Keywords: du pétrole, balance commerciale An Empirical Study of Current Account Balances in Oil-Exporting Countries Current Account Balance, Trade Balance, Oil Exporting Countries

Titre : Une Étude Empirique des Balances des Comptes Courants dans les Pays Exportateurs de Pétrole

Mots clés : comptes courants, pays exportateurs de pétrole, prix

General introduction

David Ricardo's law of comparative advantage justified a country's interaction with the rest of the world. In addition, due to international differences in production resources and consumer preferences, economic activity is becoming more extensive, not only in visible international trade, but also through the movement of capital, labor, and investment. With the increase in the number of transactions, a systematic record has been introduced that records the transaction between a country's resident with the rest of the world. The balance of payments (BoP) is a consolidated statement of all international transactions of a country over a period of time. Specifically, the balance of payments records a country's financial transactions with the rest of the world, which consist of exchanges of goods and services as well as revenues, which include financial claims and liabilities to the rest of the world (IMF, 1993). In addition, grants, gifts and transfers are taken into account. In other words, the balance of payments statement reflects the external position of a country. The balance of payments is divided into two main accounts: the current account and the financial (capital) account.

Moreover, in an era of globalization, when countries are interconnected, the external sector plays an important role in promoting a country's growth and economic stability. Furthermore, trade is the main engine of economic growth, and primary commodities are among the most traded commodities in the world, while crude oil is probably the most traded commodity since the first half of the last century.

Oil-producing countries are heavily dependent on crude oil exports for income, foreign exchange, and economic development. Crude oil exports from these countries have increased in recent decades, indicating the role of oil trade in their economies, which can also be interpreted as an increasing degree of trade openness of these countries to the rest of the world, which may explain the importance and great influence that the external sector plays in their economies.

On the other hand, any changes in global crude oil prices will have a considerable impact not only on the structure of these economies, but also on the welfare of their citizens. Oil-exporting countries are vulnerable to fluctuations in global crude oil prices as in periods of high oil prices, these countries experience a favorable trade balance, an increase in foreign exchange reserves and an appreciation in the exchange rate of their national currencies. Conversely, when world oil prices fall, the consequences are a depreciation of exchange rates, a large decline in foreign exchange inflows and a depletion of reserves, which can lead to government budget deficits and hence to slower economic growth.

Global oil prices have witnessed unprecedented fluctuations in recent decades, between large increases as in the first decade of the new millennium, when the price per barrel reached around $120 in 2002, and sharp declines as in late 2014, when the price per barrel reached $40. A large change in oil prices would lead to a significant impact on macroeconomic variables, especially on the external balance (current account -trade balance) by reducing the current account balance and the foreign exchange reserves. Thus, large and frequent oil price fluctuations will create serious and dangerous problems for oil exporting economies, as they will be exposed to large imbalances and will record undesirable deficits in their current accounts and trade balances, which could lead to slower economic growth.

On the other hand, changes in oil prices can affect real economic variables such as output, inflation, unemployment, money supply and exchange rates, not to mention their impact on government revenue and government spending. In addition, lower incomes lead to lower domestic consumption as economic activity is linked to the oil sector, and lower spending leads to a reduction in investment spending programmes, which affects economic activity and reduces potential growth. An examination of the determinants of the current account lies at the heart of development issues in oil-exporting countries. Attempting to study the activities of the external sector can add value to the frontier of knowledge helpful for policy formulation.

Thus, this thesis aims to analyses and explore the most controversial and important issues concerning the international economy and the balance of payments, including a review of the empirical and theoretical literature on external balance and oil prices and their impact on the macroeconomic. (Chapter I). The determinants of the current account and the role of exchange rate regimes in adjusting current account imbalances in oil-exporting countries (Chapter II).

The impact of oil prices on the trade balance and its oil and non-oil components (Chapter III).

In Chapter one we explore the issue of the determinants of the current account and the impact of macroeconomic fluctuations on the current account. This issue has attracted much research attention, especially since the eighties with the rise of current account imbalances in the United States and Latin America in the nineties and the financial crisis in East Asia in 1997 and the global financial crisis in 2008. On the other hand, the increased focus on the impact of world crude oil prices in creating global imbalances following the large increases in oil prices since the beginning of the first decade of this century. Consequently, many empirical studies have focused on the impact of oil prices on economic activity in general and on external balances in particular, with perhaps the best-known studies in this respect [START_REF] Hamilton | Oil and the macroeconomy since World War II[END_REF]Jimenez-Rodriguez and Sanchez, 2005;[START_REF] Kilian | Oil shocks and external balances[END_REF]. However, this issue has not been examined in relation to oil exporting countries, except in a few limited studies such as [START_REF] Morsy | Current account determinants for oil-exporting countries[END_REF]Tomas and Bayoumi, 2009).

In this first chapter of the thesis, we aim to provide a broad and deep insight into the most important determinants of current account balance development through a review of the empirical economic literature on the subject, focusing on the situation of oil-exporting countries. This is done to build a clear picture that will help deepen our understanding of economic relations in light of the interaction between the various factors that determine and explain the behavior of the current account balance. To achieve this objective, we have investigated, through a literature review, of the most important economic and financial determinants that have been reviewed in the most recent economic literature in order to identify their influence and their relationship to the development of the current account.

