The following categories are eligible to submit their work to MSR working paper series:

1) MSR staff and ambassadors.

2) Senior fellows and affiliates.

3) Annual conferences, workshops, and training programs' participants and graduates.

List of Working papers

Effects of Fiscal Policy shocks on Economic Activity in Mozambique

Hussene L. Zaina

Using data on the Mozambican economy from 2001Q1 to 2019Q3, the study analyzes the effect of fiscal policy shocks on real GDP, inflation and interest rates using a structural vector autoregressive (SVAR) model. The identification of the fiscal shocks is done using two methods, namely, the recursive approach and sign restrictions.The results show that a positive spending shock leads to an increase in real GDP, which accelerates inflation and, in response, the interest rate rises. Accordingly, 1.00 Metical (Mozambican local currency) increase in public expenditure, results in 19 cents increase in real GDP, one and a half year after the shock.On the other hand, the response of a positive tax (revenue) shock on real GDP, shows counter-intuitive results to Keynesian theory in the medium term, i.e., increasing tax revenue leads to higher real GDP. The positive tax revenue shock, has a zero or negative multiplier only in the impact period. In the medium term, the real GDP response to the positive tax revenue shock (revenue increase) is positive, i.e, it does not reduce the level of the output. A year and a half after the shock, the cumulative tax revenue multiplier reaches 38 cents.

 No.: 23                                Topic: Fiscal policy, SVAR                                Date: March 2023

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On the Welfare Trends: A view from Sen's Social Welfare Function

Riveros-Gavilanes, John Michael, Fayq Al Akayleh, Oduniyi, Oluwaseun Samuel, Azar Huseynli, Sherif M. Hassan

In this article, we use the theoretical construction of Sen’s Social Welfare Function to estimate the trends of welfare for different world regions. The empirical analysis is also complemented by investigating the long-run relationships and the role of income inequality on welfare dynamics. The results suggest heterogeneous relationships across regions between income, inequality, and welfare. Implying that welfare across regions is not similarly influenced by unequal distribution of income, while some regions are positively correlated with improvements in the income distribution leading to better welfare measures.  Over the short run, economic growth is the dominant factor in steering welfare.

 No.: 003-2022                                Topic: Income inequality, Sen                                Date: March 2022

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Expansionary Credit, Easy Money, and Boom-bust Cycles, 1868-1970

Adriel Ong

We perform causality analyses using Vector Autoregression and Impulse Response on M2 monetary policy (M2) and real Gross Domestic Product (RGDP) time se-ries spanning a century. We measure whether heterodox views on expansionary credit and business cycles hold merit. Contrary to canonical views, we nd that expansionary M2 creates an initial positive impulse response in RGDP, followed by a sharp decline. This study contributes to Cliometric literature by using standard time series analytic tools on historical data spanning far longer than most analyses, tackling a question oft-ignored.

 No.: 02-2022                                Topic: VAR, business cycle             Date: Feb 2022

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Economic development and income inequality: Findings from Regional Panel Data Analyses

John Michael Riveros-Gavilanes, Ryan Jacildo, Brian Kiberu, Imen Nouira, and Sherif M. Hassan

The inequality-economic development nexus has been the focus of a number of research undertakings in the past. Nonetheless, the variations in regional dynamics are still arguably understudied. Employing semi-parametric regressions, this research finds that the classical hypothesis of Kuznets is not well-established in all regions of the world. This reflects the heterogeneities present across economies and regional groups. The regions where the inverted U-shape relationship between income inequality and economic development (Kuznets hypothesis) can be observed are East Asia and the Pacific and Latin America and the Caribbean. In Sub-Saharan Africa, South Asia, Europe and Central Asia, the data suggest an N-shape relationship. In the Middle East and North Africa, the data interestingly present a negative correlation. Meanwhile, in North America inequality appears to increase as the real income per capita increases.

 No.: 01-2022                                Topic: Kuznet curve, income inequality                Date: Feb 2022

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The Covid 19 Pandemic and Food Security in Pakistan

Mohsin Khan

Pakistan currently faces its worse social and economic crises amidst COVID19 pandemic. The nationwide lockdown, desert locust attack, and rains have further exacerbated the economic crises, particularly raising food prices, unemployment, poverty and endangered food security of the public. This paper ascertain the ongoing pandemic, food crises, and concludes that the corona pandemic, combined with other factors such floods, locust attack and delayed decision making, caused a nation-wide food insecurity crises, particularly affecting the agricultural, and livestock sector followed by food supply chains. Similarly, the higher risk factors towards Food security are increased retail prices of food items, combined with reduced incomes, meaning that more and more households have to cut down on the quantity and quality of their food consumption. It is believed that this situation would otherwise be averted, if proper and timely interventions were taken. On the recommendations side, priority should be given to address underlying food security crises, by diversifying agricultural sector, subsidizing food items, tackling viral spread by strengthening health system, improve food and price surveillance, reduce rural poverty, in particular by provision of more and decent jobs in the rural economy, extending social protection to all, facilitating and promoting the formalization of the informal economy, labor rights, leverage tech and private-public partnership to curtail Food insecurity amidst COVID-19 crises.

