Risk Sharing in the Middle East and North Africa: The Role of Remittances and Factor Incomes
AbstractThis paper investigates welfare gains and channels of risk sharing among 14 Middle Eastern and North African (MENA) countries, including the oil-rich Gulf region and the resource-scarce economies such as Egypt, Morocco and Tunisia. The results show that, for the 1992--2009 period, the overall welfare gains across MENA countries are higher than those documented for the Organization for Economic Cooperation and Development (OECD) nations. In the Gulf region, the amount of factor income smoothing does not differ considerably when output shocks are longer-lasting rather than transitory, whereas the amount smoothed by savings increases remarkably when shocks are longer-lasting. By contrast, both factor income flows and international transfers respond more to permanent shocks than to transitory shocks in the non-oil MENA countries. The results also show that a significant portion of shocks is smoothed via remittance transfers in the economically less developed MENA countries, but not in the oil-rich Gulf and OECD countries. Finally, for the overall MENA region, a large part of the shock remains unsmoothed, suggesting that more market integration is needed to remedy the weak link of incomplete risk-sharing.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 40739.
Date of creation: 18 Aug 2012
Date of revision:
MENA region; remittance transfer; risk sharing; welfare gain;
Other versions of this item:
- Faruk Balli & Syed Abul Basherz & Rosmy Jean Louis, 2012. "Risk Sharing in the Middle East and North Africa: The Role of Remittances and Factor Incomes," CAMA Working Papers 2012-39, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-08-23 (All new papers)
- NEP-ARA-2012-08-23 (MENA - Middle East & North Africa)
- NEP-MIG-2012-08-23 (Economics of Human Migration)
- NEP-OPM-2012-08-23 (Open Economy Macroeconomic)
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