Macroeconomic and Institutional Drivers of Current Account in Developing Asian Countries

This study empirically investigates the impact of macroeconomic and institutional variables on the current account balances of nine selected developing Asian countries over the period of 1984-2018. The Fixed Effect (FE) technique that helps to identify the major variables that can affect the dependent variable i.e., current account has been used to analyze data. The results indicate that trade openness; domestic relative income and real effective exchange rate are the variables which are significant and positively associated with the current account balances of developing Asian countries. However, when the institutional variables are included i.e. law &order and bureaucratic quality have turned out to have the significant effect on current account as well. The dummy variable is also introduced to compare the ASEAN region with South Asian region. The results suggest that it has positive and significant effect on the current account balances of ASEAN.

Does the Number of Hajj Pilgrims Boost Economic Growth in Saudi Arabia?

This paper uses the multivariate Johansen cointegration approach and Granger causality tests to study the causal relationship between the number of pilgrims and the non-oil GDP growth in Saudi Arabia over the period 1980–2016 by integrating the real effective exchange rate index as an additional variable. Our findings indicate that there is only one long-run relationship between the three variables when the non-oil GDP growth is the dependent variable. There is a unidirectional long-run causality from the number of pilgrims to non-oil GDP growth. Besides, we find no short-run causal relationships between the three variables. Therefore, an important policy implication resulting from this study is that pilgrims can be a led growth factor to economic growth in Saudi Arabia in the long run. The pilgrimage event can, therefore, be an excellent opportunity for Saudi Arabia to boost its economic activity as stated by its 2030 vision.

Analysis of the Effect of the European Debt Crisis on the Saudi Arabian Economy

This paper investigates the economic impact of the 2009 European debt crisis on Saudi Arabia’s real economy from 2004 Q2 to 2014 Q2 using a structural vector autoregressive model (SVAR). The results of the impulse response functions obtained from the aggregated data show that the shock to European imports from Saudi Arabia had a significant impact on the real effective exchange rate, inflation rate, and economic growth that lasted for three periods. Moreover, the variance decomposition analysis shows that Europe’s imports from Saudi Arabia explain approximately 20% of the variance of the Saudi real effective exchange rate and real economic growth, 10% of the interest rate variability, and only 5% of the inflation rate variance. The results of the individual country analysis show that the impact of shocks to imports from all European countries had an instantaneous impact, except for France and Spain, where the impact on the economic growth was significant in the second and sixth periods respectively. The results suggest that Saudi Arabian policymakers should continue the process of export diversification in order to reduce its dependence on this region.

Research on the Impact of Sino-US Trade Structure on the Real Effective Exchange Rate of RMB

Since the beginning of 2018, Sino-US trade frictions have been escalating to the fields of science and technology, finance, and geography. Especially in the financial field, the United States has forcibly identified China as a “currency manipulator.” In order to analyze the impact of Sino-US trade on the RMB exchange rate, based on the Sino-US import and export trade data under the quarterly HS classification from 2003 to 2019 and the RMB real effective exchange rate, this article carries out the traditional time series test, seasonal unit root test, and cointegration test and further constructs the seasonal error correction model to explore the long-term and short-term dynamic impact of Sino-US import and export trade structure on RMB real effective exchange rate. The results shows that the upgrading and optimization of the overall trade structure between China and the United States will increase the appreciation pressure of RMB real effective exchange rate. There are seasonal and long-term trends between RMB real effective exchange rate and different types of import and export trade structures between China and the United States. Therefore, this article not only strongly refutes the “theory of RMB appreciation” and puts forward policy suggestions to effectively deal with the negative impact of Sino-US trade friction but also provides a research framework for global trade, especially the decoupling of trade structure and exchange rate between developing and developed countries.

Penerapan Regresi Data Panel Dinamis untuk Pemodelan Ekspor dan Impor di Asean

Perekonomian terbuka di suatu negara adalah negara yang mempunyai kegiatan perdagangan internasional seperti ekspor, impor, barang atau jasa serta dapat meminjam dari hasil pasar modal internasional. Tujuan dari penelitian adalah untuk menganalisis ekspor dan impor di wilayah beberapa negara ASEAN mulai periode tahun 2014 hingga tahun 2019. Metode estimasi parameter model adalah metode GMM (Generalized method of moment) karena penelitian ini menggunakan panel dinamis. Berdasarkan hasil analisis data, variabel yang berpengaruh signifikan positif terhadap model ekspor ASEAN adalah Growth GDP, REER sedangkan variabel GFCF berpengaruh secara negatif. Disamping itu, variabel yang berpengaruh siginifikan positif model impor ASEAN adalah Growth GDP dan Real Effective Exchange Rate.

Real Effective Exchange Rate Misalignment of the Tunisian dinar

In the Tunisian context, the issue of the misalignment of the real exchange rate has arisen for some time for some reason, a question that has intensified after the adoption of the floating regime. In this article, we will look at the assessment of the effects, if any, of the misalignment of the real effective exchange rate (REER) to its equilibrium value over the period from 1986 to 2015. The results show that the equilibrium level of the long-run exchange rate depends on productivity, the terms of trade and government spending. Two sub-periods are noted, that of a positive mismatch (undervaluation) from 1986 to 2003 followed by another negative mismatch (overvaluation) from 2004 to 2015. Such a result can be explained by the orientation of Tunisia towards the flexibility of the real exchange rate which in turn is likely to reduce the degree of imbalance of the real exchange rate. Similarly, the Tunisian authorities must adopt gradual reforms in their decisions on liberalization and financial integration and they are called upon to strengthen their trade and exchange policies to meet the challenge of the new international financial architecture. Finally, concerning the misalignment, we found the difference between the observed exchange rate and the equilibrium exchange rate is very low, especially since the implementation of the structural adjustment plan.

Analyzing the Impact of Real Effective Exchange Rate and Investment on Trade Deficit in the United Kingdom

The major purpose of this study is to determine the long-run and short-run determinants of the trade deficit in the United Kingdom (UK). The autoregressive distributive lagged (ARDL) approach has been employed for estimation purposes in this study. The study finds that there is negative and significant relationship exists between the real effective exchange rate (REER) and the export to import ratio in the long run. The empirical results reveal that a one percent increase in REER causes a decrease in the export to import ratio by 0.37%, while a positive relationship is observed between REER and the export to import ratio in the short run. The impact of gross fixed capital formation on the export to import ratio is statistically significant and negative in the long run as well as in the short run. The value is negative and statistically significant which validates convergence towards the equilibrium both in the case of UK exports to high-income and low-income trading partners (LITPs). The study suggests that real exchange rate and investment are major determinants for trade balance in the case of the United Kingdom and need proper attention.