Journal of Economics and International Finance
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Article Number - 65BC1611899


Vol.1(2), pp. 059-071 , July 2009

ISSN: 2006-9812



Full Length Research Paper

Sustainability of exchange rate policies and external public debt in the Mena region


Simon Neaime




Department of Economics, American University of Beirut, 3 Dag Hammarskjold Plaza, New York, NY 10017, USA


Email: sn01@aub.edu.lb






 Accepted: 15 May 2009  Published: 31 July 2009

Copyright © 2009 Author(s) retain the copyright of this article.
This article is published under the terms of the Creative Commons Attribution License 4.0


 

The conduct of exchange rate and fiscal policies in the small open Mena economies has recently become critical in determining those countries future economic and fiscal 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. This study presents thorough empirical analysis of the sustainability of exchange rate and external public debt using time series econometric models. The empirical results point to sustainable fiscal and exchange rate policies in Tunisia and Morocco, unsustainable external debt but sustainable exchange rate policies in Egypt and Turkey, and unsustainable external debt and exchange rate policies in Jordan. If Jordan still opts for maintaining a fixed US dollar 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.

 

Key words: MENA, exchange rate, foreign debt, sustainability, JEL classification:  C22, E31, H63.


APA (2009). Sustainability of exchange rate policies and external public debt in the Mena region. Journal of Economics and International Finance, 1(2), 059-071.
Chicago Simon Neaime. "Sustainability of exchange rate policies and external public debt in the Mena region." Journal of Economics and International Finance 1, no. 2 (2009): 059-071.
MLA Simon Neaime. "Sustainability of exchange rate policies and external public debt in the Mena region." Journal of Economics and International Finance 1.2 (2009): 059-071.
   
DOI
URL http://academicjournals.org/journal/JEIF/article-abstract/65BC1611899

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