Hany Abdel-Latif

Antecedents of war: the geopolitics of low oil prices and decelerating financial liquidity

ABSTRACT We investigate the joint dynamics of oil prices, financial liquidity and geopolitical risk, within a multi-country global vector autoregressive model. We find that low oil prices are expected to trigger higher levels of geopolitical risk and that decelerating financial liquidity serves as an accelerator.

Asymmetric impacts of oil price shocks on government expenditures: Evidence from Saudi Arabia

Abstract This paper investigates the effect of oil price shocks on government expenditures on the health and education sectors in Saudi Arabia. Using a quarterly dataset 1990Q1–2017Q2 and employing a non-linear autoregressive distributed lag (NARDL) model, our research shows evidence of a non-linear relationship between oil prices and government expenditures in Saudi Arabia, where a negative oil price shock would have a statistically significant different impact in the long run compared to a positive shock. We build upon our empirical findings and draw some policy recommendations for Vision 2030 of Saudi Arabia.

FDI Response to Political Shocks: What Can the Arab Spring Tell Us?

This paper examines the FDI response to political shocks. We first investigate whether political or institutional quality is an important determinant of FDI inflows using a panel VAR model in a dataset of 146 countries over the period of 1989-2015. Then, we exploit the Arab Spring incidence to measure the short-run effects of political shocks on FDI flows using the differences-in-differences (DiD) estimator for a sub-sample of nineteen countries in the MENA region. We account for possible bias of the DiD estimator resulting from dealing with heterogeneous group of countries by using the propensity score matching based on the countries economic development and political settings. Our findings show that a positive shock to political quality would increase FDI flows which lends evidence to the importance of political quality as an important determinant of FDI flows. In addition, we find that the Arab spring has led to a drop in FDI flows to the MENA region.

Financial Liquidity, Geopolitics, and Oil Prices

This paper aims simultaneously to study the global dynamic relationship of oil prices, financial liquidity, and geopolitical risk, on the one hand, and the economic performance of oil-dependent economies on the other. Global and country-specific dynamics are studied together in a Global Vector Autoregression (GVAR) model that allows different lag structures for different variables in different countries. Impulse response functions from the estimated model suggest that new waves of high oil prices are unlikely, despite the likely continuation of high global financial liquidity and heightened geopolitical risk, which had driven earlier episodes of very high oil prices. With oil remaining at modest to low prices by recent historical standards, we study the prospects for economic growth in oil-dependent economies through dramatic increases in domestic investment, as planned under Visions 2030 of a number of Arab economies, and conclude that success is unlikely.

Asymmetric Growth Impact of Fiscal Policy: Evidence from Egypt

This paper empirically explores how fiscal policy - represented by changes in government spending- exerts asymmetric effects on economic growth in the context of a developing country, Egypt in particular. By allowing for the theoretical plausibility of asymmetric effects of fiscal policy on economic activity, our research suggests that nothing can guarantee linearity between the growth impact of increasing and decreasing government expenditures. Using a non-linear ARDL model on Egypt data - at both aggregated and disaggregated levels- for the period 1980-2013, this paper provides new evidence of a non-linear relationship between government spending and economic growth.

From Soviet to Europe: Returns to Education Puzzle in Bulgaria

This paper makes a systematic presentation of returns to education in Bulgaria, a country that has witnessed a number of dramatic structural changes over the last two decades. It examines the headway of returns to education for Bulgaria in two obverse economic regimes - from communism to EU membership. The findings show a steady increase in returns to education for both males and females until 2003. The average returns to one additional year of education rose from 1.1% in 1986 to 5.1% in 2003 for males and from 2.1% to 5.9% for females. Quantile regression estimations, between 1986 and 2003, evince that the most prominent increase in the wage premium occurred at the top end of the distribution, where the rate of returns to education, in particular for females increased from a negative and insignificant sign in 1986 to 7% in 2003. However, this increasing trend in returns to education seems to take an inverted-U-shape in 2007, the year when the country joined the EU, which poses a new puzzle to be resolved. To this end, the current paper introduces possible explanations for such a puzzle and sheds lights on a number of insightful policy implications.