Identifying structural breaks and growth regimes in middle eastern economies

Abstract

This study is an attempt to empirically determine structural breaks ineconomic growth of selected Middle Eastern countries. We combined the sta-tistical approach with a subjective approach to identify break points in thegrowth process during the period 1970–2016. Thereby, we try to classify breaksinto up-breaks and down-breaks resulting into different regimes ranging fromstagnation to strong growth. In a sample of 17 countries examined, 15 countriesexhibited significant breaks in trend function of growth process as per the fitand filter approach. We found total 41 plausible breaks – 19 up breaks and22 down breaks. Moreover, the spatial distribution of breaks shows that over68% of the breaks are reported from oil-rich countries while as 31% from non-oil. The paper highlights the key point that growth performance of the MiddleEastern countries is very volatile and gambles in the alternating cycles ofcollapse, stagnation, moderate, rapid and strong growth