nep-ara New Economics Papers
on MENA - Middle East and North Africa
Issue of 2015‒02‒28
ten papers chosen by
Paul Makdissi
Université d’Ottawa

  1. Unemployment and Labor Force Participation in Turkey By Tansel, Aysit ; Ozdemir, Zeynel Abidin ; Aksoy, Emre
  2. Domestic activity patterns pertaining to households and informality in Turkey. By Armagan Tuna Aktuna-Gunes
  3. Satisfactory time use elasticities of demand and measuring well-being inequality through superposed utilities. By Okay Gunes ; Armagan Tuna Aktuna-Gunes
  4. Unshrouding Effects on Demand for a Costly Add-on: Evidence from Bank Overdrafts in Turkey By Sule Alan ; Mehmet Cemalcılar ; Dean Karlan ; Jonathan Zinman
  5. Measuring the effect of informal work and domestic activities on poverty and income inequality in Turkey. By Armagan Tuna Aktuna-Gunes
  6. Does Banking Market Power Matter on Financial (In)Stability? Evidence from the Banking Industry MENA Region By Labidi, Widede ; Mensi, Sami
  7. Exchange rate Pass-Through to domestic prices in Tunisia: a short and long run analysis By Helali, Kamel ; Kalai, Maha ; Boujelben, Thouraya
  8. Renewable energy consumption, economic growth and CO2 emissions: Evidence from selected MENA countries By Sahbi Farhani
  9. The Effects of Isolation on the Turkish Republic of Northern Cyprus By Gorgulu, Mehmet Emre
  10. Assessing potential growth in emerging countries after the global financial crisis By Enrica Di Stefano ; Daniela Marconi

  1. By: Tansel, Aysit (Middle East Technical University ); Ozdemir, Zeynel Abidin (Gazi University ); Aksoy, Emre (Kirikkale University )
    Abstract: This paper investigates the relationship between labor force participation rate and unemployment rate in Turkey a developing country. Cointegration analysis is carried out for the aggregate and gender and age specific series. The findings indicate that there is no long-run relationship between labor force participation and unemployment rates in Turkey. Thus, unlike in the case of the developed countries the unemployment invariance hypothesis is supported in Turkey.
    Keywords: unemployment invariance hypothesis, cointegration, Turkey
    JEL: E24
    Date: 2015–02
  2. By: Armagan Tuna Aktuna-Gunes (Centre d'Economie de la Sorbonne - Paris School of Economics )
    Abstract: We investigate underlying determinants of informality by representing the Turkish Time Use Survey in 2006 and the Household Budget Surveys for the years from 2003 to 2006 conducted by Turkish Statistical Institute. Following the descriptive methodology proposed by Gronau and Hamermesh (2006), the main focus is to describe the household data by highlighting the main features and revealing the relative importance of expenditures of time and goods through an exaustive set of commodities and assign time and goods inputs to each in order to measure their relative goods intensities. The analysis of the evolution of commodity per time spent during 2003, 2004, 2005 and 2006 reveals the fact that the average value for total expenditures per total time spent show increases in a decreasing trend (concave shape) over these years. Supposing that the average time spent among these years in constant on average (meaning that they did not really change from one year to another), the result of this accounting support the hypotheses that the amount of consumption present in household production during these years decreased. Our findings could be used as guides to better understanding the socio-economic conditions in developing countries and to obtain more accurate measurements of the size of informality, poverty and income inequalities.
    Keywords: Domestic avtivities, time use, goods intensity, informality.
