nep-ara New Economics Papers
on All new papers
Issue of 2014‒09‒08
sixteen papers chosen by
Paul Makdissi
Université d’Ottawa

  1. Real growth co-movements among the GCC+2 countries: Evidence from timefrequency analysis By Chaker Aloui; Besma Hkiri; Duc Khuong Nguyen; Hela Ben Hamida
  2. Better Luck Next Time: Learning through Retaking By Kala Krishna; Sergey Lychagin; Cemile Yavas; Veronica Frisancho
  3. Linking FDI inflows to economic growth in North African countries By Anis Omri; Amel Sassi-Tmar
  4. What is MENA Region Initially Needed: Grow Output or Mitigate CO2 Emissions? By Sahbi Farhani; Muhammad Shahbaz; Rashid Sbia; Anissa Chaibi
  5. Who bears the costs of climate change? Evidence from Tunisia By Manfred Wiebelt; Perrihan Al-Raffai; Richard Robertson
  6. Attitudes Towards Gender Equality And Perception Of Democracy In The Arab World By Veronica Kostenko; Pavel Kuzmichev; Eduard Ponarin
  7. Economic policy uncertainty, oil price shocks and GCC stock markets By Mohamed Arouri; Christophe Rault; Frederic Teulon
  8. Islamic vs. conventional banks in the GCC countries: A comparative study using classification techniques By Karim ben Khediri; Lanouar Charfeddine; Slah ben Youssef
  9. Why Small Businesses Fail in Tunisia? By Anis Omri; Mohamed Frikha
  10. The nexus between foreign investment, domestic capital and economic growth: Empirical evidence from the MENA region By Anis Omri; Bassem kahouli
  11. Regulation of water demand in arid and semi-arid countries By Lanouar Charfeddine; Ali Bouchrika; Mohamed Arouri; Frédéric Teulon
  12. Revisiting the Environmental Kuznets Curve in a Global Economy By Muhammad Shahbaz; Ilhan Ozturk; Talat Afza; Amjad Ali
  13. An empirical analysis of energy demand in Tunisia By Besma Talbi; Duc Khuong Nguyen
  14. An Empirical Investigation of Factors Affecting Small Business Success By Anis Omri; Maha Ayadi-Frikha; Anissa Chaibi
  15. The Role of Information Communication Technologyand Economic Growth in Recent Electricity Demand: Fresh Evidence from Combine Cointegration Approachin UAE By Muhammad Shahbaz; Rashid Sbia; Helmi Hamdi; Ijaz Ur Rehman
  16. Tunisian labor market responses to trade liberalization: A dynamic analysis By Charfeddine Lanouar; Zouhair Mrabet; Frederic Teulon

  1. By: Chaker Aloui; Besma Hkiri; Duc Khuong Nguyen; Hela Ben Hamida
    Abstract: Business cycle synchronization has been one of the most debated issues in the Gulf Cooperation Council (GCC) countries as it is the basic requirement for the stability of a monetary union that GCC countries have sought to wish to create in 2010. In this article, we attempt to investigate whether this required condition is attained by looking at the synchronization of real growth in GCC economies. Our findings from a continuous wavelet approach show that the real growth rates in most of the countries within the GCC region comove with the others over the short and medium terms. In addition, long-term co-movement of real growth rates is only found in seven out of the 15 country pairs. In particular, the two major countries of the GCC region, Saudi Arabia and the United Arab Emirates, share common growth cycles with the remaining countries. Finally, the growth cycle in the two potential country member candidates for the GCC, Jordan and Morocco, is found to lead the one in Saudi Arabia and Bahrain, and the one in Kuwait, Qatar, and the UAE, respectively.
    Keywords: synchronization; wavelet coherence; real GDP growth; time-frequency domain.
    JEL: E32 F00
    Date: 2014–08–29
  2. By: Kala Krishna; Sergey Lychagin; Cemile Yavas; Veronica Frisancho
    Abstract: This paper provides some evidence that repeat taking of competitive exams may reduce the impact of background disadvantages on educational outcomes. Using administra- tive data on the university entrance exam in Turkey, the paper estimates cumulative learning between the first and the nth attempt while controlling for selection into re- taking in terms of observed and unobserved characteristics. Large learning gains mea- sured in terms of improvements in the exam scores are found, especially among less advantaged students.
