Noha Emara

Inflation Volatility, Institutions, and Economic Growth

The study analyzes the effect of inflation volatility on growth in the presence of different degrees of institutional development. A nonlinear growth regression specification using a system Generalized Method of Moments (GMM) procedure on a sample of 37 countries over the period 1989–2006 is estimated. While the level of inflation was found not to have a significant effect on growth, which is in line with previous studies, inflation volatility does significantly impact growth even for countries with moderately high levels on inflation. In addition and in contrast with the results of Acemoglu et al. (2003) and Easterly (2005), the study finds that policies, particularly inflation volatility, does not act as a proxy for institutions. Improving institutions will have a statistically significant positive impact on growth which will help to reduce the negative impact of inflation volatility.

Minimax on the Gridiron: Serial Correlation and Its Effects on Outcomes in the National Football League

We examine whether the predictions of minimax in zero-sum games holds under highly incentivized conditions with highly informed informed decision makers. We examine data from 3455 National Football League (NFL) games from the 2000 season through the 2012 season. We categorize every relevant play as either a rush or a pass. We find that, despite the predictions of minimax, the pass-rush mix exhibits negative serial correlation. In other words, given the conditions of the play, teams employ an exploitable strategy in that play types alternate more frequently than implied by an independent stochastic process. We also find that the efficacy of plays are affected by previous actions and previous outcomes in a manner that is not consistent with minimax. Our analysis suggests that teams could profit from more clustered play selections, which switch play type less frequently. Our results are consistent with the explanation that teams excessively switch play types in order to not be perceived as predictable.

Economic Freedom and Economic Performance : The Case MENA Countries

The recent political up-rise in the Middle East and North African (MENA) economies sparks the light on evaluating the so called structural reforms that aimed at achieving economic freedom. This paper examines the impact of liberal policies on output per worker in 139 countries with a case study on MENA economies. Using panel least square estimation with fixed effects for a sample of 139 countries over the period 1970-2008, the study estimates the impact of different aspects of economic freedom on output per worker and its components; physical capital, human capital, and productivity. The economic freedom measure encompasses different areas including the size of the government, the protection of property rights and enforcement of contracts, the access to sound money, the freedom to access international markets, and the laxness of regulation of credit, labor, and business. In line with the results of Alexandrakis and Livanis (2013), the study finds a non-uniform impact of different areas of economic freedom on output per worker, capital intensity, human capital per worker, or total factor productivity. For instance, while trade freedom, fiscal freedom, monetary freedom, investment freedom, financial freedom, and freedom from corruption enhances output per worker, through the increase in human capital per worker, it does worsen it through a negative impact on capital intensity and total factor productivity. Furthermore, the study finds a significant reverse causality that runs from enhancing either output per worker or its three components on the economic freedom measure. While increasing output per worker or human capital per worker is reflected in an improvement in economic freedom measures, the opposite is found for the increase in capital intensity or total factor productivity. An important policy implication in this respect suggests that liberal economic policies in MENA countries might not be a pre-requisite for their enhanced future productivity. To cite this article [Emara, N. (2016). Economic Freedom and Economic Performance: The Case MENA Countries. J. Middle East North Afr. sci, 2(2), 1-15]. (p-ISSN 24129763) (e-ISSN 2412-8937). http://www.jomenas.org. 1 JEL Classification Numbers: O16; O43; N20

Estimating Aggregate Demand in Egypt

This econometric study seeks to determine the most important factors of aggregate demand in Egypt so as to provide insight into how this developing nation can grow economically in the coming years. The Ordinary Least Squares estimation method was used in order to estimate nominal GDP for the time period 1975 to 2009. Based on the results the real interest rate, the inflation rate, the growth rate of government expenditure, and the growth rate of the money supply are the most statistically and economically significant factors of the growth rate of nominal GDP for the coming year. A one percent change in the growth rate of the previous year government expenditure is predicted to cause the growth rate of the current year nominal GDP to increase by 54%. The role of government expenditures on public sector wage expansion is discussed in this study as to shed light on this factor’s significant influence on income inequality post-1975 in Egypt, which will continue to impact nominal GDP and social conditions for the developing nation in the coming years.

