nep-ara New Economics Papers
on Arab World
Issue of 2013‒09‒28
seven papers chosen by
Paul Makdissi
University of Ottawa

  1. Implicit Asymmetric Exchange Rate Peg under Inflation Targeting Regimes: The Case of Turkey By Ahmet Benlialper; Hasan Cömert
  2. Libya: Selected Issues By International Monetary Fund. Middle East and Central Asia Dept.
  3. Output-Employment Relationship across Sectors: A Long- versus Short-Run Perspective By Sahin, Afsin; Tansel, Aysit; Berument, Hakan
  4. Distributional and Welfare Consequences of Disinflation in Emerging Economies By Enes Sunel
  5. Libya: 2013 Article IV Consultation By International Monetary Fund. Middle East and Central Asia Dept.
  6. The Dynamic Effects of Crude Oil and Natural Gas Prices on Iran's Methanol By Delavari, Majid; Gandali Alikhani, Nadiya
  7. Saudi Arabia: Financial Sector Assessment Program Update—Detailed Assessment of Observance of the Basel Core Principles for Effective Banking Supervision By International Monetary Fund. Monetary and Capital Markets Department

  1. By: Ahmet Benlialper; Hasan Cömert
    Abstract: Especially, after the 2000s, many developing countries let exchange rates float and began implementing inflation targeting regimes based on mainly manipulation of expectations and aggregate demand. However, most developing countries implementing inflation targeting regimes experienced considerable appreciation trends in their currencies. Might have exchange rates been utilized as implicit tools even under inflation targeting regimes in developing countries? To answer this question and investigate the determinants of inflation under an inflation targeting regime, as a case study, this paper analyzes the Turkish experience with the inflation targeting regime between 2002 and 2008. There are two main findings of this paper. First, the evidence from a Vector Autoregressive (VAR) model suggests that the main determinants of inflation in Turkey during this period are supply side factors such as international commodity prices and the variation in exchange rate rather than demand side factors. �Since the Turkish lira (TL) was considerably over-appreciated during this period, it is apparent that the Turkish Central Bank benefited from the appreciation of the TL in its fight against inflation during this period. Second, our findings suggest that the appreciation of the TL is related to the deliberate asymmetric policy stance of the Bank with respect to the exchange rate. �Both the econometric analysis from a VAR model and descriptive statistics indicate that appreciation of the Turkish lira was tolerated during the period under investigation whereas depreciation was responded aggressively by the Bank. We call this policy stance under the inflation targeting regimes as “implicit asymmetric exchange rate peg”. �The Turkish experience indicates that, as opposed to rhetoric of central banks in developing countries, inflation targeting developing countries may have an asymeyric stance toward exchange rates and favour appreciation of their currencies to hit their inflation targets. In this sense, IT seems to contribute to the ignorance of dangers regarding to over-appreciation of currencies in developing countries. � �
    Keywords: Inflation Targeting, Central Banking, Developing Countries, Exchange Rates
    JEL: E52 E58 E31 F31
    Date: 2013
  2. By: International Monetary Fund. Middle East and Central Asia Dept.
    Keywords: Energy prices;Oil prices;Subsidies;Energy sector;Fiscal reforms;Selected issues;Libya;
    Date: 2013–05–31
  3. By: Sahin, Afsin (Gazi University); Tansel, Aysit (Middle East Technical University); Berument, Hakan (Bilkent University)
    Abstract: This paper investigates the nature of the output-employment relationship by using the Turkish quarterly data for the period 1988-2008. Even if we fail to find a long-run relationship between aggregate output and total employment, there are long-run relationships for the aggregate output with non-agricultural employment and sectoral employment levels for seven of nine sectors that we consider. However, a further investigation for the output and employment relationship within a short-run perspective do not reveal statistically significant relationships for either total employment, or non-agriculture employment or the eight out of the nine sectors that we consider. Although there are various long-run relationships between output and employment, the short-run links between demand and employment are weak. The various implications of this for the economy and the labor market are discussed. As a result, maintaining high levels of output in the long-run creating the demand is essential for employment generation.
    Keywords: seasonal cointegration, employment, output
    JEL: C32 E24 E32
    Date: 2013–08
  4. By: Enes Sunel
    Abstract: This study investigates the distributional and welfare consequences of disinflation in emerging economies using a monetary model of a small open economy with uninsured idiosyncratic earnings risk. The model is calibrated to Turkish data and is used to compare stationary equilibria with quarterly inflation rates of 14.25% (for 1987 : Q1-2002 : Q4) and 2.25% (for 2003 : Q1- 2010 : Q2). Reduction in inflationary finance is assumed to affect lump-sum transfers, since government spending-to-GDP ratios have been roughly stable during disinflation in a number of emerging economies. Disinflation is found to lower aggregate welfare by 1.23% in terms of compensating consumption variation. This is because the reduction in the distortionary impediments of inflation on the poor falls short of the decline in their redistributive transfers income that is mainly financed by the rich. The shrinkage of cash transfers also tightens natural debt limits and increases the precautionary savings motive.
    Keywords: Small open economy, incomplete markets, disinflation
    JEL: D31 F41 E52
    Date: 2013
  5. By: International Monetary Fund. Middle East and Central Asia Dept.
    Keywords: Article IV consultation reports;Economic growth;Hydrocarbons;Nonoil sector;Fiscal policy;Monetary policy;Banking sector;Bank supervision;Islamic banking;Exchange rate assessments;Economic indicators;Staff Reports;Public information notices;Libya;
    Date: 2013–05–31
  6. By: Delavari, Majid; Gandali Alikhani, Nadiya
    Abstract: Petroleum and petrochemicals prices movements have always been at the core of economic research agenda not only because of its crucial effect on the cash flows of oil-related businesses, but also due to the far-reaching implications of oil price uncertainty on the macro-economy and the financial markets. It is not surprising therefore that in the energy economics literature there is a plethora of empirical studies examining the issue of modeling movements and risk management. As a case study, this paper investigates the dynamic relationship between Iran’s crude oil price, natural gas price and methanol price which is one of the most important non-oil exports of the oil-exporting country. To do so, the weekly data from first week of 2005:1 to the third week 2013:5 in a VECM framework is applied. The results show that in the long-run, oil and gas prices hikes leads to proportional increase in methanol price while in the short-run, this impact is not significant.
    Keywords: Methanol Price; Crude Oil Price; Natural Gas Price; VECM Model
    JEL: C13 C32 Q43
    Date: 2013–01–12
  7. By: International Monetary Fund. Monetary and Capital Markets Department
    Keywords: Basel Core Principles;Banking sector;Bank supervision;Reports on the Observance of Standards and Codes;Financial Sector Assessment Program;Saudi Arabia;
    Date: 2013–07–19

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