 No.: 06-2021                                Topic: Food Security, Covid 19                Date: August 2021

Believe it or Not: Covid 19 Environmental Effects are More Ngetaives than Positives

Olwaseun Samuel Oduniyi, John M. Riveros, Sherif M. Hassan, Ferhat Citak

In addition to altering drastically people's daily lives, COVID-19 has slowed down economic activities, imposed restrictions, and enforced lockdown, altogether causing significant effects on the environment. Studying the direction, magnitude, and durability of these effects carries a serious lesson for the whole world. Preliminarily evidence suggests that COVID-19 has temporarily improved air quality, reduced greenhouse gas emissions, and noise pollution, yet, due to lock-down, the flourishing of delivery services has pulled up the single-use plastics, increased the usages of vehicles by a lower ratio of passengers/vehicle, and raised demand for energy. Using the approach of the Ambiental Kuznets curve, we investigate the impact of COVID-19 total cases on the monthly average of carbon monoxide emissions measured in micrograms per cubic across a sample of developed, heavy polluters, economies from 2014 to 2020. Driscoll-Kraay regressions confirm the COVID-19 long-run polluting impact by increasing monoxide emissions in countries of analysis.

 No.: 05-2021                                Topic: Environment, COVID 19                Date: July 2021

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Determinants of Sectoral and Sub-sectoral FDI: Evidence from the MENA Region

Ahmed Badreldin, and Sherif M. Hassan

Ignoring the heterogeneity of determinants across sectoral and sub-sectoral FDI begets flawed inferences in the mainstream literature. Significant drivers of FDI inflows vary across sectors and sub-sectors. Using UNCTAD Database of FDI from 2004 o 2018, we run GMM, Fixed Effects, and 3SLS estimations across a global sample of 198 countries and a regional sample of 17 the Middle East and North African (MENA) countries. We select the common determinants of FDI in the literature and re-visit their stylized evidence of significance and magnitude across four main FDI sectors, total, primary, secondary and tertiary, as well as across 29 subsectors. Our results confirm the divergence of the magnitude, sign, and significance of the determinants across sectors and countries’ samples.

 No.: 04-2021                                Topic: FDI, MENA                Date: July 2021

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Developing a Provincial Choice Model of the Philippines

Adriel Ong

In light of increasing domestic travel demand, policymakers in local government units need to adjust to the growth in visitors. The Department of Tourism outlines a national tourism of strategy of increased investment to address deficiencies in infrastructure and lodging. In order to adapt the national policy to local needs, local government units need access to context surrounding visitors. Under the Additive Random Utility framework, we propose a multinomial logit model of provincial destination choice, with sampled alternatives, using data from the 2005 Household Survey on Domestic Visitors to provide needed context behind a domestic traveler's decision to go to a province. Using 8 predictors such as sex, age, marital status, and the like, we intend to capture each predictor's effects on the likelihood of choosing provinces with similar characteristics as well as each predictor's individual significance on the national level.

 No.: 03-2021                                Topic: , Spatial, provincial choice model                 Date: May 2021

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Historical Climate Factors and Rice Prices in the Philippines.

Adriel Ong

Developing countries rely on sectors like agriculture for production and sustenance. Climate change threatens their economic activity by impacting crop yields and affecting seasonal planting and harvests. Using advances in econometric modeling, however, one may analyze the effects of variable climate on crop yields. We study the case of the Philippines, which remains vulnerable to climate change. Using a MIDAS regression model comparing both daily and monthly climate data to monthly farmgate rice prices, we analyze how sensitive rice supply is to climate factors.

 No.: 02-2021                                Topic: food price, Rice                           Date: May 2021

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2008 Financial Crises V.s. COVID 19: The Painful Double-Knock of Food Prices.

