Do Capital Inflows Cause Currency Black Markets in MENA? Causality Tests for Heterogeneous Panels
AbstractThis paper examines feedback causality between capital inflow components and currency black market premiums (BMP) in a panel of eight Middle Eastern and North African countries (MENA) over the period 1984-2004. MFR and average Wald statistics approaches were employed to test for causality. Both approaches gave similar results. Causality results and policy implications are different for middle income, low income, and oil and non-oil countries. Interactions of capital inflow components and BMP with openness and human capital may act as mitigating factors, offsetting some capital outflows associated with currency crises.
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Bibliographic InfoPaper provided by Economic Research Forum in its series Working Papers with number 381.
Length: 18 pages
Date of creation: Jan 2008
Date of revision: Jan 2008
Publication status: Published by The Economic Research Forum (ERF)
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