Publications (Last 10 Years)
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2025"FDI, Defense Spending and Economic Prosperity" Bulletin of Economic Research, Volume 77, Issue 1: 86-118, https://doi.org/10.1111/boer.12473
This study examines the relationship between foreign direct investment (FDI) and military spending in the Middle East and North Africa (MENA) region across 18 MENA countries over a 37-year time span (1984 - 2020). Taking into account several factors that can influence this relationship, including political stability, security concerns, and economic factors, this work analyzes whether military spending attracts foreign capital into the region. Using a dynamic panel data methodology along with other relevant macroeconomic variables, results show that the military expenditure has a positive and significant impact on FDI inflows into the MENA region. These results suggest that high levels of investment in military capabilities lead to geoeconomic favoritism in this region.
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2020"Revisiting Equity Premium Puzzles in a Data-Rich Environment" Applied Economics Quarterly, Duncker & Humblot GmbH, Berlin, Volume 65, Issue 4: 257-275, https://doi.org/10.3790/aeq.65.4.257
This paper modifies the conventional representative-agent consumption-based equilibrium models by making the habit-formation part depend on additional factors related to economic conditions. The resulting pricing model accounts for a number of interesting properties, such as time-varying risk aversion, small relative risk aversion and an equity premium that is compatible with the observed equity premium.
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2020"Exposure to Provincial and National Information and Firm Performance: Crisis Period Evidence from China" International Advances in Economic Research – Springer, Volume 267: 1-11, https://doi.org/10.1007/s11294-020-09769-1
This paper examines the impact of exposure to provincial and national information on the performance of non-financial Chinese firms during the recent global financial crisis (2007 to 2009). The results show that firms with higher level of exposure to provincial information are affected less by the crisis than firms with higher level of exposure to national information.
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2019"Monetary Policy in a Small Open Economy with Imperfect Pass-Through" Atlantic Economic Journal – Springer, Volume 47: 445–461, https://doi.org/10.1007/s11293-019-09646-1
This paper studies the stabilization and welfare properties of various monetary policy regimes in a tractable framework suitable for the analysis of monetary policy in a small open economy environment with imperfect pass-through and inflation indexation. Using welfare criteria to evaluate the best monetary policy, results show that price-level targeting performs well and provides an alternative method for conducting successful monetary policy in the case of a small-open economy.
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2018"Status or Security: The Case of the Middle East and North Africa Region" Peace Economics, Peace Science and Public Policy – De Gruyter, Volume 23, Issue 3: 445–461, https://doi.org/10.1515/peps-2017-0047
This paper takes advantage of the extended military expenditures dataset from the Stockholm International Peace Research Institute (SIPRI) to estimate demand for military expenditures model for the Middle East and North Africa (MENA) region. The extended dataset affords us to adopt robust dynamic panel estimation techniques along with a set of threat and strategic interaction proxies. Our analysis indicates that status seeking (“peer pressure”) explains the bulk of the demand for military spending in the region. We also note a significant trade-off between military and social spending, somewhat mitigating the arms race implied by status. “Resource Curse” is not a significant determinant of military spending in the region especially when applying a robust dynamic specification. We find negative and weak response to local and regional threats suggesting the need for more sophistication in the design of threat proxies.
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2018"Asset Returns and Economic Conditions" International Advances in Economic Research – Springer, Volume 24: 201–202, https://doi.org/10.1007/s11294-018-9677-9
In this paper, we focus on the dynamics of the reference level with an empirical evaluation of the extended asset pricing models in a data rich environment. The resulting model captures the dynamics of security returns including time-varying risk aversion, small relative risk aversion and an equity premi-um compatible with the actual equity premium, thus explaining many of the asset-pricing puzzles.
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2016"A dynamic panel analysis using SIPRI’s extended military expenditure data: The case of Middle Power nations" The Economics of Peace and Security Journal, EPS Publishing, Volume 11, Issue 2: 45–49, https://doi.org/10.15355/epsj.11.2.45
This study employs SIPRI’s extended military expenditure dataset to estimate a dynamic panel analysis of Middle Powers’ defense posture. The dynamic approach, particularly the Auto Regressive Distributed Lag (ARDL) approach, permits simultaneous, but separate, assessment of short- and long-run effects of a particular variable on military expenditure. We verify the robustness of earlier findings on Middle Power nations’ defense posture. In particular, their military expenditure tends to an income elasticity of greater than one indicating that military power is, at least in part, a status good. In addition, Middle Powers react to threat variables that proxy global instability, such as nuclear power proliferation, and they use foreign aid as a complementary policy tool. Competing demands for funds lead to significant tradeoffs between military and nonmilitary government spending.