On the other hand, we focused on a number of main channels through which the impact of these macroeconomic variables can be transmitted to the current account. In addition, in this chapter we focused on the impact of world crude oil prices on macroeconomic activity, as well as on determining the current account position of oil importing and exporting countries. We also looked at the most important historical events which led to important consequences in changes in oil prices from the first oil shock in 1973 to 2014. In this context, we have discussed in this chapter the most important channels through which the impact of oil price fluctuations can be transmitted to the current account balances of oil-importing and oil-exporting countries.

The objectives of this chapter are to try to understand the economic linkages and relationships that govern the relationship between external balances -current account and trade balance -and macroeconomic variables, on the one hand, and between external balances and international crude oil prices, on the other. In addition, we seek to gain a deeper understanding of the dynamics of oil prices by examining the recent history of the most important events that have influenced the movement of global crude oil prices.

On the other hand, countries that register deficits or imbalances in their balance of payments seek to make great efforts to bring them back into balance and to treat the imbalances in various ways and measures so that the imbalances do not affect their economic path as well as to achieve their desired development. There can be many measures and policies that a state can use to achieve this goal. In this regard, exchange rate policy is one of the most important of these approaches and policies. Thus, in the case of oil-exporting countries, which depend heavily on crude oil exports for foreign income, exchange rate regimes play an important role in protecting the economy from external shocks and fluctuations in oil export revenues. a country must adopt an exchange regime appropriate to the nature of its financial and economic system. Especially in light of international economic developments, most notably the emergence in recent years of an inverse relationship between US dollar exchange rates and oil prices, in addition to shifts in the centers of gravity of the global economy.

In this regard, the prevailing exchange rate regimes in the world's economies are arranged within three main patterns, each comprising a range of formulas, ranging from fully floating, intermediate exchange rate regimes and fixed regimes. The issue of differential exchange rate regimes remains a major concern and of great interest to policymakers in each country, especially with regard to adjusting current account imbalances. According to the International Monetary Fund, oil-exporting countries' trends in adopting exchange rate regimes varied, given differences in the development of their monetary and financial systems to mitigate external imbalances and shocks and achieve financial and economic stability.

The second chapter examines the issue of current account persistence and the role of exchange rate regimes in adjusting current account imbalances in oil-exporting countries. On the other hand, we study the current account determinants according to the geographical area of the countries under study. Where we examine the impact of the set of determinants that determine the current account path of oil-exporting countries. This chapter attempts to answer this question by analyzing 27 oil exporting countries over a period of 21 years .

This empirical analysis uses dynamic panel tests (LSDVC) as well as fixed and random effect estimators. This chapter differs from other studies in several ways. First, this chapter complements the empirical literature on small samples using dynamic panel analysis. In addition, this analysis allows for a more detailed examination of the relationship between exchange rate regimes and current account persistence for oil exporting countries in the sample. This chapter also examines the current account determinants of oil-exporting countries by including a wide range of variables that are widely used in the current account literature.

In another context, oil price fluctuations can lead to serious imbalances or deficits in the trade balances of oil exporting countries. Research shows that the response of the trade balance depends on each of the sources of oil price shocks in terms of whether it is a supply shock, or a demand shock caused by global economic activity, or a demand shock caused by speculative steps. On the other hand, the extent to which the trade balance reacts depends on the interaction of the oil and non-oil components of a country's trade balance. While the world oil price dominates the oil component of a country's trade balance, the response of the non-oil component of the trade balance is often influenced by other economic factors, including the exchange rate, the output gap and the economic position of the country.

In the third chapter of this thesis, we investigate the impact of changes in oil prices in addition to the effects of the real effective exchange rate, the output gap and the economic growth rate on the trade balance in Libya and its oil and non-oil components. To achieve this objective, we use an econometric method of analysis, in particular the ARDL model, as well as unit root and co-integration methods to analyses the relationship between the trade balance and the variables mentioned for the period from 1980 to 2020. The purpose of this chapter is to identify the impact of changes in oil prices on Libya's trade balance and to examine the response of oil and non-oil components to changes in oil prices. In addition to identifying the role of the exchange rate, the output gap and the rate of economic growth in determining the trade balance in Libya over the study period. This thesis aims to analyses and explore the most controversial issues related to current account balances by reviewing the most important literature in this area (Chapter 1), and also includes the role of exchange rate regimes in adjusting current account imbalances (Chapter 2), and the role of oil price developments in determining the trade balance of a major oil producer -using Libya as a case study -(Chapter 3). The contribution of this study is to extend the analysis to include exchange rate regimes as well as a set of determinants to determine current account behavior. In addition, this study attempts to examine several key aspects of the external balance and to analyses current account balances in oil-exporting countries. Thus, the evidence presented in this study will further contribute to the previous literature on this topic. This analysis is important as any conclusions drawn on the relationship between exchange rate regimes and current account adjustments, and on the impact of oil price fluctuations on the trade balance and hence on the current account will be useful in policy formulation.

