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The Global Impact of the Systemic Economies and MENA Business Cycles

  • Paul Cashin
  • Kamiar Mohaddes
  • Mehdi Raissi

This paper analyzes spillovers from macroeconomic shocks in systemic economies (China, the Euro Area, and the United States) to the Middle East and North Africa (MENA) region as well as outward spillovers from a GDP shock in the Gulf Cooperation Council (GCC) countries and MENA oil exporters to the rest of the world. This analysis is based on a Global Vector Autoregression (GVAR) model, estimated for 38 countries/regions over the period 1979Q2 to 2011Q2. Spillovers are transmitted across economies via trade, financial, and commodity price linkages. The results show that the MENA countries are more sensitive to developments in China than to shocks in the Euro Area or the United States, in line with the direction of evolving trade patterns and the emergence of China as a key driver of the global economy. Outward spillovers from the GCC region and MENA oil exporters are likely to be stronger in their immediate geographical proximity, but also have global implications.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 12/255.

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Length: 40
Date of creation: 25 Oct 2012
Date of revision:
Handle: RePEc:imf:imfwpa:12/255
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  1. Andrews, Donald W K & Ploberger, Werner, 1994. "Optimal Tests When a Nuisance Parameter Is Present Only under the Alternative," Econometrica, Econometric Society, vol. 62(6), pages 1383-1414, November.
  2. Oral Williams & Kamiar Mohaddes, 2011. "Inflation Differentials in the GCC; Does the Oil Cycle Matter?," IMF Working Papers 11/294, International Monetary Fund.
  3. Stephane Dees & Filippo di Mauro & M. Hashem Pesaran & L. Vanessa Smith, 2004. "Exploring the International Linkages of the Euro Area: A Global VAR Analysis," IEPR Working Papers 04.6, Institute of Economic Policy Research (IEPR).
  4. Hadi Salehi Esfahani & Kamiar Mohaddes & M. Hashem Pesaran, 2014. "An Empirical Growth Model For Major Oil Exporters," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(1), pages 1-21, 01.
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  8. Hadi Salehi Esfahani & Kamiar Mohaddes & M. Hashem Pesaran, 2009. "Oil Exports and the Iranian Economy," CESifo Working Paper Series 2843, CESifo Group Munich.
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  15. Cavalcanti, T.V.de V. & Mohaddes, K. & Raissi, M., 2011. "Commodity Price Volatility and the Sources of Growth," Cambridge Working Papers in Economics 1112, Faculty of Economics, University of Cambridge.
  16. Cavalcanti, Tiago V. de V. & Mohaddes, Kamiar & Raissi, Mehdi, 2011. "Growth, development and natural resources: New evidence using a heterogeneous panel analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 51(4), pages 305-318.
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