Public Sector Deficits and Macroeconomic Performance in Lebanon: A Simulation Analysis

The main aims of this paper are as follows. First, to macro model prospective development in the Lebanese economy for policy analysis and evaluation. This study develops s a dynamic macroeconomic model for Lebanon including the budget deficit and the funding of it (e.g. by monetary accommodation or bond financing), as well as the composition of government expenditures (capital or current). Hence this paper develops behavioural equations not used before for Lebanon. This macroeconomic model is utilised as well to analyse the effects of exogenous shocks arising from increased government expenditures (capital expenditure or consumption expenditure) upon key macroeconomic variables. The second aim of this study is the application of a simulation analysis to the Lebanese economy, which suffers from fiscal deficits and public debt during last few decades. This study conducts a numerical simulation analysis of the macroeconomic model developed, in order to analyse a number of economic policies in the context of the Lebanese fiscal crisis with the aim of improving the country’s macroeconomic performance. The major findings from the simulation results presented in this study are that, implementing the policy of expansion in government capital expenditure, for two presumed cases (unanticipated/gradual), produces larger favourable impacts (in comparison with the policy of expansion in government consumption expenditure) upon Lebanese economic development in terms of private sector investment, and in terms of the supply side of the economy (crowding in effects) during the whole adjustment process towards long run steady state. Implementing the policy of an expansion in government consumption expenditure produces unfavourable effects in terms of external developments during the adjustment process. This policy produces, as well, unfavourable effect in terms of private investment and aggregate supply (crowding out effect). However, the simulation results for the two policies show that money deficit financing is inflationary and shows large sensitivity in terms of the interest rate. Bond financing is non inflationary and shows little sensitivity in terms of interest rates. The main finding is that if the government considers a fiscal expansion policy in order to improve macroeconomic performance, the simulation results suggest that the government should adopt the policy of an expansion in capital expenditure because it produces the most desirable outcomes. In addition, it should adopt a gradual approach because this produces considerably less volatility in terms of major macro variables. The main findings from our simulation results dealing with the government approach to the fiscal crisis, does not support the government policy in dealing with the crisis. The results presented here suggest that it produces the most undesirable economic outcomes, and hence will only exacerbate Lebanon’s economic difficulties.Public sector deficits, macroeconomic performance, Lebanon, simulation analysis

Voltage stability assessment for distrbuted generation in islanded microgrid system

The increasing energy demands are stressing the generation and transmission capabilities of the power system. Distributed generation (DG), which generally located in distribution systems, has the ability to meet some of the growing energy demands. However, unplanned application of individual distributed generators might cause other technical problems. The microgrid concept has the potential to solve major problems arising from large penetration of DG in distribution systems. A microgrid is not a forceful system when it is compared to a power system. This project proposes a simulation approach to study voltage stability index (VSI) and voltage stability analysis in microgrid system for the improvement of the dynamic voltage stability in a microgrid in case of the dynamic voltage insufficiency. A model of IEEE-14 Bus System has been presented as a case study of an islanded microgird system. This project also presented line voltage stability index analysis which accurately performs voltage stability analysis at each transmission line and precisely predicts voltage collapse on power systems. A formula to calculate VSI has been derived and applied on two cases on the system. To show the effectiveness of the proposed voltage stability analysis method, this approach is implemented in a microgrid test system (14-bus, 20 lines) in PSAT which is a MATLAB toolbox environment. The test system has four diesel DGs and a wind turbine connected with eleven constant loads. The dynamic simulation of the test system is carried out for various types of disturbances. Islanded mode of operation is considered in this study. Fast Voltage Stability Index (FVSI) and voltage stability analysis have been successfully implemented and analysed

Revisiting Budget and Trade Deficits in Lebanon: A Critique

This study re-examines the relationship between the budget deficit and the trade deficit in Lebanon. In contrast to earlier studies, we start by testing for a unit root in the presence of structural change using the Innovational Outlier (IO) model. This study also utilizes the newly proposed autoregressive distributed lag (ARDL) approach to examine such a relationship. The results show that the endogenously determined times of the breaks coincide with observed real events occurring during the years of Civil War in Lebanon and especially after the Israeli invasion of Beirut in 1982. This study finds, as well, that the trade deficit in Lebanon has a long run impact on the budget deficit.Budget deficit, trade deficit, structural break, ARDL, Lebanon

Testing the Keynesian Proposition of Twin Deficits in the Presence of Trade Liberalisation: Evidence from Sri Lanka after War: the case of a bridge too far?

This paper examines the long-run and short-run relationships between the current account deficit, budget deficit, savings and investment gap and trade openness in Sri Lanka using the autoregressive distributive lagged (ARDL) approach. The time series properties of the variables, in the presence of endogenous structural breaks, was previously analysed using Perron’s (1997) additive outlier (AO) and innovational outlier (IO) models. The empirical analysis supports the Keynesian view that a link exists between the current account, budget deficit and savings and investment gap. We found that trade openness has a positive effect on the current account deficit, but is statistically insignificant, and offer some strategies to stabilise the budget deficit and current account deficits in Sri Lanka.twin deficit, structural change, unit roots, ARDL

Lebanon’s Fiscal Crisis and Economic Reconstruction after War: the case of a bridge too far?

