارة المخاطر فى أسواق السلع: دعوة لرؤية جديدة By Onour, Ibrahim
  4. Estimating a Small Open-Economy Model for Egypt: Spillovers, Inflation Dynamics, and Implications for Monetary Policy By Kenji Moriyama; Elif C Arbatli
  5. Credit Market Imperfections and Business Cycle Asymmetries in Turkey (Turkiye’de Kredi Piyasasi Noksanliklari ve Is Cevrim Nispetsizlikleri) By Huseyin Gunay; Mustafa Kilinc
  6. Increasing Share of Agriculture in Employment in the Time of Crisis: Puzzle or Not? (Kriz Zamanlarinda Artan Tarim Istihdami: Bilmece mi, Degil mi? ) By Gonul Sengul; Murat Ungor
  7. Les rendez-vous manqués de l'économie de la Tunisie 7-Novembriste By Mabrouk, Mohamed B.R.

  1. By: Ibrahim Tutar (Penetra Consulting); Aysit Tansel (Middle East Technical University,Institute for the Study of Labor (IZA) Bonn, Germany and Economic Research Forum (ERF) Cairo, Egypt)
    Abstract: This study examines the effects of fragmented governments and fiscal authorities on budget deficits in Turkey along with political business cycle effects. For econometric analysis we will use annual data from the period of 1960-2009. This paper sheds light on various dispersion indices and their use in the field of political power and fiscal performance. The results show that the power dispersion indices of governments and fiscal institutions significantly explain the increases in the ratio of budget deficit to GNP. The paper draws attention to the unification and better coordination of fiscal authorities in Turkey. The analysis has important policy implications for Turkey and other developing countries from the viewpoint of fragmented political and administrative dispersion of power and poor budget performances.
    Keywords: Political Business Cycles, Fragmentation and Power Dispersion, Public Budget, Turkey, Statistical Indices
    JEL: P16 H72 C22 C43
    Date: 2011–05
  2. By: Badi H. Baltagi; Yusuf Soner Baskaya; Timur Hulagu
    Abstract: This paper examines the Turkish wage curve using individual data from the Household Labor Force Survey (HLFS) including 26 NUTS-2 regions over the period 2005 - 2008. When the local unemployment rate is treated as predetermined, there is evidence in favor of the wage curve only for younger and female workers. However, if the lagged unemployment rate is used as an instrument for current unemployment rate, we find an unemployment elasticity of -0.099. We also find a higher elasticity for younger, less educated, low experienced workers than for older, more educated and more experienced workers. Another important finding is that the wages of females in Turkey are significantly more responsive to local unemployment rates than their male counterparts.
    Keywords: Wage Curve, Fixed Effects, Regional Labor Markets, Two-Stage Least Squares
    JEL: J30 J60
    Date: 2011
  3. By: Onour, Ibrahim
    Abstract: After highlighting different views of Islamic scholars on option derivatives, the paper explores a potential role for option derivatives as useful risk management tool in commodity markets, while attuned to Islamic Shariah principles. The author illustrated a model of commodity stock market to show how options can play a role similar to that of insurance of risks in commodity markets.
    Keywords: options;risk;islamic derivative
    JEL: E00 G10
    Date: 2011–04–28
  4. By: Kenji Moriyama; Elif C Arbatli
    Abstract: This paper estimates a small open economy model for Egypt to analyze inflation, output dynamics and monetary policy during 2005-2010. The interest rate channel is found to be relatively weak in Egypt, complicating the use of interest rates as the immediate target of monetary policy. However, the paper also finds a significant level of persistence in the policy rate, making monetary policy pro-cyclical. More active use of interest rate policy, measures to improve domestic debt markets and a gradual move towards inflation targeting can help support a successful disinflation strategy for Egypt.
    Date: 2011–05–06
  5. By: Huseyin Gunay; Mustafa Kilinc
    Abstract: The credit market imperfections have important consequences for aggregate cycles, especially for developing countries. The research on the relationship between imperfections and output dynamics at the macro level are ample, but the lack of wide coverage micro data sets for developing countries limit the study of aggregate implications of the micro level capital market imperfections. This paper presents micro evidence on the credit market imperfections in Turkey and connects these imperfections to macro movements. First part of the paper documents the aggregate boom-bust cycles in Turkey and shows that non-tradable sector is more volatile over the business cycle than tradable sector. Additionally, this sector based asymmetry is found to be strongly correlated with aggregate credit movements. To establish the connection between the sector based asymmetries and the credit markets further, second part of the paper constructs two micro data sets. Using structural estimation, we find that non-tradable sector is financially more constrained than tradable sector. With non-tradable sector being more constrained, credit movements become an important determinant of boom-bust cycles. Therefore, we can establish that the asymmetry in the financial constraints of the different sectors at the micro level can generate the observed asymmetrical aggregate response of sectors over the business cycle.
    Keywords: Credit constraints, business cycle asymmetries, cash-flow regressions
    JEL: D92 E44 G31
    Date: 2011
  6. By: Gonul Sengul; Murat Ungor
    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 for an explanation of this phenomenon. Less to the attention of the debate, 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? 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 to answer this question. 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 agricultural productivity growth is needed as it is at the heart of the secular changes in employment shares in Turkey.
    Keywords: Sectoral productivity differences, reallocation of labor, Turkey.
    JEL: O11 O41 O57
    Date: 2011
  7. By: Mabrouk, Mohamed B.R.
    Abstract: Two major changes have affected the Tunisian economy during the 7-November period: the change of the economic system on the one hand and the change of the demographic structure on the other. The change of the economic system consists in the adoption of liberalism and free-trade. Although, at the beginning of the studied period, this change has improved the external economic balance and the standard of living, comparison with other countries and also the drift of the external deficit shows that the country has failed to exploit the opportunity offered by free-trade. A more decisive opportunity has also been lost: the "demographic dividend" offered by the relative decline of the economically unproductive, that is to say, children and the elderly. Properly exploited, it should have enabled the country to recover his savings to pay off its external debt and capitalize for the future which should see the share of unproductive population increase again due to aging. Two interrelated reasons have caused this failure. One is overconsumption of imported luxury goods. The other is the declining economic role of the state. Along with comments on the desirable type of economic system, some measures, mostly Keynesian, are suggested to revive the economy. Among those measures: limiting imports of frivolous goods, reforming the foreign exchange system, reforming taxation of households and of foreign trade, a tighter democratic control of state resources and public markets and boosting state investment in productive areas with high social and environmental impact.
    Keywords: Tunisian economic crisis; liberalism; demographic dividend; marxism; foreign trade; foreign exchange; state investment
    JEL: F40 O55 A13
    Date: 2011–05–01

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