Asymmetric import cost pass-through in GCC countries: Evidence from nonlinear panel analysis

This paper investigates the asymmetric impacts of import costs on inflation in GCC countries. We utilize data from GCC countries and their trading partners over the period of 1990:Q1-2014:Q4 to construct a new import cost index that captures changes in both foreign prices and exchange rates. The results indicate that inflation responses to positive shocks in import costs are larger than their responses to negative shocks, confirming the presence of an asymmetric impact of import costs on inflation. This result holds only when the external shocks occur in an Asian or North American country. Furthermore, the results indicate that shocks in import cost pass-through into inflation occur only in periods of economic expansion. According to these results, monetary policy makers should take into account the nature of the shock, the geographical origin of the shock and the state of the domestic business cycle when the shock occurs.Scopu

Asymmetric impacts of foreign exchange rate on the demand for money in Turkey: new evidence from nonlinear ARDL

Using the nonlinear ARDL bounds test for cointegration, this empirical study explores the long and the short run asymmetric impact of exchange rate shocks on the demand for money in Turkey from 1986:Q1 to 2014:Q4. Two specifications of money demand have been investigated that reveal that demand for money is explained by the scale and opportunity cost variables as well as the foreign exchange rate which accounts for currency substitution. In particular, the nonlinear ARDL model provides strong proof for asymmetry by using the bootstrap test. Our findings suggest that the response of money demand to a negative shock in exchange rate (appreciation) was stronger than its reaction to a positive shock (depreciation). Thus, individuals should expect further appreciation when Turkish lira appreciates. In addition, based on the dominated effect of inflation expectation caused by the currency depreciation, monetary policy makers should achieve more stable exchange rates to anchor price fluctuations. Furthermore, the findings of stable money demand behaviour emphasizes the important role of money to conduct an efficient monetary policy and achieve price stability.Scopu

The Impact of Foreign Agricultural Aid and Total Foreign Aid on Agricultural Output in African Countries: New Evidence from Panel Data Analysis

Official Development Assistance may play an important role in increasing the resources to finance the agriculture sector and improve agricultural outcomes in African countries. Although this is a relevant issue, very few studies have investigated the link between foreign agricultural aid and national agricultural output. Using advanced econometrics techniques, this paper examines the impact of foreign agricultural aid and foreign aid on agriculture output in the panel data set of 29 African countries over the period of 1975-2013. In particular, we employed two estimation methods: Augmented Mean Group and Common Correlated Effects-2SLS. The first method accounts for heterogeneous slope coefficients across group members and cross-sectional dependency among variables, whereas the second method accounts for endogenous regressors. Our main findings indicate a small and positive impact of foreign agricultural aid and total foreign aid on agricultural output for low- and middle-income countries. Furthermore, the Pairwise Dumitrescu-Hurlin Panel Causality test shows evidence of a bidirectional causal relationship between agricultural aid and agricultural output for the full sample, noting that the result changes at the different group income level. Based on the empirical results, recommendations for future policy are given. - 2019 Economic Society of South Africa.Scopu

The impact of parallel market exchange rate volatility and oil exports on real GDP in Syria: Evidence from the ARDL approach

This paper investigates the impact of parallel market exchange rate volatility and trade on real GDP and real GDP growth in the Syrian economy over the period of 1990Q1–2010Q4. To this end, we first construct a parallel market exchange rate volatility indicator. Second, we estimate an autoregressive distributed lag (ARDL) model where we include our indicator of volatility among the main determinants of real GDP. Our findings imply that real GDP can be explained by three main variables: parallel market exchange rate, money supply, and oil exports. The long-run equilibrium reveals that parallel market exchange rate volatility has a negative impact on real GDP compared to the positive impact of money supply and oil exports. In contrast, the short-run impact of parallel market exchange rate volatility on real GDP growth is positive and very small counter to the long-run impact. Furthermore, the coefficient of the error correction term of the estimated ARDL model indicates that real GDP deviation from the equilibrium level will be corrected by about 10% after each quarter

Urbanization and non-renewable energy demand: A comparison of developed and emerging countries

Much of the current literature that deals with the effect of urbanization on energy demand focuses only on a specific region or a single country. This research extends the current literature by concentrating on a sample of countries containing developed and emerging countries. Our study inspect for those countries the impacts of urbanization and other key determinants on demand of non-renewable energy during the period 1980-2014. In addition, this empirical research employs an advanced heterogeneous panel techniques such as Augmented Mean Groups (AMG). Our empirical results suggest that a one percent rises in urbanization rises the consumption of non-renewable energy by 0.72%. We find that (as compared to the effect of factors such as the GDP and the price of oil) urbanization has the largest effect on non-renewable energy demand.Scopu

The environmental Kuznets curve relationship: a case study of the Gulf Cooperation Council region

By using panel data over the 1980?2017 period and two alternative indicators of environmental pollution (carbon dioxide (CO2) and sulfur dioxide (SO2) emissions), this paper investigates the validity of the environmental Kuznets curve (EKC) hypothesis in the Gulf Cooperation Council (GCC) region. Using three alternative econometric estimation techniques, we find strong evidence of a long-run inverted U-shaped relationship between real GDP per capita and both environmental indicators in the GCC region. Country-level short-run analysis indicates that the EKC hypothesis holds for Bahrain, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) when CO2 emissions are used as a measure of environmental pollution. However, when SO2 emissions are used as a measure of environmental pollution, the EKC hypothesis holds for Oman, Qatar, Saudi Arabia, and the UAE. The results of a recently developed panel causality test reveal one-way causality from real GDP per capita to CO2 emissions and from real GDP per capita to SO2 emissions.Scopu

The switching impact of financial stability and economic growth in Qatar: Evidence from an oil-rich country

This paper investigates the relationship between financial stability and economic growth in the Qatar economy over the period 1980:Q1–2013:Q4. The paper estimates the short- and long-run impact of real GDP growth on real loan provisions using a Vector Error Correction Model (VECM) with structural breaks. Moreover, the empirical analysis includes an impulse response analysis to evaluate Qatar banking sectors’ resilience to adverse macroeconomic shocks so as to check whether financial instability may impede economic growth or vice versa. To this end, the empirical results indicate that there is a long-run relationship with a shift in the cointegration vector between real loan provisions and real GDP growth and other explanatory variables. The empirical findings show that real GDP growth has a long-run negative impact and a moderate short-run positive impact on real loan provisions. This negative relationship indicates that an increase in real GDP growth may lead to less defaults on loans. Furthermore, the impulse response test indicates that unexpected shocks in real GDP growth have a negative impact on real loan provisions with the largest contribution in real loan provision changes coming mainly from changes in real GDP growth.Scopu