    JEL: D1 J22 E26
    Date: 2015–02
  3. By: Okay Gunes (Centre d'Economie de la Sorbonne ); Armagan Tuna Aktuna-Gunes (Centre d'Economie de la Sorbonne - Paris School of Economics )
    Abstract: In this article, the satisfactory consumption and labor supply elasticities of demand are measured through a model of time allocation that includes eight time assignment equations by using the full time use (the temporal values of the monetary expenditure plus time spent) concept obtained by matching the Classic Family Budget survey with the Time Use survey for Turkey. The cross-sectional data covers the period of 2003-2006 in Turkey. The elasticity results show a clear picture of the relationship between satisfactory consumption and working with commodity demands for Turkey. As a contribution to the literature, we explore the reasons behind the demand for satisfactory consumption through working decisions by measuring well-being inequality for each consumption group. In order to increase the robustness of our result, overall well-being inequality is measured by introducing the axiom of superposed utility of preferences. As expected, overall well-being inequality delcines to 0.26, which is 119 percentage points lower than the average rate of well-being inequality (0.57) in Turkey.
    Keywords: Time use, life satisfaction, well-being inequality, superposed utilities.
    JEL: C51 D03 J22 I31
    Date: 2015–02
  4. By: Sule Alan ; Mehmet Cemalcılar ; Dean Karlan ; Jonathan Zinman
    Abstract: Models of shrouding predict that firms lack incentives to compete on add-on prices. Working with a large Turkish bank to test SMS direct marketing promotions to 108,000 existing checking account holders, we find that messages promoting a large discount on the overdraft interest rate reduce overdraft usage. In contrast, messages that mention overdraft availability without mentioning price increase usage. Neither change persists long after messages stop, suggesting that induced overdrafting is not habit-forming. Our results are consistent with a model of limited memory and attention.
    JEL: D12 D14 G02
    Date: 2015–02
  5. By: Armagan Tuna Aktuna-Gunes (Centre d'Economie de la Sorbonne - Paris School of Economics )
    Abstract: In this article, we propose to calculate the size of the population living in poverty, measured through uni- and multidimensional poverty indices, and the Gini coefficient using extended full (time plus money and informal earnings) incomes, from cross-sectional data covering 2003-2006 in Turkey. Thus monetary incomes are corrected by adding the earnings gathered from informal activities and the monetary values of time spent in domestic activities into declared incomes, producing an error-free estimate of the size of the population living in poverty and the Gini ratio overall. To show the effect informal activities with the domestic ones have on poverty, changes in the joint probability of being in informal activity while being considered poor is measured by means of a bivariate probit model using extended (money plus informal earnings) income and extended full incomes.
    Keywords: Informal earnings, domestic activities, poverty, Gini coefficient.
    JEL: E26 D1 I32 D63
    Date: 2015–02
  6. By: Labidi, Widede ; Mensi, Sami
    Abstract: The various financial crisis incidents during the two last decades and particularly since the 2007-2008 Global Financial Crisis has revealed the complexity of the interaction between bank market structure, regulation and the stability of the banking industry. Due to its effects on financial stability, banking market structure has been a focus of academic and policy debates of which we prefer the market power paradigm. More precisely, the impact of competition and market concentration on the probability of financial crisis emerges as a crucial topic. Despite their importance, little is known about the relationship between Banking Market Power and Bank Soundness from banks of MENA region. This paper tries to overcome the tradeoff between banking market power and financial (in)stability among 157 commercial banks chosen from 18 countries of MENA region between 2000 and 2008. The results indicate that although the banks operate in a competitive market, they suffer from financial instability. The results also revealed a non-significant negative relationship between the rather low degree of market power and financial instability. In other words, we concluded that financial instability is not affected by competition in the banking market in the MENA region.
    Keywords: market power, financial stability, competition, MENA.
    JEL: D4 G00
    Date: 2015–01–07
  7. By: Helali, Kamel ; Kalai, Maha ; Boujelben, Thouraya
    Abstract: This study analyzes the impact of the exchange rate fluctuations in the short and long-runs in Tunisia under a pure commitment policy through two channels. The first is the Structural Vector Autoregression used to analyze the short run effects of the exchange rate on the industrial production index and on the consumer and import price indexes. The second is the Vector Error Correction Model used to examine the long run dynamic effects of the exchange rate upon the same variables relying on Tunisian monthly data during the period January 1993 to June 2011. Unlike several empirical studies, which show that the impact of the exchange rate movements on prices has been reduced over the past few years in the industrialized countries, the exchange rate is found to be a potential source not only of production but also of inflation reduction in Tunisia. Indeed, the direct channel of the exchange rate seems to have a significant impact on production and inflation in the long-run, whereas the indirect one has no effect on the money supply. These results strongly support the monetary policy of the central bank targeting the exchange rate because there is a strong correlation between this rate and prices.
