nep-ara New Economics Papers
on Arab World
Issue of 2013‒08‒10
two papers chosen by
Paul Makdissi
University of Ottawa

  1. What is MENA Region Initially Needed: Grow Output or Mitigate CO2 Emissions? By Farhani, Sahbi; Shahbaz, Muhammad; Sbia, Rashid
  2. Top incomes and the measurement of inequality in Egypt By Hlasny, Vladimir; Verme, Paolo

  1. By: Farhani, Sahbi; Shahbaz, Muhammad; Sbia, Rashid
    Abstract: This paper examines the question: ‘What is Middle East and North Africa (MENA) region initially needed: grow output or mitigate CO2 emissions? This question is a focus on the issue of both production function and environmental function based on the environmental Kuznets curve (EKC) approach. Adopting a new analytical framework, the empirical study parallels two approaches: i) First one follows the studies of Lean and Smyth (2010a) and Sadorsky (2012) which examine the dynamic interaction of energy consumption and trade openness using production function; ii) Second one extends the recent works of Halicioglu (2009), and Jayanthakumaran et al. (2012) which attempt to introduce energy consumption and trade openness in the environmental function as a mean to circumvent omitted variable bias. For nine MENA countries over the period 1990-2011, the empirical results appear to be relevant in light of the growing literature on the cointegration and causal relationships. Policy implications for a better environment indicate that MENA countries should adopt policies to control the increase of pollution as well as to stabilize the productivity growth. One of these policies consists to facilitate the role of energy use by increasing the share of renewable energy relative to non-renewable energy sources.
    Keywords: Growth, Energy, CO2 Emissions, MENA
    JEL: O1
    Date: 2013–08–04
  2. By: Hlasny, Vladimir; Verme, Paolo
    Abstract: By all accounts, income inequality in Egypt is low and had been declining during the decade that preceded the 2011 revolution. As the Egyptian revolution was partly motivated by claims of social injustice and inequalities, this seems at odds with a low level of income inequality. Moreover, while income inequality shows a decline between 2000 and 2009, the World Values Surveys indicate that the aversion to inequality has significantly increased during the same period and for all social groups. This paper utilizes a range of recently developed statistical techniques to assess the true value of income inequality in the presence of a range of possible measurement issues related to top incomes, including item and unit non-response, outliers and extreme observations, and atypical top income distributions. The analysis finds that correcting for unit non-response significantly increases the estimate of inequality by just over 1 percentage point, that the Egyptian distribution of top incomes follows rather closely the Pareto distribution, and that the inverted Pareto coefficient is located around median values when compared with 418 household surveys worldwide. Hence, income inequality in Egypt is confirmed to be low while the distribution of top incomes is not atypical compared with what Pareto had predicted and compared with other countries in the world. This would suggest that the increased frustration with income inequality voiced by Egyptians and measured by the World Values Surveys is driven by factors other than income inequality.
    Keywords: Inequality,Rural Poverty Reduction,Poverty Impact Evaluation,Income,Economic Theory&Research
    Date: 2013–08–01

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