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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
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    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.

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    Article provided by Euro-American Association of Economic Development in its journal Applied Econometrics and International Development.

    Volume (Year): 13 (2013)
    Issue (Month): 1 ()
    Pages: 187-202

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    Handle: RePEc:eaa:aeinde:v:13:y:2013:i:1_15
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    Keywords: capital inflow; currency black market; causality; MFR; Wald statistics;

    Find related papers by 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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