CHAPTER Ӏ General literature review of current account balance 1 Introduction

Recent decades have been marked by large fluctuations in world oil prices and, in this context, many studies indicate that it is difficult to separate temporary fluctuations from the general trend in oil prices (Liu et al,2010;Bentley and Bentley,2015;[START_REF] Gronwald | Explosive oil prices[END_REF]Guntner, 2014;Baumeisterand and Kilian,2016;Caldara et al,2017;Haugom et al,2016;[START_REF] Regnier | Oil and energy price volatility[END_REF]Difiglio,2014;Kesicki,2010). According to these studies, oil shocks will continue to be frequent, exposing the economies of oil-producing countries to boom and bust cycles as oil rents change. Faced with extreme fluctuations in oil revenues, governments of oil-producing countries have to balance several objectives at once including facilitating long-term consumption and ensuring intergenerational equity, in addition to the need to allocate oil revenues between creating a reserve stock of safe assets and investing in physical and human capital and promoting economic development.

From a more specific perspective the relevant literature examining the relationship between macroeconomic volatility and current account imbalance highlights the importance of external income volatility and its impact on external equilibrium (Esfahani et al.,2012;De Santis,2003;Huntington,2015;Gossé and Seranito,2014;Bondenstein et al.,2011;Guesmi and Fattoum,2014). Large current account imbalances can be a major source of macroeconomic vulnerability and impose constraints on a country's economic growth (Ahmed and Wadud,2011;Nusair,2016;Median and Soto,2016;Hamidi and Sabia,2013;Ajauro et al.,2016;[START_REF] Kilian | Oil shocks and external balances[END_REF]Cherif and Hasanov,2013;Bems and Filho,2011). Many studies indicate that the 2008 financial crisis confirmed the inability of financial markets to finance the current account deficit of many large economies (Cashin,2014). Economic theory suggests that a current account deficit should not pose a threat to macroeconomic stability, as long as it can be financed by capital inflows and financial accounts (Arezki and Hasanov,2013). Many factors can affect a country's current account balance, some of which are related to domestic macroeconomic conditions and others to external forces. Understanding how these processes work can help policymaking.

On the other hand, many studies assume that the oil price is the main driver of the current account behaviour of oil exporters (Bems and Filho,2009;Allegret et al,2014;Ketenci,2010;Özlale and Pekkurnaz,2010;Uneze and Ekor,2012;Rafiq et al,2016;Van der Ploge and Venables,2012), and thus higher oil prices would result in huge surpluses for oil exporters. There is evidence that oil price dynamics are important in determining the export earnings of oil exporting countries, which in turn affect external balances. Oil-producing countries are more vulnerable to fluctuations in their external accounts because their exports are relatively concentrated and oil prices fluctuate more widely than the prices of other commodities. This volatility is directly reflected in the terms of trade, as well as in current accounts and incomes in general. However, oil price dynamics are not the only relevant factor determining this relationship. Nevertheless, some argue that oil prices (spot market) reflect the current composition of oil shocks (supply and demand) at any given time. In a study by [START_REF] Kilian | Oil shocks and external balances[END_REF], it was found that oil price fluctuations can be distinguished into structural shocks to oil demand and supply (not all oil shocks are alike). Similarly, different structural shocks may lead to a different internal response for oil producers.

For oil exporters, the government plays an important role in economies that-on average-are more dependent on imports and migrants than other countries (Mehrara,2006).

Thus, this suggests that government spending decisions may have a greater impact on the current account than in other economies. On the other hand, oil producers are price-taker and cannot affect the prevailing price individually, and they produce at full capacity at that price level; thus, the gains from the volume of exports may be minimal. Moreover, since exchange rate changes lead to changes in the relative prices between domestic and foreign goods which may affect import and export incentives; for example, according to several studies (Behar and Filho,2009;Hakura and Billmeier,2008) exchange rate changes in oil-exporting countries can be fully reflected in changes in domestic currency rates. In instance, devaluation will cause the local currency to value exports to a greater extent than other countries, and in some cases net foreign remittances may increase due to limited substitution between citizens and immigrants in the labor market, which means a decrease in foreign exchange earnings in the first case, and an increase in foreign exchange outflows in the second case (Hamidi and Sabi,2013).

On the other hand, fiscal policy can play an important role in adjusting the external balances of oil-exporting countries. In general, fiscal, and external balances are related to the so-called Ricardian Equivalence -the offsetting between private and public domestic savings -so reductions in government spending are likely to reduce imports and remittance flows. However, over time this may also lead to a reduction in export flows and net investment income (Bems and Filho, 2009). Consequently, it is worth noting the importance of macroeconomic policy interactions in containing the undesirable effects of these fluctuations on external balances and thus in achieving the desired economic stability. In this context, it is very important to consider the characteristics of oil-exporting countries that may affect the nature of the relationship between the macroeconomic and current account in oil-exporting countries.

By reviewing the literature on this topic, we aim to identify the most important determinants and relationships governing the behavior of the current account in oil-exporting countries during the study period. Studying of the determinants of the current account lies at the heart of concerns about the effects of large oil price fluctuations over the past several decades. Oil-exporting countries are more vulnerable to external shocks for several reasons, the most important of which is that they face inelastic demand for goods as well as their dependence on oil exports for foreign exchange earnings. Through this study, we seek to shed more lights on the economic relationships and interactions at the macro level of oil exporting countries which may affect the evolution of the current account and external balance of these countries. Hence, that can help policy makers and economic decision makers in the countries studied.