    JEL: C13 C38 I23 I24
    Date: 2014–01
  3. By: Anis Omri; Amel Sassi-Tmar
    Abstract: This paper examines the relationship between FDI inflows and the economic growth for three African economies (Tunisia, Morocco, and Egypt) during 1985–2011. Our analysis, which is based on a simultaneous equations model, reveals that in overall terms a mutually promoting two-way linkage between FDI and economic growth exists in these countries. Using the generalized method of moments (GMM), we find that the two-way linkage between FDI inflows and economic growth has been verified in all three economies , i.e., high level of foreign direct investment inflows had accelerated economic growth and high economic growth in these economies does send positive signals to prospective foreign investors.
    Keywords: Economic growth; FDI inflows; GMM-estimator; North African countries.
    JEL: G20 H54 C36
    Date: 2014–08–29
  4. By: Sahbi Farhani; Muhammad Shahbaz; Rashid Sbia; Anissa Chaibi
    Abstract: We contribute to the economic growth–CO2 emissions literature in the MENA region by focusing on both production and environmental functions. Adopting an original analytical framework, our empirical investigation parallels two approaches. The first one follows the studies by Lean and Smyth (2010a) and Sadorsky (2012) which examine the dynamic interaction of energy consumption and trade openness using production function. The second one extends the recent works by Halicioglu (2009), Jalil and Mahmud (2009), and Jayanthakumaran et al. (2012) which attempt to introduce energy consumption and trade openness in the environmental function as a solution to circumvent omitted variable bias. Our findings suggest that MENA countries should adopt policies to control the increase of pollution as well as to stabilize the productivity growth. One of these policies is to increase the share of renewable energy relative to non-renewable energy sources.
    Keywords: Energy; Economic growth; CO2 emissions; Panel data analysis
    Date: 2014–08–29
  5. By: Manfred Wiebelt; Perrihan Al-Raffai; Richard Robertson
    Abstract: In order to estimate the economic costs of climate change for Tunisia, this paper uses a combination of biophysical and economic models. In addition, the paper draws on the literature to complement the quantitative analysis with policy recommendations on how to adapt to the changing climate. The results bear out the expectation that climate change has a negative but weak overall effect on the Tunisian economy. Decomposing the global and local effects shows that global climate change may benefit the agricultural sector since higher world market prices for agricultural commodities are likely to stimulate export expansion and import substitution. Locally felt climate change, however, is likely to hurt the agricultural sector as lower yields reduce factor productivities lead to lower incomes and higher food prices. The combined local and global effects are projected to be mostly negative and the costs will have to be carried mainly by urban and richer households. From a policy perspective, the results suggest that Tunisia should try to maximize the benefits from rising global agricultural prices and to minimize (or reverse) declining crop yields at home
    Keywords: climate change, agricultural growth, general equilibrium analysis, Tunisia, Middle East and North Africa
    JEL: O5 O13 D13 C68
    Date: 2014–08
  6. By: Veronica Kostenko (National Research University Higher School of Economics); Pavel Kuzmichev (National Research University Higher School of Economics); Eduard Ponarin (National Research University Higher School of Economics)
    Abstract: This paper analyzes the relationship between support of democracy and attitudes to human rights: in particular, support for gender equality in the countries covered by the first wave of the Arab Barometer project. We used cluster analysis and negative binomial regression modeling to show that, unlike in most countries of the world, the correlation between support of democracy and gender equality is very low in Arab countries. There is a group of people in the region who support both democracy and gender equality, but they are a small group (about 17% of the population) of elderly and middle-aged people characterized by higher education and social status. A substantial number of poorly educated males express support for democracy, but not for gender equality. Many people (especially young males aged 25–35 in 2007) are against both gender equality and democracy. Younger people tend to be both better educated and more conservative - those belonging to the 25–34 age group are the most patriarchal in their gender attitudes. Controlling for age, education still has a positive effect on gender equality attitudes. Nevertheless, this phenomenon probably means that there are two simultaneous processes going on in the Middle East. On the one hand, people are becoming more educated, urbanized etc., which means the continuation of modernization. On the other hand, we observed a certain retrogression of social values.
