Identifying structural breaks and growth regimes in middle eastern economies

This study is an attempt to empirically determine structural breaks in economic growth of selected Middle Eastern countries. We combined the statistical approach with a subjective approach to identify break points in the growth process during the period 1970–2016. Thereby, we try to classify breaks into up‐breaks and down‐breaks resulting into different regimes ranging from stagnation to strong growth. In a sample of 17 countries examined, 15 countries exhibited significant breaks in trend function of growth process as per the fit and filter approach. We found total 41 plausible breaks – 19 up breaks and 22 down breaks. Moreover, the spatial distribution of breaks shows that over 68% of the breaks are reported from oil‐rich countries while as 31% from non‐oil. The paper highlights the key point that growth performance of the Middle Eastern countries is very volatile and gambles in the alternating cycles of collapse, stagnation, moderate, rapid and strong growth.