Literature survey on the determinants of the current account

In this section of the study, we attempt to introduce some important works on the determinants of the current account. To this end, we address the most basic theoretical notions and empirical studies that have investigated current account balance and external equilibrium.

We therefore first present a simplified summary of the theoretical concepts of external equilibrium according to the Keynesian school, where we present the most important approaches that are exposed to external equilibrium analysis. In addition, in the second step we present the most important results of early empirical studies of the behavior and determinants of the current account balance since the early 1990s.

Theoretical basis review for the current account balance

Balance of payments transactions are categorized into the current account, capital and financial account, and reserve assets. The current account records exports and imports of goods and services, income receivable and payable abroad as well as current transfers.

Current account transactions are recorded on a transaction gross basis, where all credit transactions (receipts from abroad) and debit transactions (payments to abroad) are recorded.

As per [START_REF] Todaro | Economic Development[END_REF], the current account balance is the difference between a country's total exports and imports of goods and services, plus net investment income, debt service payments, remittances, and transfers. By definition, in a given period, the current account balance, the capital account balance and the financial account balance are zero, with errors and omissions being ignored. The capital account describes many unilateral transfers, while the financial account includes net foreign direct investment, net portfolio investment, net financial investment in derivatives and other investments, including loans, as well as net withdrawals of funds and foreign exchange reserves (Harkmann and Staehr,2020).

It follows that the current account balance mainly reflects the capital and financial account balances and thus represents the net resource flows to a country. A positive current account balance is related to the net flow of resources, which is generally called a capital inflow, while a negative current account balance is related to the net flow of resources, which is called a capital outflow (Pilbeam,2006). The national accounts statistics determine the current account balance according to a number of macroeconomic variables. Major theories of the current account balance take these definitions as a starting point. The current account balance is the sum of the trade balance, net income from international factors and some current transfers. This means that the factors that affect the trade balance will also affect, assuming the rest of the variables are constant, on the current account balance. The national accounts indicate that the current account balance equals net savings, which is savings minus investment (Harkmann and Staehr,2020).

The current account balance is said to be in deficit when there is a negative balance and surplus when the balance is positive. The Current Account Balance (CAB) can be expressed as follows:

CAB = X -M + NY + NCT (1.1)
Where, [X] is Exports of goods and services, [M] is Imports of goods and services, [NY] is Net income from abroad and [NCT] is Net current transfers.

The national income accounting identity as per macro-economic theory is given as:

Y=C+I+G+X-M (1.2)
Where Y= is national income Equation ( 1.4) provides the current account balance (X-M) as the sum of the private and public savings gaps, which is, the sum of private savings minus investment and the fiscal balance (taxes minus public spending).

From the previous equation, the current account deficit can be reduced by either raising the savings rate by decreasing investment, increasing government taxes or lowering government spending. The surplus of imports over exports (current account deficit usually financed by external borrowing), enabling a country to spend more than it produces or to invest more than it saves.

It should be noted here that since the middle of the previous century, Keynesian theory offered several approaches to balance of payments analysis based on Keynesian national income relationships [START_REF] Alexander | Effects of a Devaluation on a Trade Balance[END_REF][START_REF] Keynes | The supply of gold[END_REF][START_REF] Machlup | The Theory of Competitive Price[END_REF][START_REF] Meade | The balance of payments[END_REF]Robinson, 1947;[START_REF] Mundell | The monetary dynamics of international adjustment under fixed and flexible exchange rates[END_REF][START_REF] Mundell | The appropriate use of monetary and fiscal policy for internal and external stability[END_REF]. However, according to (Arize et al., 2000;[START_REF] Giancarlo | International Finance and Open-Economy Macroeconomics[END_REF], there is no single approach to analyzing a country's balance of payments. Since spending decisions are linked to financing decisions, since a country's imports are the rest of the world's exports, and since debts must be repaid, there is an intertwining of international and temporal deficits that offer alternative balance of payments methods. There are, however, three main approaches to the balance of payments, and these are generally identified as the absorption approach, the elasticity approach, and the intertemporal approach.

Absorption approach

The First theory of current account balance is the absorption approach stipulated that current account balance is the difference between domestic output and spending. It assumes that prices remain constant and emphasizes in changes in real domestic income thus it real-income theory of the balance of payments. Keynesian national income framework is

given by [Y=C+I+G+X-M], while absorption or aggregate demand is given by [AD=C+I+G].

Current account balance (CAB) is given by: [X-M=Y-AD] (1.5)

It implies that the balance is affected by the change in domestic expenditure. It shows that currency depreciation can improve the current account since it depends on its effect on national income and on domestic absorption. The net effect is ambiguous, and the outcome of devaluation depends on its direct impact on absorption, which discourages investment and consumption. Consequently, a reduction of domestic expenditure (absorption) improves the current account balance. It concludes that the absorption approach proposes that depreciation can be effective in improving the current account balances when the economy has unemployed resources, the economy meets the Marshall-Lerner condition, and the government fulfills contractionary fiscal or monetary policy along with depreciation (Giancarlo,2002).

