Trade Elasticities in the Middle East and Central Asia: What is the Role of Oil?

35 Pages Posted: 8 Oct 2008

See all articles by Andreas Billmeier

Andreas Billmeier

International Monetary Fund (IMF) - Middle East and Central Asia Department

Dalia Hakura

International Monetary Fund (IMF)

Date Written: September 2008

Abstract

The analysis in this paper suggests that import and export volume elasticities are markedly lower in oil-exporting Middle East and Central Asian countries than in non-oil countries in the region. A key implication of this finding is that a real appreciation of the exchange rate in oil-exporting countries would achieve little in terms of expenditure switching: an appreciation does not boost imports and non-oil exports constitute only a small share of GDP and total trade in these countries. Therefore, while a real appreciation lowers the current account surplus of oil-exporting countries through valuation effects, the contribution to lowering global imbalances may be more limited.

Keywords: Middle East and Central Asia, Trade policy, Imports, Exports, Oil exporting countries, Exchange rate appreciation, Current account surpluses, Economic integration, Real effective exchange rates, Economic models, Working Paper

Suggested Citation

Billmeier, Andreas and Hakura, Dalia, Trade Elasticities in the Middle East and Central Asia: What is the Role of Oil? (September 2008). IMF Working Papers, Vol. , pp. 1-33, 2008. Available at SSRN: https://ssrn.com/abstract=1278427

Andreas Billmeier (Contact Author)

International Monetary Fund (IMF) - Middle East and Central Asia Department ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Dalia Hakura

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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