    Keywords: modernization, Arab Barometer, democracy, gender equality, patriarchal values, Islam
    JEL: E11
    Date: 2014
  7. By: Mohamed Arouri; Christophe Rault; Frederic Teulon
    Abstract: We contribute to the literature by studying of economic policy uncertainty (EPU) for major net oil importers (USA, Europe and China) on Gulf Cooperation Council (GCC) stock markets. We use panel data methods to estimate different specification. We find that (i) an increase in EPU affect negatively stock returns (ii) this effect is persistent and interacts with oil price changes and (iii) an increase in EPU has a delayed positive effect on volatility.
    Keywords: Economic policy uncertainty (EPU), GCC stock markets, Oil price, Volatility.
    Date: 2014–08–29
  8. By: Karim ben Khediri; Lanouar Charfeddine; Slah ben Youssef
    Abstract: This paper contributes to the empirical literature on Islamic finance by investigating the feature of Islamic and conventional banks in Gulf Cooperation Council (GCC) countries over the period 2003-2010. We use parametric and non-parametric classification models (Linear discriminant analysis, Logistic regression, Tree of classification and Neural network) to examine whether financial ratios can be used to distinguish between Islamic and conventional banks. Univariate results show that Islamic banks are, on average, more profitable, more liquid, better capitalized, and have lower credit risk than conventional banks. We also find that Islamic banks are, on average, less involved in off-balance sheet activities and have more operating leverage than their conventional peers. Results from classification models show that the two types of banks may be differentiated in terms of credit and insolvency risk, operating leverage and off-balance sheet activities, but not in terms of profitability and liquidity. More interestingly, we find that the recent global financial crisis has a negative impact on the profitability for both Islamic and conventional banks, but time shifted. Finally, results show that Logit regression obtained slightly higher classification accuracies than other models.
    Keywords: Islamic finance; GCC banking; classification techniques; linear discriminant analysis; logit; tree of classification; neural network.
    JEL: C44 C45 C25 G21 G28
    Date: 2014–08–29
  9. By: Anis Omri; Mohamed Frikha
    Abstract: This paper aims at drawing up an average cognitive map in order to explain the failure factors of Tunisian small businesses. The method adopted in our study is the cognitive approach. Our study extends entrepreneurship literature and previous literature by proposing a new approach in order to build an average cognitive map for the explanation of small businesses failures.
    Keywords: Entrepreneurial Failure, Small businesses, Tunisia.
    Date: 2014–08–29
  10. By: Anis Omri; Bassem kahouli
    Abstract: The objective of this paper is to estimate an econometric model for analyzing the interrelationship between foreign direct investment, domestic capital and economic growth in 13 MENA countries by using a ‘growth model’ framework and simultaneous-equations models estimated by the Generalized Method of Moments (GMM) during the period 1990–2010. Our empirical results show that there is bi-directional causal relationship between foreign investment and economic growth, between domestic capital and economic growth, and there is uni-directional causal relationship from foreign direct investment to domestic capital for the region as a whole.
    Keywords: Foreign investment, Domestic capital, Economic growth, GMM-estimator.
    JEL: G20 O40 H54 C36
    Date: 2014–08–29
  11. By: Lanouar Charfeddine; Ali Bouchrika; Mohamed Arouri; Frédéric Teulon
    Abstract: Water deficiency is a major concern in several arid and semi-arid countries, affecting public utilities, sustainable development, and economic welfare. This paper aims to empirically investigate the structure of water demand in residential, industrial, and tourism sectors in Tunisia by using semi-aggregate time series data on water use and employing co-integration and error correction models to estimate water demand equations. Through our analysis, we seek to propose some policy recommendations for the company SONEDE (the regulator) to improve water supply management. Our findings indicate that the water price is not a key determinant of water consumption for the three sectors. As consequence, we recommend a modification of water tariff structure in an attempt that water consumption will be more sensitive to water price. Especially, for the residential sector, we suggest to modify the tariff of the four first brackets where priceelasticity of water is very low in absolute value compared to the last bracket. We propose also some others non-price water policies in order to improve water regulation.
    Keywords: water management, water tariffs, co-integration, VECM model, monopoly.
