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

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  • Mr. Andreas Billmeier
  • Ms. Dalia S Hakura

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.

Suggested Citation

  • Mr. Andreas Billmeier & Ms. Dalia S Hakura, 2008. "Trade Elasticities in the Middle East and Central Asia: What is the Role of Oil?," IMF Working Papers 2008/216, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2008/216
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    4. Salaheddine Soummane & Frédéric Ghersi & Franck Lecocq, 2022. "Structural Transformation Options of the Saudi Economy Under Constraint of Depressed World Oil Prices," The Energy Journal, , vol. 43(3), pages 185-204, May.
    5. Salaheddine Soummane & F. Ghersi, 2020. "The IMACLIM-SAU model Version 1.0," Working Papers hal-03099334, HAL.
    6. Almira Buzaushina, 2015. "Trade elasticities in transition countries," International Economics and Economic Policy, Springer, vol. 12(2), pages 309-335, June.
    7. Dzmitry Kruk, 2011. "The Mechanism of Adjustment to Changes in Exchange Rate in Belarus and its Implications for Monetary Policy," BEROC Policy Paper Series 04, Belarusian Economic Research and Outreach Center (BEROC).
    8. Salaheddine Soummane & F. Ghersi, 2020. "The IMACLIM-SAU model Version 1.0," CIRED Working Papers hal-03099334, HAL.
    9. International Monetary Fund, 2014. "Liberia: Third Review Under the Extended Credit Facility Arrangement and Request for Waiver of Nonobservance of Performance Criterion and Modification of Performance Criteria," IMF Staff Country Reports 2014/197, International Monetary Fund.
    10. Gelan, Ayele U., 2018. "Kuwait's energy subsidy reduction: Examining economic and CO2 emission effects with or without compensation," Energy Economics, Elsevier, vol. 71(C), pages 186-200.
    11. Hassan, Syeda Anam & Zaman, Khalid, 2012. "Effect of oil prices on trade balance: New insights into the cointegration relationship from Pakistan," Economic Modelling, Elsevier, vol. 29(6), pages 2125-2143.
    12. International Monetary Fund, 2010. "Bangladesh: Selected Issues," IMF Staff Country Reports 2010/056, International Monetary Fund.

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