nep-ara New Economics Papers
on MENA - Middle East and North Africa
Issue of 2014‒02‒21
nine papers chosen by
Paul Makdissi
University of Ottawa

  1. Economic Growth in the Euro-Med Area through Trade Integration: Focus on Agriculture and Food – The case of Turkey By Erol H. Cakmak; Hasan Dudu
  2. Unemployment Flows, Participation and the Natural Rate for Turkey By Gonul Sengul; Murat Tasci
  3. Assessing the efficiency of the MENA emerging stock markets: A sectoral perspective By Imen Zgueb Rejichi; Chaker Aloui; Duc Khuong Nguyen
  4. Oil prices and MENA stock markets:New evidence from nonlinear and asymmetric causalities during and after the crisis period By Ahdi Noomen Ajmi; Ghassen El Montasser; Shawkat Hammoudeh; Duc Khuong Nguyen
  5. Oil Shocks and Economic Growth in OPEC countries By Zied Ftiti; Khaled Guesmi; Frédéric Teulon
  6. A study of CO2 emissions, output, energy consumption, and trade By Sahbi Farhani; Anissa Chaibi; Christophe Rault
  7. Domestic Road Infrastructure and International Trade: Evidence from Turkey By A. Kerem Cosar; Banu Demir
  8. Islamic finance: a review of the literature By Jean-Yves MOISSERON; Bruno-Laurent MOSCHETTO; Frédéric TEULON
  9. Making informed investment decisions in an uncertain world : a short demonstration By Bonzanigo, Laura; Kalra, Nidhi

