This study investigates whether and to what extent financial markets in MENA countries exhibit structural decoupling from global financial trends in response to geopolitical shocks. Specifically, we test the hypothesis that heightened geopolitical uncertainty accelerates financial differentiation in MENA markets. Using a GARCH-VAR model on monthly data from 2014 to 2024, we identify evolving volatility transmission patterns between MENA and global markets, particularly during key geopolitical episodes. Our results suggest a regionally specific shift toward financial insularity, shaped by both economic and strategic realignments. We note a clear decoupling from historical correlations in the MENA region’s equity markets, with leading countries of that region either completely or partially decoupled. The empirical results indicate that countries in the region are rejecting pressures to take sides, and seeking a new direction by strengthening ties with emerging markets.

Using Panel data, GMM and GLS econometric models, and a sample of six Mediterranean (MED) countries (Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia) over the period 2002-2023, this paper assesses empirically the impact of financial inclusion on income inequality, poverty, and financial stability asymmetries in the MED region. While the empirical literature covering the region is relatively scarce, this paper adds to that literature by bridging a significant existing gap, especially in the aftermath of the recent financial and debt crises and the recent political and social turmoil that have been unfolding in several MED countries. Our empirical results show that financial inclusion decreases inequality but has no significant effect on poverty. Other empirical results show that while the empirical evidence indicates that enhanced financial integration is a contributing factor to financial instability in the MED region, an increase in financial inclusion and in population contributes positively to financial stability.

Between 2011 and 2017, Egypt experienced the worst economic crisis in decades. In this entry we first outline in detail the main causes that led to the crisis, as well as the evolution and characteristics of the crisis. We then discuss how Egypt managed to recover from the crisis in 2018 by first moving to a floating exchange rate regime and by reducing its debt‐to‐GDP ratio to below 100 percent. Egypt also managed to contain both its budget and current account deficits and re‐establish financial stability and economic growth under the auspices of International Monetary Fund and European Union financing programs. Finally, we conclude the entry by outlining the lessons learned from this crisis.

This study identifies empirically Lebanon's fiscal asymmetries and shocks and traces their effects on GDP using a sign-restricted structural VAR approach. Following Arias et al.’s (2018) identification procedure of sign and zero restrictions, our empirical findings point to a sluggish effect of fiscal policy on economic activity, stipulating that fiscal policy is conducted with non-Keynesian features. The study also documents evidence in favor of crowding out effects given that central government's borrowings are mainly from the local financial market. Moreover, with a non-Keynesian effect of fiscal policy, policy makers should refrain from using fiscal tools to counteract business-cycle fluctuations. It is shown that in order to break through government expenditure's inefficiency, the government must curb a rising budget deficit, which is harnessing an increasing cost of capital and impinging negatively on debt and its service. A rising sovereign debt, in turn, has subsequently triggered a sovereign debt crisis in October 2019.

With limited fiscal space, MENA governments with flexible exchange rates have been relying extensively on accommodative monetary policy to circumvent external shocks such as Covid 19 and other domestic macroeconomic imbalances. Other MENA countries with high debt levels and fixed exchange rates are not able to use conventional monetary policy effectively. We use a battery of econometric models to identify domestic and external nominal shocks affecting the MENA region and their dynamic transmission mechanisms through impulse response functions and granger causality tests derived from a structural VAR. Once the nature of those shocks is identified, we formulate appropriate macroeconomic policy responses to mitigate their effects. We show that shocks to Saudi Arabia's macroeconomic fundamentals and oil prices have a significant impact on MENA countries' GDP, inflation, and interest rates. In the absence of an effective conventional monetary policy, MENA central banks will have to rely more on non-conventional monetary policy tools.

The objective of this paper is to shed light on the twin deficit hypothesis in Southern Europe and the MENA region, taking into account fiscal spillovers from the core during the global crisis. Using Godley and Lavoie (2007)'s baseline model, we first show that fiscal shocks from a core region could aggravate macroeconomic imbalances in the periphery. We then gather data from the period 1977–2016 for ten MENA and peripheral EMU countries, and model the twin deficit hypothesis in the presence of fiscal spillover with a P-VARX methodology. Our results highlight that fiscal balance, current account, and GDP growth rates in the EMU's periphery are negatively affected by fiscal consolidations in the core. Fiscal discipline in surplus countries is tantamount to a 'beggar thy neighbor' effect on the periphery, in times of crisis. We discuss the implications of our results to propose further international coordination of macroeconomic policies.

Despite a significant growth in profitability and efficiency, MENA's well developed banking system seems to be unable to reach vast segments of the population, especially the underprivileged ones. To this end, the onus of policymakers in the region is to create effective opportunities for financial inclusion, and subsequently poverty and income inequality reduction. Whether they have succeeded in their endeavor is an empirical question we seek to address in this paper. Using Generalized Method of Moments (GMM) and Generalized Least Squares (GLS) econometric models and a large sample of eight MENA countries over the period 2002-2015, this paper assesses empirically the impact of financial inclusion on income inequality, poverty, and financial stability. Our empirical results show that while financial inclusion decreases income inequality, population size and inflation are found to increase income inequality. Other empirical results show that financial inclusion has no effects on poverty, whereas population, inflation, and trade openness are all found to significantly increase poverty. Finally, the empirical evidence indicates that while financial integration is a contributing factor to financial instability in MENA, financial inclusion contributes positively to financial stability.