Elasticity approach

Elasticity approach of balance of payment is second theory on current account balance. It concentrates on the trade flows (exports and imports). According to Augustine et al., (2000), the approach mainly emphasizes on exchange rates, price and income changes as the ones that determine of current account balance. This means that current account depends on price and income elasticities. The quantity of a currency demanded in the foreign exchange market is derived from the country's demand for imports while the supply of foreign exchange to a country result from its exports of goods and services the elasticities approach centers on changes in the prices of goods and services as the determinant of a country's balance of payments and the exchange value of its currency.

The theory assumes that Capital flows occur only as a means of financing current account transactions and trade balance exclusively represents the current account. Current account balance normally adjusts through changes in the exchange rate which affect relative prices of goods and services, thus affecting the demand both by domestic and foreign consumers. The Marshall-Lerner (ML) condition, which states that, assuming initial equilibrium condition, the sum of price elasticities (in absolute value) of exports and imports must be greater than unity in order for currency devaluation or depreciation to improve the current account balance, that is [ex + em > 1], where [em] is the price elasticity of import and

[ex] is the price elasticity of export. A depreciation or devaluation of the exchange rate makes domestic exports cheaper in foreign markets, which increases their demand. At the same time, imports become more expensive in the domestic market, and their demand diminishes. The net effect on the current account balance will depend on price elasticities. If goods exported are elastic to price, quantity demanded will increase proportionately more than the decrease in price, and total export revenue will increase. Augustine et al. (2000) noted that if goods imported are elastic, total import expenditure will decrease and both cases will improve the current account balance. However, empirical evidence indicates that goods tend to be inelastic in the short term, since it takes time to adjust to new prices, current contracts, and consumption patterns. However, depreciation of the domestic currency is unlikely to immediately improve a country's balance-of-payments deficit. It is even possible that the depreciation could cause a country's balance of payments to worsen before it improves.

There are benefits of elasticities approach especially when using it for empirical predictions purposes. They proved helpful when examining short-run implications of exchange rate changes on trade balance. In developing countries there are arguments that their elasticities are very low to satisfy the Marshal Lerner condition and depreciation worsens the current account balance. This is because most of them mainly import intermediate inputs and machinery for production purposes meaning that the demand elasticity of imports is usually very low. At the same time demand elasticity for primary commodities exports is low. The elasticities approach relies on exchange rate changes and assumes constant commodity prices.

It does not recognize the income effects and relative prices of exports and imports that are key determinants of terms of trade effects. Due to its shortcoming, it is considered as a partial equilibrium analysis. As a result, elasticity has a limited ability to explain long-term developments in saving-investment balance (Augustine et al.,2000;[START_REF] Giancarlo | International Finance and Open-Economy Macroeconomics[END_REF], Gandolfo ,2016).

The discussion above illustrates the potentially large number of potential links between internal and external economic developments and the current account balance. A variety of macroeconomic developments can affect the current account balance, and in some cases, it can be difficult to determine the direction of causation.

Intertemporal approach

The intertemporal approach is another method of analyzing the current account. It shifted from the trade view of the current account to savings investment definition. Gandolfo (2016) defined current account balance as the difference between domestic savings and investment. The current account balance is regarded as an intertemporal phenomenon because the savings and investments are also based on intertemporal decisions. The decisions are made according to the future expectations of the economy like economic growth, government spending real interest rates etc. The approach accounts for the macroeconomic determinants of the prices and analyze the impact of the current and future prices on savings and investments.

The macroeconomic factors that determine and affect saving and investment end up influencing the current account balance. The factors like fiscal deficits, consumption smoothing, and investment determine current-account behavior [START_REF] Edwards | Does the Current Account Matter? National Bureau of Economic Research[END_REF].

As noted by Genberg and Swoboda (1992), recent theoretical work on the determinants of the current account balance, has tended to emphasize the intertemporal aspects highlighted by the saving-investment approach. Hence, intertemporal aspects identified as the determinants of saving and investment should be fundamental in any analysis of current account developments. According to Obstfeld and Rogoff (1994) and [START_REF] Calderon | Determinants of current account deficits in developing countries[END_REF], current account balance is the outcome of forward-looking dynamic saving and investment decisions driven by expectations of productivity growth, government spending, and interest rates among others. The intertemporal approach to the current account recognizes that saving and investment decisions result from forward looking calculations based on the expected values of various macroeconomic factors.

According to [START_REF] Faruqee | What determines the current account? A cross-sectional and panel approach[END_REF] the current account balance acts as a buffer against shocks in productivity and demand. This approach postulates that the impact of economic changes on the current account balance varies according to their origin, persistence and timing of such changes. The approach advises that the current account deficits should reflect increase in (private) investment -not decline in savings-and a bigger current account deficit is not a cause for concern as long as the fiscal account is balanced [START_REF] Edwards | Does the Current Account Matter? National Bureau of Economic Research[END_REF].

The intertemporal approach views the current account balance as an outcome of forward-looking dynamic saving and investment decisions. This was since the intertemporal approach to current account analysis extends the absorption approach through its recognition that private saving and investment decisions, and government decisions, which result from forward-looking calculations based on expectations of future productivity growth, government spending demand, real interest rates. Therefore, the intertemporal approach besides being dynamic, achieves a synthesis of both absorption and elasticities approaches by accounting for macroeconomic determinants of relative prices and by analyzing the impact of current and future prices on saving and investment. Hence, the approach provides a consistent and coherent foundation for open-economy policy analysis (Obstfeld and Rogoff, 1994).