John M. Riveros, Sherif M. Hassan and Oluwaseun Samuel Oduniyi

Food supply and demand chains are highly sensitive to global shocks. Unstable and sudden food price hikes cause serious malnutrition problems and increase the number of food-insecure people, especially in developing countries. Using FAO Food Price Index (FFPI), this study makes one of the first attempts to utilize monthly observations of FFPI in a dynamic time series ARDL and ARX settings for identifying food price effects of the COVDI 19 infection rates V.s. 2008 global financial crises. Our empirical findings confirm that the pandemic has a mild impact on food prices relative to the 2008 crisis, wherein 1 million new COVID 19 infection cases are associated with an increase of only 0.0509 points in FFPI.

 No.: 01-2021                                Topic: FAO food price, ARDL                            Date: Mar 2021

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Excess liquidity and monetary policy implementation in a small open developing economy: The case of Mozambique

Aurelio Bucuane

The purpose of this article is to explain the dynamics of the exchange rate in Mozambique. The applied VAR model reveals that, in fact, it is the exchange rate that determines the macroeconomic variables (fundamentals), and not the opposite (at least in the short run), as predicted in exchange rate monetary models. Variables based on market microstructure (Order Flow) have the potential to predict exchange rates, as the IRF shows a significant and consistent reaction of exchange rates to structural shocks on order flow (demand pressure), while the exchange rate reacts not only significantly less, but also in the opposite direction to that predicted in the models based on fundamentals. These results are consistent in the long run, as demonstrated by the VECM model. In addition, the exchange rate forecast, based on a hybrid model which combines macro and micro variables, exceeds the benchmark model (random walk). Furthermore, since agents’ interpretations of fundamentals are incorporated in order flows, this appears to be the transmission mechanism between macroeconomic indicators and exchange rates, and in this way, order flow helps to clarify the exchange rate puzzle identified in the literature. Finally, this article suggests the use of microstructure variables of the foreign exchange market to predict exchange rates, as well as using them as a proxy for expectations, which can contribute to effective implementation of forward-looking monetary policy.

 No.: 04-2020                                Topic:  Exchange rate, Hybrid model          Date: Nov 2020

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Impact of Trade Openness on Foreign Direct Investment in Sub Saharan Africa Countries

Badamasi Sani Mohamed and Sule Ya'u Hayewa

No country in the world stays isolated and becomes developed without influence of other countries in one way or the other. Countries in the world are working hard through various economic policies in order to attract more Foreign Direct Investment (FDI). Therefore any attempt to find out the influence of FDI is paramount important. The paper seeks to look into the impact of trade openness on Foreign Direct Investment in Sub-Sahara African Countries for the period of 2000 to 2017. The study employed panel data analysis, including the panel unit root test, panel cointegration test, and fully modified least square method (FMOLS). The findings reveal that, all the variables were cointegrated of order one and have a long-run relationship. More so the results show that trade openness was positive and statistically significant in influencing FDI in the region, while corruption was negative and statistically significant in influencing FDI in the region. The findings suggest that the existing trade policies should be amended by governments through various legislative arms of government to give room for the inflow of capital and new technological advancement from developed countries where this FDI comes from to those countries under study. Also, Governments in the region should create more policies that are used to reduce the level of corruption in the system through the improvement of the existing institutions that fight corruption to a standstill.

 No.: 03-2020                                Topic:  Trade openness, FMOLS          Date: Nov 2020

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First to React Is Last to Forgive: Evidence from the Stock Market Impact of COVID 19

Sherif M. Hassan and John Riveros

COVID 19 has had parallel and uneven economic shocks across countries since its outbreak in December 2019. Stock markets as usual were the first to react, with drop rates as much as the Global Financial crises of 2008. This study uses daily data to model the dynamic impact of COVID 19 pandemic on returns of selected stock market indices and globally-traded commodities. The overall panel least squares VAR estimation results indicate a negative short termed impact of 2.3% on the performances of the stock markets when the spread rate of corona-virus increases by 1% across countries ceteris paribus. While The COVID 19 contamination rate is not statistically significant to explain the changes in the exchange rate and gold prices in the countries of analysis, yet the virus spread rate is found to be significant in steering prices of platinum, silver, WTI, and Brent crude oil.

 No.: 02-2020                                Topic:  COVID 19, Stock Market          Date: July 2020

Health Repercussions of Child Marriage on Middle-Eastern Mothers and Their Children

Sherif M. Hassan and Mohsin Khan

Although the MENA region hosts around 24 percent of the global incidences of child marriage, empirical evidence examining the health and demographic outcome of child marriage for local women is rather rare or absent. The prevalence rate of this phenomenon may be subject to expansion due to the ongoing conflicts and political fluxes across many countries in the region. This study investigates the impact of child marriage on the health outcome for mothers and their children in three developing MENA countries, Egypt, Sudan, and Palestine.

 No.: 01-2020                                Topic:  Development, Child Marriage          Date: May 2020