Back Matter

Back Matter

Ahmed Al-Darwish, Naif Alghaith, Alberto Behar, Tim Callen, Pragyan Deb, Amgad Hegazy, Padamja Khandelwal, Malika Pant, and Haonan Qu
Published Date:
March 2015
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    Prices as of November 14, 2014.

    Projections for the high and low oil resource cases versus the baseline (reference case) are reported in EIA (2014). Trends in the high and low oil resource scenarios are superimposed on the IEA baseline for U.S. oil production to derive the range of uncertainties around the baseline.

    Spare capacity is defined by the IEA as additional production capacity levels that can be reached within 30 days and sustained for 90 days.

    A wide range of estimates of the demand elasticity of oil in response to a change in price are found in the literature. For example, the IMF’s World Economic Outlook reports in April 2005 and April 2011 estimated short-term demand elasticities of −0.02 and −0.1, while Kilian and Murphy (2012) estimate −0.25, and the analytical work underpinning IMF (2014) estimates quarterly elasticities of −0.07 to −0.2. Supply outside of expected to hold as long as the oil price level stays above the breakeven cost for shale oil production because, if oil prices drop below the cost of producing unconventional oil, then the producers of unconventional oil may scale back their production, reducing the total supply of oil. We also assume that the supply from other OPEC and non-OPEC producers remains unchanged from the baseline.

    The main difference between these approaches is that the DEA compares each country against a fixed country sample, whereas the PFDH makes the comparison against repeated randomized subsamples, thus reducing sensitivity to outliers. Another important difference is that the PFDH allows for the presence of super-efficient countries that will be located beyond the production possibility frontier and have efficiency scores higher than one.

    The index is constructed using the principle components procedure on data series of telephone lines (landlines), electricity production, and roads, expressed in per capita terms.

    SAMA bills were previously known as Treasury bills.

    In line with the impossible trinity concept, a country can choose only two of the following three attributes: a fixed exchange rate, an open capital account, and an independent monetary policy. The Saudi riyal’s exchange rate peg to the U.S. dollar and relatively open capital account imply that the interest rates track the U.S. rates fairly closely.

    Banking system liquidity is defined narrowly as the monetary base, and is the sum of currency outside banks and bank reserves. The liquidity surplus in the banking system is defined as excess reserves (i.e., commercial bank holdings of cash and deposits at SAMA in excess of statutory requirements).

    Commercial banks place a significant amount in overnight deposits at SAMA to earn the reverse repo interest rate (currently at 0.25 percent). These reverse repo transactions are uncollateralized. The overnight deposits thus placed are considered as part of excess reserves of banks and are included in the monetary base. As a result, while reverse repo transactions imply that bank excess reserves are remunerated, they do not impact banking system liquidity.

    Reserve requirements can be used both as a monetary policy tool and a macroprudential tool. As a monetary policy tool, reserve requirements are often set at moderate to low levels and generally imposed uniformly. The objective is to affect the level of interest rates and credit through the liquidity channel. In contrast, reserve requirements as a macroprudential tool can be used to (i) protect against liquidity risks and (ii) address risks associated with excess credit growth. They can be raised to very high levels and also used countercyclically to help support credit growth in financial downturns. They are often targeted and differentiated by currency, maturity, and types of liabilities, and can be applied on the stock of liabilities or on a marginal basis on new liabilities. For instance, in January 2008, Peru implemented higher reserve requirements on foreign currency and nonresident deposits to discourage short-term capital inflows.

    Similar results are found by replacing the U.S. federal funds rate with SIBOR in the empirical model. SIBOR closely tracks the U.S. federal funds rate, so only one of the two rates can be included in the analysis at a time.

    Saudi Arabia requires banks to obtain approval before commencing foreign exchange operations.

    The new GDP data released in 2013 starts in 2004.

    Adult literacy is defined as the percent of people 15 years of age and above who can read and write; youth literacy refers to the percent of people between the ages of 15 and 24.

    These include the King Abdullah University of Science and Technology (2009) and Princess Nora bint Abdul Rahman University (2011).

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