This study aims to examine the impact of political instability on economic performance in the Middle East and North Africa (MENA) region. It covers the period from 2006 to 2018 and includes 14 countries. The effects of political instability on economic growth and inflation volatility are investigated separately in this study. First, the study uses 19 political instability indicators to analyse the multidimensionality of political instability. By using a factor analysis technique, the study finds five dimensions of political instability. Second, the research adopts generalised autoregressive conditional heteroscedasticity (GARCH), exponential GARCH (EGARCH), and threshold GARCH (TGARCH) volatility specifications to model country-specific monthly inflation data. Third, the study examines the impact of the five dimensions of political instability on inflation volatility by adopting the dynamic generalized method of moments (GMM) panel. Similarly, this research evaluates the effects of the five political instability dimensions on economic growth, and reports evidence of the positive and negative effects of political instability on economic performance. In particular, the instability of the political regime dimension significantly weakens economic performance by increasing inflation volatility and slowing economic growth. On the other hand, the most striking result is that the dimension of government instability significantly improves economic performance by lowering inflation volatility and raising economic growth.
|Date of Award||11 Aug 2022|
|Supervisor||Gareth Downing (Main Supervisor) & Luisanna Onnis (Co-Supervisor)|