  1. By: Erol H. Cakmak (TED University Ankara Turkey); Hasan Dudu (European Commission – JRC - IPTS)
    Abstract: In this study, we analyse the effects of trade liberalization, world price increase of basic staple and productivity growth in agricultural activities on Turkey by using a dynamic CGE model calibrated to 2008 data. The simulation results suggest that Turkish economy is capable of accommodating the adverse effects of trade liberalization. There are significant welfare gains if trade liberalization is accompanied by the CAP payments in the accession scenario. Trade policy turns out to be a strong instrument to stabilize the domestic prices and avoid the adverse effects of world price increase. Productivity increase in agri-food production has prominent effects on welfare and trade.
    Keywords: Trade Liberalization, Dynamic CGE Model, Agriculture, Turkey
    JEL: C68 D58 Q17 Q27
    Date: 2014–01
  2. By: Gonul Sengul (Central Bank of Turkey); Murat Tasci (Federal Reserve Bank of Cleveland)
    Abstract: This paper measures flow rates into and out of unemployment for Turkey and uses these rates to estimate the unemployment rate trend, that is the level of the unemployment rate the economy converges to in the long-run. In doing so, the paper explores the role of the labor force participation in determining the trend unemployment. We find an inverse V-shaped pattern for the unemployment rate trend over time in Turkey, currently standing between 8.5 and 9 percent, with an increasing labor market turnover. We also find that allowing for an explicit role for participation changes the results substantially, reducing the “natural” rate at first, but then getting closer to the baseline over time. Finally, we show that this parsimonious model can be used for forecasting unemployment in Turkey with relative ease and accuracy.
    Keywords: Risk measurement, systemic risk, connectedness, systemically important financial institutions, vector autoregression, variance decomposition
    JEL: C3 G2
    Date: 2014–02
  3. By: Imen Zgueb Rejichi; Chaker Aloui; Duc Khuong Nguyen
    Abstract: Market efficiency is among the foremost criteria for making investment decisions when foreign investors attempt to allocate their funds to emerging market assets. If the markets under consideration are efficient, quoted prices of the assets will serve as useful and reliable signals for capital budgeting. In this paper we adopt a new powerful approach to investigate the sectoral efficiency of emerging stock markets in the Middle East and North Africa (MENA) region. At the empirical level, we focus on economic sectors of stock markets and make use of the filtered Hurst exponents to assess their efficient behavior through time. We then rank economic sectors according to their level of inefficiency. Empirical results, drawn from 26 sectoral indices and 6 market indices for six MENA stock markets over the period 2000-2007, reveal the importance of banking and industrial sectors in terms of evolving market efficiency. Our findings are useful for portfolio and fund managers operating in the MENA region as they can pursue a dedicated and dynamic asset allocation based on efficiency levels of selected economic sectors.
    Keywords: Sectoral efficiency, MENA stock markets, long-range dependence, Hurst exponent
    JEL: C22 C58 G11 G14
    Date: 2014–01–06
  4. By: Ahdi Noomen Ajmi; Ghassen El Montasser; Shawkat Hammoudeh; Duc Khuong Nguyen
    Abstract: This article investigates the potential of nonlinear causal relationships between world oil prices and stock markets in MENA countries during a black swan period that is characterized by rarity and devastating impacts. By using the nonlinear and asymmetric causality test of Kyrtsou and Labys (2006), we mainly find that: i) oil prices and MENA stock markets interact in a nonlinear manner; ii) the signs of changes in the causing variables are important for detecting the true causality links between the variables; and iii) the nonlinear causality is more pronounced in the case of the Brent than WTI oil prices.
    Keywords: MENA countries, stock markets, oil prices, nonlinear causality.
    JEL: C52 G15 Q43
    Date: 2014–01–06
  5. By: Zied Ftiti; Khaled Guesmi; Frédéric Teulon
    Abstract: This paper assesses the impact of oil prices on economic growth of the four major OPEC countries (United Arab Emirates, Kuwait, Saudi Arabia and Venezuela) over the period spanning from 03/09/2000 to 03/12/2010. We aim at complementing the results from existing analyses (mainly focused on oil-importing countries) by using the evolutionary co-spectral analysis as defined by Priestley and Tong (1973). We find that co-movements between oil and economic growth have different patterns depending of the studied horizons. This interdependence is a mediumlived phenomenon, revealed on a three years and one quarter horizon, being weak in the short-run (ten months). We show that oil price shocks in periods of world turmoil or during fluctuations of the global business cycle (downturn or growth, as for instance the 2008 financial crisis) have a significant impact on the relationship between oil and economic growth in oil-exporting countries.
    Keywords: oil prices shocks, stock markets, evolutionary co-spectral analysis, OPEC
    JEL: C14 C22 G12 G15 Q43
    Date: 2014–01–06
  6. By: Sahbi Farhani; Anissa Chaibi; Christophe Rault
    Abstract: This article contributes to the literature by investigating the dynamic relationship between Carbone dioxide (CO2) emissions, output (GDP), energy consumption, and trade using the bounds testing approach to cointegration and the ARDL methodology for Tunisia over the period 1971-2008. The empirical results reveal the existence of two causal long-run relationships between the variables. In the short-run, there are three unidirectional Granger causality relationships, which run from GDP, squared GDP and energy consumption to CO2 emissions. To check the stability in the parameter of the selected model, CUSUM and CUSUMSQ were used. The results also provide important policy implications.
    Keywords: CO2 emissions, Energy consumption, ARDL bounds testing approach
    JEL: Q56 Q43 C51
    Date: 2014–01–06
  7. By: A. Kerem Cosar (University of Chicago, Booth School of Business); Banu Demir (Bilkent University, Department of Economics)
    Abstract: Poor domestic transportation infrastructure in developing countries is often cited as an important impediment for accessing international markets. Yet, evidence on how transportation infrastructure improvements affect the volume and composition of exports is scarce. Drawing on the large-scale public investment in expressways undertaken in Turkey during the 2000s, this paper contributes to our understanding of how internal trade costs affect regional exports and specialization. Two results emerge. First, we estimate that this road infrastructure project accounts for 15 percent of the export increase from interior regions, generating a 10-year discounted stream of additional export revenues that amount to between 9 and 14 percent of the value of the investment. Second, while the exports of all industries within a given region increase in response to improvements in connectivity to the international gateways of the country, the magnitude of this increase is larger the more time sensitive an industry is. Accordingly, we also observe an increase in the regional employment and revenue shares of such industries. Our results support the hypothesis that internal trade costs can be a determinant of international specialization and comparative advantage.
    Keywords: international trade, infrastructure, transportation costs, time-sensitive industries.
    JEL: F14 R11 R41
    Date: 2014–02
  8. By: Jean-Yves MOISSERON; Bruno-Laurent MOSCHETTO; Frédéric TEULON
    Abstract: In recent years, a number of Islamic banks have been created to cater to the growing demand, driven by globalization and the vast wealth of some Muslim states in the Middle East and Southeast Asia, and Islamic finance has moved from a niche position to become a mainstream component of the global banking system. Islamic banking refers to a financial system which is consistent with principles of Islamic law (or 'sharia') and guided by Islamic ethics. A large amount of research has been undertaken into this subject. This paper presents islamic finance’s role in the new world order.
    Date: 2014–02–12
  9. By: Bonzanigo, Laura; Kalra, Nidhi
    Abstract: Governments invest billions of dollars annually in long-term projects. Yet deep uncertainties pose formidable challenges to making near-term decisions that make long-term sense. Methods that identify robust decisions have been recommended for investment lending but are not widely used. This paper seeks to help bridge this gap and, with a demonstration, motivate and equip analysts better to manage uncertainty in investment decisions. The paper first reviews the economic analysis of ten World Bank projects. It finds that analysts seek to manage uncertainty but use traditional approaches that do not evaluate options over the full range of possible futures. Second, the paper applies a different approach, Robust Decision Making, to the economic analysis of a 2006 World Bank project, the Electricity Generation Rehabilitation and Restructuring Project, which sought to improve Turkey's energy security. The analysis shows that Robust Decision Making can help decision makers answer specific and useful questions: How do options perform across a wide range of potential future conditions? Under what specific conditions does the leading option fail to meet decision makers'goals? Are those conditions sufficiently likely that decision makers should choose a different option? Such knowledge informs rather than replaces decision makers'deliberations. It can help them systematically, rigorously, and transparently compare their options and select one that is robust. Moreover, the paper demonstrates that analysts can use the same data and models for Robust Decision Making as are typically used in economic analyses. Finally, the paper discusses the challenges in applying such methods and how they can be overcome.
    Keywords: Energy Production and Transportation,Climate Change Economics,Debt Markets,Non Bank Financial Institutions,Climate Change Mitigation and Green House Gases
    Date: 2014–02–01

This nep-ara issue is ©2014 by Paul Makdissi. 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.
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