    Keywords: Exchange rate Pass-through; domestic prices; short and long run analysis; Tunisia.
    JEL: C32 E31 F31 F43
    Date: 2014–06–15
  8. By: Sahbi Farhani
    Abstract: This paper uses panel cointegration techniques to examine the causal relationship between renewable energy consumption, economic growth and CO2 emissions for a group of 12 MENA countries covering the annual period 1975-2008. The Granger-causality results indicate that there is no causal relationship between these variables in short run except a unidirectional causality running from renewable energy consumption to CO2 emissions. However, we find unidirectional causality running from economic growth and CO2 emissions to renewable energy consumption in long run. With panel FMOLS and DOLS estimates, we find that only CO2 emissions have an impact on renewable energy consumption. These results indicate that MENA countries don’t find the best policy which can control the regulation of the renewable energy prices, which can help to take into account the stability in the economic growth structure, and which can also mitigate pollutant emissions.
    Keywords: Renewable energy consumption, Economic growth, CO2 emissions, MENA countries
    JEL: C33 Q43
    Date: 2015–02–10
  9. By: Gorgulu, Mehmet Emre
    Abstract: The economic development of the Turkish Republic of Northern Cyprus remains to be volatile mainly due to the isolation of the de facto Turkish Cypriot state. While on one hand, high costs of energy in the Turkish Republic of Northern Cyprus associated with the isolation, remains as a huge obstacle for the increment in Turkish Cypriot production, embargo placed upon her, including closure of ports and airports, on the other, restrains international trade for Turkish Cypriots, thus making the Turkish Cypriot economy a challanged one. Therefore, after indicating the burdensome effects of isolation on the economy of Turkish Republic of Northern Cyprus, this paper proposes how the Turkish Cypriot economy needs to overcome her self-reliance issues and suggests alternative solutions to the Turkish Cypriot economy. For this purpose, by using time-series analysis this paper provides a double-model approach in which the economic growth of the Turkish Republic of Northern Cyprus is mainly dependent on aid transfers from Turkish government and is suffering from isolation in the first, and is determined by the free-trade and free-movement of international capital brought by becoming a transition economy and therefore easing the contractions on the economy, on the hypothetical second model. While the results of the analysis employed in this paper confirms that main problems of Turkish Cypriot economy are associated with the isolation, it also indicates that Turkish Cypriot economy would be better off in an isolation-free environment. Thus, this paper aims to assert the importance of self-determination rights for the Turkish Cypriots.
    Keywords: Economic Development, Cyprus Dispute, Economy of the Turkish Republic of Northern Cyprus as a Transition Economy
    JEL: F41 F43 F51 O10 P45 P48
    Date: 2014–04–25
  10. By: Enrica Di Stefano (Bank of Italy ); Daniela Marconi (Bank of Italy )
    Abstract: We examine the growth performance of six emerging economies (Brazil, China, India, Indonesia, Russia and Turkey) in the last two decades and examine whether domestic structural constraints are affecting their present and future growth potential. In order to assess better the determinants of the recent synchronized slowdown of these economies, we concentrate on the dynamics of labor productivity (value added per worker, a synthetic measure of capital deepening, labor quality and total factor productivity) and of employment. We find that the ongoing slowdown in EMEs is largely structural, but there is still ample room for catching up in terms of output composition, reallocation of labor across sectors and within-sector productivity improvements. The scope for further reform and reform priorities differs across countries. In the longer run other structural factors will weigh on potential growth, particularly the evolution of the size and quality of the labor force.
    Keywords: emerging markets, growth, potential growth, productivity
    JEL: E32 O47 O57
    Date: 2015–01

This nep-ara issue is ©2015 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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.