Empirical review of current account balance

The issue of current account balance determinants attracted the attention of scholars in the early 1980s. Moreover, since the beginning of this century, more attention has been paid in the empirical literature to the topic of current account determinants as the liberalization policies adopted by emerging market economies in the 1990s paved the path to large current account deficits and the associated increased risks to financing these deficits.

There are some empirical studies that analyze the determinants of the current account, to ascertain the level of the current account that can be considered as "regular" for a state, based on a set of macroeconomic and structural attributes. These economic fundamentals usually include GDP per capita, demography, fiscal balance, trade openness, and initial net foreign assets (see, [START_REF] Garg | Drivers of India's current account deficits, with implications for ameliorating them[END_REF]. The empirical literature on the determinants of the current account has focused mainly on the U.S. and other developed countries. Using timeseries data, Von [START_REF] Von Furstenberg | Domestic determinants of the current account balance of the United States[END_REF], [START_REF] Dibooglu | Accounting for US current account deficits: an empirical investigation[END_REF], [START_REF] Chinn | Global current account imbalances: American fiscal policy versus East Asian savings[END_REF] and [START_REF] Batdelger | Determinants of the current account balance in the United States[END_REF] examined the long-run determinants of the U.S. current account balance. Using panel data techniques, [START_REF] Bussière | Current account dynamics in OECD and EU acceding countries-an intertemporal approach[END_REF], [START_REF] Arghyrou | Current account imbalances and real exchange rates in the euro area[END_REF], [START_REF] Herwartz | Determinants of current account imbalances in 16 OECD countries: an out-of-sample perspective[END_REF], Gosse and Serranito (2014) analyzed current account determinants for samples of countries drawn from the Euro Area or the OECD more broadly.

Moreover, several studies have analyzed the current account's determinants focusing on developing countries. In this context, [START_REF] Chinn | Medium-term determinants of current accounts in industrial and developing countries: an empirical exploration[END_REF] adopted a structured approach that includes the roles of basic macroeconomic determinants of saving and investment to investigate the medium-term determinants of the current account. They used data samples for 18 industrialized countries and 71 developing countries covering the period 1971-1995 and found that the initial stock of net foreign assets and government budget balances -for each -had positive effects on current account balances.

After the financial crises of Southeast Asian countries in 1997, the current account surpluses of the affected Asian countries grew dramatically. This measure serves as safety funds to prevent a recurrence of the situation that caused the crisis and also as a hedge against sudden setbacks. Chinn and Ito (2007) were able to provide an empirical explanation for the increase in account surpluses in some Asian countries. Mainly from the 1997 deficit to surpluses in subsequent years. They suggest that the standard current account determinants as in (Chinn and Prassad, 2003) cannot explain the increase in current account surpluses.

Considering this, they provide indicators of financial development and the legal environment, which are likely to affect savings, investment, and economic growth. Their results show that the interaction of the legal environment with financial development plays an important role in explaining the flow of external capital from Asia. Consequently, their results indicate that the lack of investment opportunities instead of excess savings is responsible for the sudden rise in current account surpluses in Asia, after the 1997 Asian Nations Association financial crisis.

Thus, this leads them to reject the theory of abundant savings. On the other hand [START_REF] Gruber | Explaining the global pattern of current account imbalances[END_REF], found that financial crises could help explain the decline in aggregate demand in Asia, which would lead to an improvement in the current account situation.

Debelle and [START_REF] Faruqee | What determines the current account? A cross-sectional and panel approach[END_REF] used in their study a group of 21 developing countries during the period and a wide range of cross-section data in 34 developed and developing countries. The purpose of their study is to examine the factors that may influence the determination of the current account in the long run. They note that short-term variables are used to ensure that the current account position is not necessarily in equilibrium over the long term. Their results also indicate that relative income and demographics have a significant impact on the current account balance in most cases. They also found that fiscal policy has a major impact on the current account. Moreover, they have come across too, the short-term variables such as -changes in the real exchange rate, business cycle, and changes in terms of trade-have a major impact on current account developments.

Moreover, [START_REF] Calderon | Determinants of current account deficits in developing countries[END_REF] continued the work that he had done by [START_REF] Faruqee | What determines the current account? A cross-sectional and panel approach[END_REF]. Their study attempted to estimate the determinants of the current account balances of 44 developing countries during 1966-1995. Their results indicate that the current account deficit is moderately persistent, and that GDP growth leads to an exacerbation of the current account deficit, and on the other hand, a temporary increase in public and private savings leads to an improvement in the current account position. They also document that a temporary increase in the appreciation of the real exchange rate or a deterioration in terms of trade could widen the current account deficit, but its long-term impact is not significant. Also, the temporary increase in the level of economic growth in developed countries leads to a reduction in the current account deficit in developing countries in the short and long term. On the other hand, the rise in global interest rates in developed countries reduces the current account deficit in developing countries.