Effect of Income Elasticity on MDG Health Indicators: The Case of MENA Countries

Abstract The health target is still considered one of the most challenging goals for most Middle East and North African (MENA) Countries. Using Panel Least Square with Regional Dummies (LSDV) for 20 MENA countries over the period 2000–2009, the study concludes that with less than 5 years for the Millennium Development Goals (MDGs) to be concluded, a significant acceleration in economic growth is required for the MENA countries to achieve their goals on reducing the under-five infant mortality rates (UFMR) and the maternal mortality rates (MMR) if these countries depended solely on economic growth. As a policy implication, MENA governments need to concentrate on developing and improving many areas including social and physical infrastructure as well as legal and financial institutions.

Income Elasticity and the Gender Gap: A Challenging MDG for the MENA Countries

Abstract The gender equality target is still considered one of the most challenging goals for most Middle East and North African (MENA) Countries. Using panel least square with regional dummies (LSDV) for 22 MENA countries over the period 1990–2007, the study concludes that with less than 5 years for the Millennium Development Goals (MDGs) to be concluded, a significant acceleration in economic growth is required for the MENA countries to achieve the gender goal if these countries depended solely on economic growth. As a policy implication, the increase in economic growth in the MENA countries needs to be complemented with other factors boosting the achievability of the gender equality such as the government spending on education, infrastructure, and encouragement of international trade. All three factors proved to have a statistical significant and important impact on closing the gender gap.

An Analysis of the Seasonal Cycle and the Business Cycle

Robert Barsky and Jeffrey Miron (1989) revealed the seasonal cycle of the U.S. economy from 1948 to 1985 was characterized by a “bubble-like” expansion in the second and fourth quarters, a “crash-like” contraction in the first quarter, and a mild contraction in the third quarter. We replicate, in part, their seasonal cycle analysis from 1946 to 2001. Our results are largely in line with theirs. Nonetheless, we find the seasonal cycle is not stable and can evolve across time. In particular, the Great Moderation affected both the business cycle and the seasonal cycle. Robert Barsky and Jeffrey Miron also found real aggregates, like the output, move together in the seasonal cycle across broadly defined sectors, similar to a phenomenon observed under the conventional business cycle. They posed a challenge question concerning why “the seasonal and the conventional business cycles are so similar.” To answer their question, we focus on a number of aggregate variables with a recursive application of the HP filter and find that aggregates, such as the GDP, consumption, the S&P 500 Index, and so forth, have a “bubble-like” expansion and a “crash-like” contraction in their cyclical trends in business cycle frequencies. Although preference shifts and production synergy are the two major forces that drive the seasonal cycle, we find the time-varying stochastic discount factor is the main cause of the business cycle and plays a more important role in macroeconomic fluctuations in business cycle frequencies than other factors.

The Welfare Effects of Inflation Volatility and Institutions: Implications for Emerging Market Economies

Using a micro-foundation based monetary Small Open Economy (SOE) model of McCandless (2008) with a cash-in-advance constraint, a capital adjustment cost, foreign bonds, and a trade sector, the study quantifies the welfare implications under two policy scenarios: (a) a reduction in inflation volatility and (b) an improvement in institutions. The monetary small open economy model is calibrated using quarterly data from 1989 to 2006 for an emerging market economy, Mexico, a country that, by the study’s measure has poor financial institutions and moderately high inflation volatility. The results of the model suggest that decreasing inflation volatility leads to about 8 percent increase in welfare, at most, while improving institutions leads to an increase in welfare by about 10 percent, at most. Furthermore, when the decrease in inflation volatility is coupled with the improvement in institutions the welfare increase is in the range of around 11–19 percent, depending on the degree of the drop in inflation volatility and the level of development in financial institutions. Finally, the study analyzes the impact of the reduction in inflation volatility versus the impact of the improvement in institutions on the behavior of the endogenous variables along the transition path. One policy implication of these results is that an emerging market economy, like Mexico, with relatively high inflation volatility and underdeveloped financial institutions, can get large welfare gains from either reducing inflation volatility or improving their institutions, with the largest gains coming from the latter. A long-run sustainable economic development policy will lean more towards the improvement in institutions rather than the reduction of inflation volatility.