    Date: 2014–08–29
  12. By: Muhammad Shahbaz; Ilhan Ozturk; Talat Afza; Amjad Ali
    Abstract: The present study deals with an empirical investigation between CO2 emissions, energy intensity, economic growth and globalization using annual data over the period of 1970- 2010 for Turkish economy. We applied unit root test and cointegration approach in the presence of structural breaks. The direction of causality between the variables is investigated by applying the VECM Granger causality approach. Our results confirmed the existence of cointegration between the series. The empirical evidence reported that energy intensity, economic growth (globalization) increase (condense) CO2 emissions. The results also validated the presence of Environmental Kuznets curve (EKC). The causality analysis shows bidirectional causality between economic growth and CO2 emissions. This implies that economic growth can be boosted at the cost of environment.
    Keywords: Carbon dioxide emissions, EKC, economic growth
    JEL: C32 O4 Q56
    Date: 2014–08–29
  13. By: Besma Talbi; Duc Khuong Nguyen
    Abstract: This article assesses the impact of real energy prices on the consumption of different energy sources in Tunisia. We estimate the short-run and long-run energy demand elasticities over the period 1980-2004, where energy demand is specified by a simple partial adjustment model. Our results show that energy demand in Tunisia is generally sensitive to the income level and real prices of energy products. Moreover, the price elasticity and income elasticity differ across energy sources. These findings imply that energy price increases will not only affect energy demand, but also give rise to substitution effects between different forms of energy.
    Keywords: Elasticity, energy demand, partial adjustment model.
    JEL: Q4 C4
    Date: 2014–08–29
  14. By: Anis Omri; Maha Ayadi-Frikha; Anissa Chaibi
    Abstract: The purpose of this article is to build a mediational model of small businesses success. We investigate how the human, social and financial capital of entrepreneurs influences the capacity of small business to succeed. Our objective is then to demonstrate that these capitals are converted into success through the process of innovation. Based on an analysis of data from 228 Tunisian micro-enterprises, we concluded that the effects of these capitals on businesses success were partially mediated by the process of innovation. Our paper extends the theoritical and empirical researches on entrepreneurship by building a mediational model of small business success. This model presents the indirect effect of the human, social and financial capital on small business success via their impact on innovation.
    Keywords: Mediational model, Innovation, Success; Small businesses, Tunisia.
    JEL: L26
    Date: 2014–08–29
  15. By: Muhammad Shahbaz; Rashid Sbia; Helmi Hamdi; Ijaz Ur Rehman
    Abstract: This paper investigates relationship between information communication technology (ICT), economic growth and electricity consumption using data of UAE over the period of 1975- 2011.We have tested the unit properties of variables and the Bayer and Hanck combined cointegration approach for long run relationship. The innovative accounting approach is applied to test the robustness of the VECM Granger causality findings. Our empirical results confirm the existence of cointegration between the series. We find that ICT adds in electricity demand but electricity prices lower it. Income growth increases electricity consumption. The non-linear relationship between ICT and electricity consumption is an Inverted U-shaped. The causality results reveal that ICT and electricity prices Granger cause electricity demand. The feedback effect exists between economic growth and electricity consumption.
    Date: 2014–08–29
  16. By: Charfeddine Lanouar; Zouhair Mrabet; Frederic Teulon
    Abstract: The impact of trade openness and technology transfer on the relative demand for skilled labor remains a puzzle. The empirical findings surrounding this question are in total contradiction with the prediction of traditional international trade theory. This paper addresses this puzzle by investigating the Tunisian economy. For this purpose, a database covering 12 Tunisian sectors from the period of 1983-2010, was constructed and a dynamic panel data method was employed. Empirical results indicate that trade openness positively affects skilled labor employment levels. Empirical results also show that the effects of changes in technology are ambiguous; on the one hand, advances in technology have positive effects mediated via export channels, but on the other hand, advances can have a negative effect mediated via imports. These empirical findings have important economic implications; for instance Tunisian economic policy should be oriented to improve a firm's competitiveness and labor market capacity to minimize the cost of trade liberalization in terms of employment losses.
    Keywords: Wages inequalities, technology change, skill upgrading, dynamic panel data model.
    Date: 2014–08–29

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