IMF (2006) This study analyzed the structural determinants of trade account balances in developing countries, and their study aims to determine the medium term of the current account, as they used the data of (Chinn and Prassad, 2003). The results of this study show that both the budget balance and the initial position of the net foreign assets are positively correlated with the current account balances in developing countries. Some studies dealt with current account determinants based on limited characteristics of countries. A study by [START_REF] Calderon | Current account deficits in Africa: Stylized facts and basic determinants[END_REF] focused on developing economies and low-income countries. They found that the real exchange rate appreciation that corresponds to with the Mundell-Fleming model as well as the deterioration of the total terms of trade which corresponds to the (Harberger-Lnursen-Metzier, HLM effect) both lead to a deterioration of the current account deficit. Regarding African countries, they found that there is not much consistency in the account deficit. As is the case in the full sample of developing countries according to their study. [START_REF] Medina | Current account balance estimates for emerging market economies[END_REF] studied the determinants of the current account in developing countries, and their results indicate that the financial balance greatly affects the current account, and they also found that increasing net foreign assets improves the current account balances.

On the other hand, (Herman and Winker,2008) investigated current account imbalances in the context of income convergence theory and analyzes by comparing developing countries in Asia and developing countries in Europe. They argue that financial market development and international financial integration are important factors in determining current account balances. The developed financial markets are associated with higher financial integration, either with a higher deficit or a smaller current account surplus. Consequently, they explain this through the fact that countries with more developed and financially integrated financial markets can borrow from abroad and thus increase domestic consumption and savings. The budget balance is an important determinant of the current account balance for industrial countries.

For the East Asian countries, there is evidence that the budget balance is larger than predicted.

More financial development leads to higher saving. Among developing countries, higher terms of trade volatility are associated with larger current account surpluses.

The degree of openness to international trade is weakly associated with larger current account deficits among developing countries. The study finds little response to ither flow or speculative oil demand shocks in the very short run, consistent with the notion of high adjustment costs in oil production.

Both OPEC and non-OPEC producers seem to respond to speculative demand shocks.

On average over the sample period, oil supply by OPEC decreases, whereas total non-OPEC production increases. Fall in government spending would increase the trade and current account balance

Current account balances' drivers

Several studies (Chinn and Prasad,2003;Lane and Mileisi-Ferretti,2012;Cheung et al,2013) have shown that the effects of certain economic variables such as net foreign assets, expected growth, age dependency ratio, fiscal deficit, and financial deepening affect the current account balance. These factors or influences differ considerably between industrialized and developing countries. Moreover, these studies indicate that the dynamics of the country must be taken into account when investigating the determinants or the current account balance.

Effects of fiscal balance factor on current account balance

The term twin deficit was coined by Martin Feldstein (1985), to explain the hypothesis of the correlation between US fiscal balance and the current account during the 1980s. Salvator ( 2006) also developed a theoretical approach to the twin deficit hypothesis, in terms of supply and demand for borrow-able funds, in order to highlight the link between fiscal policy and the current account. According to this model, the expected effects of the fiscal deficit are an increase in the interest rate, a rise in the domestic exchange rate, and a decrease in the current account balance. In contrast, in inter-temporal current account models with Ricardian agents, it is assumed that the increase in the deficit will be adjusted by the increase in private saving [START_REF] Glick | Global versus country-specific productivity shocks and the current account[END_REF]. More recently, inter-temporal models have assumed that there are two types of factors -the spending families that spend their disposable income in each period, and the saving families that consume according to their permanent income and consume their resources between time periods- [START_REF] Bussière | Productivity shocks, budget deficits and the current account[END_REF]. Within this framework, the effect of the fiscal deficit on the current account is positive and will depend on the share of non-Ricardian households in the economy. [START_REF] Abbas | Ricardo, Fiscal Policy and the Current Account[END_REF] used in their study a large group of 140 countries, they concluded with regard to the developed countries, where the major improvements in the current account were associated with changes in the financial balance in the medium term. In contrast, the significant deterioration in the current account was associated with changes in the savings and investment balance of the private sector rather than the public sector. [START_REF] Bernheim | Budget deficits and the balance of trade[END_REF] presented a deep discussion of the double deficit hypothesis, which is linked to the trade deficit with the government budget deficit. He claims that in the event of an inability to compensate through private saving, the high government budget deficit causes insufficient domestic private and public saving to achieve profitable government investments and expenditures. This leads to the interest rate becoming high and the local currency stronger, which attracts foreign capital investment and discourages exports of goods and services. Thus, both effects shift the current account toward deficit, and this results in both government budget imbalances and trade balances.

Effects of financial development on current account balance

Although economic theory indicates that capital should flow from rich countries to poor countries, capital flows can go in the opposite direction [START_REF] Lucas | Why doesn't capital flow from rich to poor countries?[END_REF]. In the first decade of the 21st century, several influential authors have argued that Lucas' paradox can be explained by the varying levels of development of the world's financial markets [START_REF] Caballero | Financial crash, commodity prices and global imbalances[END_REF].

