Comparative Macroeconomic Dynamics in the Arab World: A Panel VAR Approach

Abstract:     
The paper presents a comparative analysis of macroeconomic dynamics of 18 Arab countries based on a panel vector autogression estimation. Comparing growth performance, fiscal and current account developments in these countries, the study concludes that (1) in the short run, external and country-specific factors play an almost equal role in explaining macroeconomic fluctuations, but in the long run external factors dominate; (2) on average, program countries are less vulnerable to adverse exogeneous shocks than nonprogram countries, (3) to mitigate the negative impact of an external shock, domestic policy response should be consistent with the size of the shock.

Number of Pages in PDF File: 53

Keywords: VAR, economic growth, panel data, Arab countries

JEL Classification: C32, C33, E17, E23, F43, F47, O47

working papers series