Institutions and Macroeconomic Policies in Resource-Rich Arab Economies

Edited by Kamiar Mohaddes, Jeffrey B. Nugent, and Hoda Selim

• A reliable and quality resource for students, academics and policy makers
• Uses policy-relevant research to explore thematic issues and lessons from international experience
• Combines macroeconomic and political economy analysis
• Includes country-context analysis showing variations in fiscal policies

For over eighty years the Arab region has been deriving massive wealth from its natural resources. Nevertheless, its economic performance has been at the mercy of ebbs and flows of oil prices and its resources have been slowly depleting. The two critical questions are why and how Arab countries might escape the oil curse. Institutions and Macroeconomic Policies in Resource-Rich Arab Economies focuses on the unique features of the Arab world to explain the disappointing outcomes of macroeconomic policy. It explores the interaction between oil and institutions to draw policy recommendations on how Arab countries can best exploit their oil revenues to avoid the resource curse. Case studies and contributions from experts provide an understanding of macroeconomic institutions (including their underlying rules, procedures and institutional arrangements) in oil-rich Arab economies and of their political economy environment, which has largely been overlooked in previous research. Institutions and Macroeconomic Policies in Resource-Rich Arab Economies offers novel macroeconomic policy propositions for exchange rate regimes, fiscal policy and oil wealth distribution that is more consistent with macroeconomic stability and fiscal sustainability. These policy reforms, if implemented successfully, could go a long way in helping the resource-rich countries of the Arab region and elsewhere to avoid the oil curse. Table of Contents

• 1: Objectives, Issues, and Findings, Kamiar Mohaddes, Jeffrey B. Nugent, and Hoda Selim

Part I: What Determines Macroeconomic Policies: Institutions or Oil Wealth?

• 2: The Political Economy of Macroeconomic Policy in Resource-rich Arab Economies, Adeel Malik
• 3: Oil, Volatility and Institutions: Cross-Country Evidence from Major Oil Producers, Amany El-Anshassy, Kamiar Mohaddes, and Jeffrey Nugent
• 4: Threshold effects of Fiscal-Monetary Interdependence and Exchange Rate Regimes in Oil-Dependent Arab Economies, Ibrahim Elbadawi, Mohamed Goaied, and Moez Ben Tahar

Part II: Which Macroeconomic Institutions can be Most Effective for Commodity Exporters?

• 5: Does Central Bank Independence Matter in Arab Oil Exporters?, Hoda Selim
• 6: The Currency-plus-Commodity Basket: A Proposal for Exchange Rates in Oil-Exporting Countries to Accommodate Trade Shocks Automatically, Jeffrey Frankel
• 7: Exchange Rate Regimes and Economic Performance in Resource Dependent Economies, Bassem Kamar and Raimundo Soto
• 8: How to use Oil Revenues Efficiently, Shanta Devarajan
• 9: Reforming Fiscal Institutions in Resource-Rich Arab Economies: Policy Proposals, Kamiar Mohaddes, Jeffrey B. Nugent, and Hoda Selim

Part III: Assessment of Fiscal Institutions through a Political Economy lens in Arab Commodity Exporters

• 10: The Political Economy of Fiscal Institutions and Macroeconomic Management in Sudan, Kabbashi M. Suliman
• 11: Fiscal Outcomes in Bahrain: Oil Price Volatility, Fiscal Institutions or Politics?, Hoda El Enbaby and Hoda Selim
• 12: Fiscal Institutions and Macroeconomic Management in the United Arab Emirates, Raimundo Soto

Institutions and Macroeconomic Policies in Resource-Rich Arab Economies