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Growth, fluctuations and macroeconomic policies: Evidence from Arab open economies

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  • Ramzi, Knani
  • Asma, Madouri
  • Chebbi, Ali

Abstract

In this paper, we examine empirically the Macroeconomic policy impact on economic Growth in four Arab open economies over the period 1982–2013. The multivariate Markov switching approach is used to study the trade openness, financial development, financial integration, inflation and investment shock effects on growth according to the economic state. Our findings are (i) two economies were under persistent recession states for most of the time, (ii) macroeconomic policy do not lead to dynamic gains from trade in the largest Arab countries, (iii) inflationary pressure stimulates economic growth through domestic investment, (iv) financial Integration and the financial Development suggest that structural reforms in the banking sector and financial markets should be implemented, and (v) short term stabilization policies should be accommodated to the macroeconomic fluctuations. These results in terms of economic policy recommendations were not possible to be carried out outside the RBC framework.

Suggested Citation

  • Ramzi, Knani & Asma, Madouri & Chebbi, Ali, 2017. "Growth, fluctuations and macroeconomic policies: Evidence from Arab open economies," Economic Analysis and Policy, Elsevier, vol. 55(C), pages 132-146.
    • Handle: RePEc:eee:ecanpo:v:55:y:2017:i:c:p:132-146
    DOI: 10.1016/j.eap.2017.04.007
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    More about this item

    Keywords

    MSM-VAR models; Economic growth rate; Trade openness; Financial integration;
    All these keywords.

    JEL classification:

    • E03 - Macroeconomics and Monetary Economics - - General - - - Behavioral Macroeconomics
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • F15 - International Economics - - Trade - - - Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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