Since the onset of the Civil War in 1975 Lebanon has experienced burgeoning fiscal deficits and an unsustainable public debt overhang. Much of this arose from the loss of revenues during the period of the Civil War 1975-90 and attempts to maintain basic public expenditure, while from 1990-2006 it reflected post Taif rebuilding and reconstruction of key infrastructure with limited revenue capacity. Considerable progress from the 1990s has been achieved in rebuilding the shattered economy from both public and private international and domestic sources, but its legacy is a huge public debt and a servicing requirement that currently absorbs alone almost 30 per cent of total government revenue and is the highest in the world on a per capita basis. While the need to reduce this debt to a sustainable level would be daunting enough in itself, Lebanon’s fiscal predicament was further compounded by the outbreak of war with Israel during July-August 2006. The consequence of this 34 day conflagration was the devastation of residential property, vital infrastructure, agricultural production, industrial production, exports, environmental damage, the collapse of tourism and a further erosion of the influence and power of the central government. Estimates of the direct and indirect costs for Lebanon of this relatively brief but devastating war conservatively vary from US$10-15 billion. The implications of such reconstruction and rebuilding costs for the budget and public debt are potentially calamitous for Lebanon. A key question is whether Lebanon can tackle this enormous task in insolation. This paper explores the background to the fiscal crisis, identifies from available literature the extent, nature and cost of the war damage, analyses the options available to the authorities in rebuilding the economy and highlights key policy issues and measures that will be required if a sustainable economic recovery is to be achieved. Despite its demonstrated and remarkable resilience to past trauma the paper concludes that the fiscal crisis makes it impossible for Lebanon to tackle the reconstruction and rebuilding task on its own and particularly in the wake of the events of summer 2006. The country will require substantial and ongoing financial support from international lenders and donors. The success of these efforts in the case of Lebanon is of particular interest as it could well be a microcosm of possible future outcomes for the region more generally.

Islamic Banking Performance in the Middle East: A Case Study of Jordan

Islamic banking in Jordan started around two decades ago. Since then it has played an important role in financing and contributing to different economics and social sectors in the country in compliance with the principles of Shariah rules in Islamic banking practices. Since there have been limited studies on the financial performance of Islamic banks in the country. The aim of this paper is to examine and analyse the Jordanian experience with Islamic banking, and in particular the experience for the first and second Islamic bank in the country, Jordan Islamic Bank for Finance and Investment (JIBFI), and Islamic International Arab Bank (IIAB) in order to evaluate the Islamic banks’ performance in the county. The paper goes further to shed some light on the domestic as well as global challenges, which are facing this sector. However, this paper used the performance evaluation methodology by conducting the profit maximization, capital structure, and liquidity tests. This paper found that the efficiency and ability of both banks has increased and both have expanded their investment and activities and had played an important role in financing projects in Jordan. Another interesting finding of the paper that these banks have focused on the short-term investment, perhaps this seems to be the case in most Islamic banking practices. Another finding is that the Bank for Finance and Investment (JIBFI) has a high profitability that encourages other banks to practice the Islamic financial system. The paper also found that Islamic banks have a high growth in the credit facilities and in profitability.Islamic banking, Performance, Efficiency, Challenges, Jordan

An Overview of Mobile Ad Hoc Networks for the Existing Protocols and Applications

Mobile Ad Hoc Network (MANET) is a collection of two or more devices or nodes or terminals with wireless communications and networking capability that communicate with each other without the aid of any centralized administrator also the wireless nodes that can dynamically form a network to exchange information without using any existing fixed network infrastructure. And it's an autonomous system in which mobile hosts connected by wireless links are free to be dynamically and some time act as routers at the same time, and we discuss in this paper the distinct characteristics of traditional wired networks, including network configuration may change at any time, there is no direction or limit the movement and so on, and thus needed a new optional path Agreement (Routing Protocol) to identify nodes for these actions communicate with each other path, An ideal choice way the agreement should not only be able to find the right path, and the Ad Hoc Network must be able to adapt to changing network of this type at any time. and we talk in details in this paper all the information of Mobile Ad Hoc Network which include the History of ad hoc, wireless ad hoc, wireless mobile approaches and types of mobile ad Hoc networks, and then we present more than 13 types of the routing Ad Hoc Networks protocols have been proposed. In this paper, the more representative of routing protocols, analysis of individual characteristics and advantages and disadvantages to collate and compare, and present the all applications or the Possible Service of Ad Hoc Networks.Comment: 24 Pages, JGraph-Hoc Journa