This paper examines empirically the causes of the 2010 Eurozone debt crisis. We use a battery of econometric models with quarterly data from 2004 to 2014 to identify domestic and external nominal shocks and their transmission mechanisms through impulse response functions and granger causality tests derived from a structural VAR (SVAR) specification. It is shown that shocks to Germany’s macroeconomic fundamentals have a significant impact on Greece’s inflation rates, industrial production, and interest rates. Our empirical results indicate that the root cause of the Greek debt crisis emanates from imbalances in its balance of payment, mainly in its current account, losses in competitiveness vis-à-vis Germany, and the lack of nominal adjustment measures through monetary policy due to Greece’s membership in the Eurozone. We argue, in the absence of nominal adjustment mechanisms, Greece will probably have to go through prolonged deflationary episodes in order to enhance its competitiveness, produce a positive current account, reduce its budget deficits and public debt, and reverse capital outflows. We also argue, in the absence of an effective monetary policy, countries members in a monetary union running large budget and current account deficits maybe more prone to a Greek debt type crisis.

In the wake of the recent financial and debt crises, the conduct of macroeconomic policies in the emerging MENA economies has recently become critical in determining those countries future economic situation, due to the accumulation since the early 1990s of a sizable level of external debt, and the pursuit by some countries of a fixed exchange rate regime. Using time series econometric models, this study assesses the sustainability of macroeconomic policies in a selected sample of 4 MENA countries. The empirical results point to sustainable fiscal and exchange rate policies in Tunisia and Morocco, and unsustainable external debt and exchange rate policies in Egypt and Jordan. While Egypt has recently moved to a flexible exchange rate regime, if Jordan still opts for maintaining a fixed exchange rate arrangement, it will have to implement crisis-prevention measures, namely by exercising fiscal discipline, and managing properly its external debt and foreign reserves.

This paper examines contagion vulnerability and the international and regional financial linkages of the MENA stock markets. The degree of vulnerability of those markets to global and regional financial crises will have important bearings on the respective economies' growth rate, and on their ability to diversify international and regional portfolios. Granger causality tests and impulse response functions reveal that while the GCC equity markets still offer international investors portfolio diversification potentials, those markets are relatively less vulnerable to global and regional financial crises. Moreover, even though the remaining MENA stock markets of Egypt, Morocco, and Tunisia have matured and are now financially integrated with the world stock markets, they tend to exhibit more vulnerability to regional and international financial crises. Their vulnerability to international financial crises is due, on the one hand, to weak regional integration, and to greater economic and financial integration with the more advanced economies on the other.

This paper examines empirically using time series econometric models the sustainability of public debt and exchange rate policies, as well as, the relationship between current account and budget deficits in the emerging small open economy of Lebanon. The empirical results point to unsustainable debt and exchange rate policies. Other empirical results support the existence of a uni-directional causal relationship, in the short run, between the budget and current account deficits, indicating that rising fiscal deficits have started to put even more strain on the current account deficits and on the national public debt. To avoid a future depreciation of the exchange rate and perhaps a fiscal and currency crises, the government will have to timely introduce austerity measures to curb the negative implications of its rising budget and current account deficits and debt on Lebanon's economy.

We provide further empirical evidence on the mean reversion hypothesis for ten frontier stock markets in the Middle East and North Africa (MENA) using a battery of panel and time series econometric tests including Monte Carlo simulations. Standard unit root and panel unit root tests indicate that stock prices in the MENA region are not mean reverting which is consistent with the weak form efficient market hypothesis. However, Monte Carlo simulations depict mean reversion in the stock markets of Saudi Arabia, Jordan and Bahrain. (C) 2015 Elsevier Inc. All rights reserved.

This paper investigates whether foreign financial shocks can destabilize the cost of equity in emerging markets. After a theoretical discussion, we develop annual metrics for the international cost of equity, financial integration, spillovers and shift-contagion vulnerability in a sample of 535 Middle East and North African firms from Egypt, Tunisia, Morocco and Jordan over the 1998–2011 period. We then analyze the impact of foreign shocks on the international cost of equity, using a set of SGMM and PVAR models. Our results indicate that external shocks can increase the cost of equity in mature emerging markets.

This study investigates the components of the mobile telephone demand in several countries in the Middle East and North Africa (MENA) between 1995 and 2007. We find that the magnitude of demand elasticities do not entice collusive behavior between service providers because the effect of price reductions is neutral on total revenues. We also find that the cost of service and administrative corruption have a strong negative effect on mobile penetration, which, surprisingly, is higher in countries with more unequal income distribution. The study discusses how market reforms in developed countries fail to translate to developing countries because several negative externalities are often overlooked.

This paper presents a thorough empirical analysis of fiscal developments in the European Union over the past three decades. After an evaluation of major fiscal and financial developments in France, Germany, Greece, Ireland, Italy, Portugal and Spain, the paper uses the Present Value Constraint (PVC) framework to analyze whether European Union's debts and deficits are sustainable. It is shown that some EU's countries could be heading towards a debt and fiscal crisis, which could degenerate into a banking crisis similar to the 2001 Argentinean crisis, unless timely fiscal adjustment/austerity measures are introduced in the near future.

The 2007 United States financial crisis has developed into the most severe worldwide economic crisis since the 1927 Great Depression. In addition to its severe repercussion in North America and the European Union, the crisis has put pressure on emerging markets in general, and the Middle East and North Africa region in particular. For a better understanding of how the crisis affected the MENA region, we focus in this paper on the global and regional financial linkages between MENA stock markets and the more developed financial markets, and on the intra-regional financial linkages between MENA countries' financial markets.