nep-ara New Economics Papers
on Arab World
Issue of 2012‒03‒08
five papers chosen by
Quentin Wodon
World Bank

  1. Cointegration, causality and Wagner’s law with disaggregated data: evidence from Turkey, 1968-2004 By Kucukkale, Yakup; Yamak, Rahmi
  2. Exports, government size and economic growth (Evidence from Iran as a developing oil-export based economy) By Dizaji, S.F.
  3. A general equilibrium analysis of the inflationary impact of energy subsidies reform in Iran By Hossein Mirshojaeian Hosseini; Shinji Kaneko
  4. Using US Strategic Reserves to Moderate Potential Oil Price Increases from Sanctions on Iran By Philip K. Verleger
  5. Benefits trickling away: The health impact of extending access to piped water and sanitation in urban Yemen By Stephan Klasen; Tobias Lechtenfeld; Kristina Meier; Johannes Rieckmann

  1. By: Kucukkale, Yakup; Yamak, Rahmi
    Abstract: Recent developments in time series analysis have encouraged the economists to re-examine their findings about the Wagner’s Law. That is why, the aggregation in public expenditures may lead some contradictions, disaggregated analyses should perform to have more consistent results. In this paper, the cointegration and causal relationships have re-examined between public expenditure and economic growth by using disaggregated annual data over the period of 1968-2004 for Turkish economy. Obtained results show that there is no common trend between these variables in the long-run. In the short-run, however, there is a strong and bidirectional causal relationship between public investment expenditures and economic growth.
    Keywords: Wagner's Law; Cointegration; Causality; disaggregated data; public expenditures; economic growth
    JEL: E62 O23 C12 B22
    Date: 2012–02–19
  2. By: Dizaji, S.F.
    Abstract: In this study, I investigate the short run and long run effects of government size and exports on the economic growth of Iran as a developing oil export based economy for the period of 1974 to 2008. For this purpose I use the bounds testing approach to cointegration and error correction models, developed within an autoregressive distributed lag (ARDL) framework. A modified form of Ram’s (1986) model has been applied to include both government size and exports as determinants of economic growth in addition to labor force and capital. I use total exports, oil exports and non-oil exports respectively in three different equations to assess their effects on economic growth. Moreover, according to Armey curve(1995) in each of the equations I test the existence of non-linear relationship between government size and economic growth. My findings show that in all of the equations both in long run and short run the Armey curve is valid for Iranian economy, indicating that both a very big size and a too small size of government are harmful for growth and Iranian government should adjust its size (to have smaller size, compared to the average size over the period of this study) for obtaining higher rates of growth. The results show that total exports, the amount of oil exports in terms of barrels and oil prices could affect the economic growth positively and significantly both in short run and long run. However because of the weaknesses of the Iranian non-oil sectors, the non-oil exports could not have significant effects on growth in the long run. As a result of this study in the short run, Iran should try to attract foreign technologies and investments to develop the capacity and ability of its oil production. In the short run this can be a reliable factor for having the stable economy in comparison with relying on uncertain oil prices. In the long run Iran should use the oil revenues to improve its economic structure and invest on some non-oil sectors to diversify its non-oil exports. This can create new resources for government revenues and will reduce the dependence of the economy on Oil exports.
    Keywords: oil prices;economic growth;Iran;oil exports;government size;non-oil exports
    Date: 2012–02–27
  3. By: Hossein Mirshojaeian Hosseini; Shinji Kaneko (Graduate School for International Development and Cooperation, Hiroshima University)
    Abstract: Iran has suffered ever-increasing domestic energy consumption mostly due to its price controlling policy. If the trend continues, it will become a pure importer in the following decades. To avoid that unlucky fate, Iran started the energy subsidies reform on December 2010. It increased domestic energy and agricultural prices up to 20 times, making it the first major oil-exporting country to reduce substantially implicit energy subsidies. The paper studies the inflationary impact of the energy subsidies reform on different non-energy sectors and urban and rural households in Iran. For this purpose, the input-output price model of Iran is made and energy cross-price elasticities of non-energy sectors are derived. The results evidence the tremendous effects of the complete reform on the production and consumption prices.
    Keywords: Energy subsidies reform, Production and consumption prices, Iran, Input-output price model, Decomposition
    JEL: C67 E31 Q48
    Date: 2012–02
  4. By: Philip K. Verleger (Peterson Institute for International Economics)
    Abstract: The new, draconian sanctions introduced by the United States and the European Union to prevent Iran from earning money from its crude oil exports could pose a serious economic threat to oil-importing countries that also trade heavily with the US and EU economies. Nations such as China, South Korea, and Japan, which obtain significant amount of oil from Iran while enjoying large trade surpluses with the United States, are justifiably anxious. These countries and others worry that by pushing Iran from the global crude market, the new US and EU sanctions will disrupt oil markets, increase crude prices, and further slow global economic growth, which, at a minimum, would cut their export revenues. Saudi Arabia and other members of the Oil and Petroleum Exporting Countries (OPEC) have indicated they would replace oil previously purchased from Iran, but these offers have done little to allay the apprehensions. Verleger suggests a way to put real pressure on Iran while moderating or eliminating economic fallout for the US and EU economies and those of their trading partners: selling oil from the US Strategic Petroleum Reserve (SPR), which now holds far more oil than required by treaty obligations—more than 280 million surplus barrels. This strategic use of the SPR will increase the effectiveness of sanctions on Iran and ease the adjustment difficulties that confront US allies. The sales might also reduce any price pressure caused by removal of light Iranian crude from the market.
    Date: 2012–02
  5. By: Stephan Klasen (Georg-August-University Göttingen); Tobias Lechtenfeld (Georg-August-University Göttingen); Kristina Meier (Georg-August-University Göttingen); Johannes Rieckmann (Georg-August-University Göttingen)
    Abstract: This article investigates the impact of piped water supply and sanitation on health outcomes in urban Yemen using a combination of quasi-experimental methods and results from microbiological water tests. Variations in project roll-out allow separate identification of water and sanitation impacts. Results indicate that access to piped water supply worsens health outcomes when water rationing is frequent, which appears to be linked to a build-up of pollution in the network. When water supply is continuous no clear health benefits are found compared to traditional urban water supply through water vendors. Connections to piped sewers can lead to health improvements, conditional on regular water supply. The findings suggest that investments in piped water supply should not be made when availability and reliability of water cannot be guaranteed.
    Keywords: water supply; water quality; sanitation; hygiene; child health; diarrhoea; impact evaluation; infrastructure; Yemen
    JEL: I10 I38 Q53
    Date: 2012–03–01

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