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2015"Stock Price Synchronicity and Tails of Return Distribution" Journal of International Financial Markets, Institutions & Money, Volume 37: 1-11, https://doi.org/10.1016/j.intfin.2015.04.003
This paper uses stock price synchronicity to explain the cross-sectional variation in return asymmetries for firms listed in Finland, Sweden, Norway, and Denmark during the period between 2000 and 2012. Our results show that firms with high synchronicity have higher probability of generating heavier positive tails than firms with low synchronicity. We consider better information environment associated with these firms as the main reason behind this result. We argue that investors in these firms react less severely to negative news than investors in firms with low synchronicity. As a result of this asymmetric reaction to negative news, firms with high stock price synchronicity have higher probability of generating heavier positive tails than firms with low synchronicity. Our results are robust across sub-samples of large and small firms and across sub-samples based on geographic boundaries.
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2014"Middle Powers and the Demand for Military Expenditures" Defence and Peace Economics, 25(6),: 605–618, https://doi.org/10.1080/10242694.2013.861652
Middle power nations increase military expenditures in response to heightened regional instability, increased threat perceptions, and the need to maintain their national interests and influence in a complex international system. These countries often use foreign aid as a complementary tool to military spending and must balance defense investments with other crucial government spending like economic development and social programs. The panel data analysis in this paper shows that the middle power nations react to threat variables that proxy global instability utilize foreign aid as a complementary policy tool along with military expenditures, and face significant trade-offs between military and non-military government spending.
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2015"Casting Light on the Arab Spring: A Survey of Influential Economic Factors in the Arab Spring Countries" In: John Deutsch Institute for The Study of Economic Policy, Queen’s University and DRDC, Canada, pp. 45-72
This study concentrates on twelve Arab countries in the Middle East and North Africa. None of these countries had, prior to the Arab Spring, implemented a fully inclusive democracy, partly due to their colonial history, partly due to the manner in which they earned their freedom from colonialist powers, and largely due to the winds of history and techno logy that did not create adequate conditions for democracies to emerge.
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2025
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2015"The Continuous Hidden Threshold Mixed Skew-Symmetric Distribution" MPRA Paper No. 70546
The "Continuous Hidden Threshold Mixed Skew-Symmetric Distribution" is a flexible statistical model proposed by Bouaddi, Belhachemi, and Douch (2015) that constructs a new family of univariate probability distributions. It captures characteristics like asymmetry, fat tails, and thin tails by combining elements of the skew-normal distribution and mixtures of distributions, utilizing a continuous latent state variable to model dependence.
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2017"Demand for Military Spending: The case of the MENA Region" MPRA Paper No. 88689
The demand for military spending in the Middle East and North Africa (MENA) region is driven by regional instability, internal conflicts, and geopolitical threats, leading to significantly high expenditures as a percentage of GDP. The results from this study indicate that military spending in the MENA region does exhibit high income elasticity and status is further signaled through regional clubs such as the Arab League. MENA countries face substantial opportunity cost of military spending and only weakly respond to local threats. The so-called ‘resource curse’ is not a strong indicator of military posture in MENA especially within the neoclassical demand model setting and robust estimation that account for dynamics and endogeneity.
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2014"Déterminants empiriques du taux de change Canada/États-Unis dans une perspective de court et de long terme" (En Français) MPRA Paper No. 6172
This paper investigates the fundamental macroeconomic variables driving the Canada-U.S. exchange rate, using the classical monetary theory as its foundation. By extending Chinn's (2000) model and incorporating monetary and financial market equilibria, we identify the key variables for the framework. Our findings indicate that the estimated monetary model successfully captures the exchange rate's general dynamics and, in a forecasting context, outperforms a standard moving average model.
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Determinants and Impact of Military Spending
2015-2025A multi-country study examining how Military spending is determined (Security-related factors: wars, external threats), economic conditions (GDP, national debt), political factors (regime type, alliances), and technological capabilities. The impact of this spending is complex and debated, but high military spending is often linked to negative economic growth, while alliances can influence a country's defense budget.
Dr. Mohamed Douch (PI)
Dr. Ben Solomon (Co-PI)
Research Outputs
- 5 journal articles (4 published, 1 under review)
- Various Conference Presentations (National and international conferences)
- Publicly available dataset on Threats facing Middle Power Nations
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Financial Economics
2013-2025Study Asset Returns and Economic Conditions.
Dr. Mohamed Douch (PI)
Dr. M. Bouaddi
Dr. O. Farooq
Research Outputs
- 6 journal articles
- Various Conference Presentations (National and international conferences)
Other Scholarly Publications and Manuscripts
Work in Progress
Military Expenditures and Economic Growth
The relationship between military expenditures and economic growth has long been a topic of intense debate among economists, policymakers, and scholars. This study aims to reveal the asymmetric relationship between military expenditures and economic growth using a nonlinear framework.
Request DraftInequality and Military Expenditures
This paper studies the impact of military expenditure on inequality by using data from middle power nations.
Learn MoreCausality Measures in the Energy Sector
This paper aims to examine the asymmetric causal linkages between Investor sentiments and energy sector returns.
Request Draft