What Drives Inflation in MENA Countries?

Ali, Mohamed Sami Ben; Mim, Sami Ben

doi:10.5539/ijef.v3n4p119

Cited by 7 publications

(6 citation statements)

References 34 publications

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“…There has been an increasingly growing interest in measuring potential GDP and output gaps, with a number of studies focusing on the estimation of output gaps in the GCC including Ali andMim (2011), Dupasquier, Guay, andSt-Amant (1999), Osman (2011), andOsman, Louis, andBalli (2008). Potential output is determined by the supply side of the economy (i.e., the factors of production, such as capital stock, labor force and technology).…”

Section: Estimating Potential Output and Output Gapmentioning

confidence: 99%

Estimating the Output Gap for Saudi Arabia

Alkhareif¹,

Barnett²,

Alsadoun³

2017

IJEF

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The objective of this paper is to estimate annual potential output growth and the output gap for the Saudi economy over the period 1980 to 2015, looking at both total output and non-oil output. The focus on the latter is so that the progress in diversifying the economy might be examined and the possible impact of diversification on potential output might be measured. We use three methods for estimating potential output proposed in the macroeconomic literature. The methodologies include the Hodrick-Prescott filter, Kalman filter, and the production function approach. We compare the three over the entire sample and the last five years. Our findings suggest that the output gap (the difference between actual and potential output, as measured by real GDP) is positive on average over the entire period (i.e., actual output has on average exceeded potential); however, the gap has turned negative and has shrunk in recent years, as fiscal expenditures, particularly in infrastructure, have acted to better align actual and potential. Our analysis also indicated that growth in both potential GDP and total factor productivity have accelerated in the 2011-2015 period. In contrast, growth in these factors has slowed in many other countries, particularly the advanced economies. This better performance of the Saudi economy is possibly due to the development of a resilient financial sector in the Saudi economy.

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Section: Estimating Potential Output and Output Gapmentioning

confidence: 99%

Estimating the Output Gap for Saudi Arabia

Alkhareif¹,

Barnett²,

Alsadoun³

2017

IJEF

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“…After a long period of relative price stability in both developed and developing countries, inflation has reemerged around the world as a global challenge with serious socio-economic implications. In a recent study, Ben Ali and Ben Mim (2012), present a survey on inflation and its determinants. The pass-through issue has been widely debated in the economic literature, as one of the main challenges for inflation targeting currently facing emerging economies is to assess the impact of exchange rate shocks on domestic prices and to forecast its determinants (Taylor, 2000;Bailliu and Fujii, 2004;and Gagnon and Ihrig, 2004 for developed economies, Hakura, 2006 andCa'Zorzi et al, 2007 for emerging markets).…”

Section: Introductionmentioning

confidence: 99%

Exchange Rate Pass-Through and Inflation Dynamics in Tunisia: A Markov-Switching Approach

Khemiri

Ali

2013

Economics

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This paper studies the effect of exchange rate pass-through on inflation in Tunisia for the period 2001 to 2009. The objective is to track inflation regimes for the Tunisian economy and to forecast its determinants. Using a Markov-switching approach, the authors identified two main regimes for inflation in Tunisia during this period: a low and stable inflation regime associated with a low pass-through level and a high inflation regime associated with a high pass-through level. To highlight the mechanisms underlying shifts in inflation regimes, the authors used a time-varying probabilities approach and identified a set of variables to assess their effects on inflation in Tunisia. The results show that the price level decreases in response to an increase in interest rates. Along with this, the empirical results provide strong evidence that the industrial production index has a negative and significant effect, as it increases the probability to stay in an inflationary regime and remain at a high pass-through level. The results also show robust support for the hypothesis that the imports increase the probability to stay in a high-inflation regime and maintain a high pass-through level. However, exports increase the probability of staying in a low-inflation regime and maintaining a low pass-through level. JEL G15 F3 F4

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“…suggest that more open economies tend to have low in ation levels (Ali & Mim, 2011). However, the proponents of the cost-push hypothesis of trade openness propose that openness does not necessarily imply a reduced in ation rate.…”

Section: Results Of Jks (2021) Panel Granger Non-causality Testmentioning

confidence: 99%

Deciphering the Non-Linear Nexus Between Government Size and Inflation in MENA Countries: An Application of Dynamic-Panel Threshold Model

Tariq,

Amin,

Ahmad

2023

Preprint

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Contradictory to conventional economic theory, which foresees any increase in the size of government as inflationary, this article provides evidence that the reaction of price levels to changes in the size of government is nonlinear. The price levels do not necessarily increase in response to a rise in the size of the government but only up to a certain threshold or optimal level. Accordingly, this paper utilises the dynamic panel threshold model to examine the threshold effects of government size (measured as government final consumption expenditure as a proportion of GDP) on inflatn using a sample of 10 selected MENA countries from 1980 to 2019. The findings of this study stand out in several ways. First, the results support the nonlinear relationship between government size and inflation in the study area. Second, the government size's estimated threshold level is equivalent to 12.46 percent. Third, government size negatively impacts inflation in the regime of small governments up to the threshold level. The impact turns positive once the government size goes beyond the threshold level in a regime of large size of government. These findings have ramifications for the conduct of fiscal policy. Policymakers in the MENA region can increase the size of government till it reaches the threshold level without exerting any upward pressure on price levels.

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What Drives Inflation in MENA Countries?

Cited by 7 publications

References 34 publications

Estimating the Output Gap for Saudi Arabia

Estimating the Output Gap for Saudi Arabia

Exchange Rate Pass-Through and Inflation Dynamics in Tunisia: A Markov-Switching Approach

Deciphering the Non-Linear Nexus Between Government Size and Inflation in MENA Countries: An Application of Dynamic-Panel Threshold Model

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