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Do Capital Inflows Cause Currency Black Markets In Mena Countries? Causality Tests For Heterogeneous Panels

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  • SULIMAN, Osman

Abstract

This paper tests 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. Because of the high likelihood of heterogeneity in the data set, Mixed-Fixed Random Effects (MFR) and average Wald statistic approaches are employed in the analysis. Causality results and policy implications are different for middle income and low income countries. The interaction of capital inflow components and BMP with openness and human capital may act to mitigate the capital outflow associated with currency crises.

Suggested Citation

  • SULIMAN, Osman, 2013. "Do Capital Inflows Cause Currency Black Markets In Mena Countries? Causality Tests For Heterogeneous Panels," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 13(1), pages 187-202.
    • Handle: RePEc:eaa:aeinde:v:13:y:2013:i:1_15
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    More about this item

    Keywords

    capital inflow; currency black market; causality; MFR; Wald statistics;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F3 - International Economics - - International Finance

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