Consequently, inefficient financial markets for emerging economies can discourage domestic investment and encourage savings [START_REF] Hubbard | The US current account deficit and public policy[END_REF]Ju andWei, 2006,2016) and this excess saving, after that, must be invested in countries that are supposed to be more efficient financial markets, specifically the United States. [START_REF] Caballero | Financial crash, commodity prices and global imbalances[END_REF][START_REF] Mendoza | On the welfare implications of financial globalization without financial development [with comments[END_REF] indicated that the presence of high-quality financial assets in financially advanced countries -as opposed to -insufficient development in many emerging countries. Thus, this could explain why some of the more advanced economies have succeeded in attracting huge savings flows, which emerging countries cannot absorb. In the empirical literature, financial development can be measured either by means of asset price variables or quantitative indicators. Consequently, the differences in expected returns across countries can be viewed as reflecting asset preferences or a risk premium, given that international financial integration is supposed to equal returns to assets around the world. As a result, real interest rate differentials may reflect asset prices (Gruber and Kamin, 2009).

In a more specific way, this also means that the investor may prefer to obtain lower returns on assets in more developed countries, compared to the assets of less developed countries in the financial market. Higher than average interest rates in a country indicate that investors are finding assets relatively less attractive in this national market, which means smaller net capital flows and larger current account surpluses. According to a study by [START_REF] Allegret | Current accounts and oil price fluctuations in oil-exporting countries: the role of financial development[END_REF] It is likely that the evolving financial system will improve the current account response to oil price changes. For example, this could mitigate the positive impact of higher oil prices on the current account. Countries with more developed financial systems have a high saving-investment relationship, so external imbalances are low. Financial development can have an indirect impact on the current accounts of oil-exporting countries, through its indirect impact on the relationship between oil prices and current accounts. The basic idea is that financial depth can help achieve stability as well as precautionary savings. This could be achieved by removing borrowing restrictions and, also by creating sovereign funds and increasing foreign reserves. On the other hand, the developed financial system is expected to lead to successfully direct more oil revenues to domestic investment. Thus, reducing the need for precautionary savings, and shifting unexpected oil revenues into higher domestic investments.

Impacts of demographic factors on current account balance

The life cycle hypothesis [START_REF] Ando | The" life cycle" hypothesis of saving: Aggregate implications and tests[END_REF] predicts that the level of total savings for a country might be depends on the demographic combination of the population.

The higher the dependent population ratio, the lower the level of national saving, and consequently, the lower the current account balance. The dependent population consists of people who are either too young to work or old. Consequently, countries with younger and relatively large populations are likely to suffer from current account deficits. For the countries, whose populations are rapidly aging, they need to accumulate external savings by managing current account surpluses that they can tap into after their workers retire. On the other hand, young and fast-growing economies with ample investment opportunities may benefit from foreign financing, and that can handle the current account deficit provided they can pay them off with future income. However, there are times when external imbalances reflect macroeconomic and financial vulnerabilities. Countries in which external liabilities accumulate on a very large scale may become vulnerable to sudden stops in capital flows and financial crises, in the event of negative impacts that go beyond their borders (IMF, 2018). Population variables are also supposed to be important, in that they affect the saving rate and thus the current account imbalances. Whereas the total savings rates are high in the population with more workers than there are children or retirees. Accordingly, a current account surplus is likely to be appropriate in countries with a greater proportion of workers in their population [START_REF] Higgins | Viewing the current account deficit as a capital inflow[END_REF].

Regarding per capita gross national product, according to [START_REF] Huntington | Crude oil trade and current account deficits[END_REF], it is difficult to understand or perceive how this variable can contribute to drawing the current account balance. In fact, higher domestic income relative to foreign income often turns the trade balance towards greater net imports of goods and services, although the effects of exchange rates can mitigate this effect. Moreover, Debelle and [START_REF] Faruqee | What determines the current account? A cross-sectional and panel approach[END_REF] emphasize the importance of the developmental stages' hypotheses for the balance of payments. The transition from the low and medium level of development often requires the import of larger capital and a large current account deficit. And when the economy matures at a more advanced level of development, it may begin to develop current account surpluses, in the form of payments to ex-foreign liabilities and large capital exports to develop the economy. It is important to point out that according to the literature, this probability requires a non-linear characteristic that includes both the level and the square of the per capita gross national product. Where the coefficient of the level of per capita income is supposed to be negative, while the coefficient of the income square is assumed to be positive, to monitor the response between GDPs per capita and the current account.

Effects of terms of trade on current account balance

Both (Haberger, 1950;[START_REF] Laursen | Flexible exchange rates and the theory of employment[END_REF] highlighted the relationship between the terms of trade on the current account balance -so-called HLM effect -, as they indicated that improving terms of trade for a small open economy increases its real income.

Assuming that the marginal propensity to consume is less than one, thus, consumption increases less than income, which means that it has a positive impact on the current account balance by increasing private savings. The inter-temporal approach to the current account [START_REF] Obstfeld | Aggregate spending and the terms of trade: Is there a Laursen-Metzler effect?[END_REF][START_REF] Svensson | The terms of trade and the current account: The Harberger-Laursen-Metzler effect[END_REF] shows that the intensity of the HLM consequence decreases with the shock, if the increase in terms of trade is permanent it will not have an impact on the current account, hence the real income is determined based on its value Long-term savings without a change in the level of savings. However, if the increase in terms of trade is temporary then the level of real income rises temporarily above its permanent level, and consumption is facilitated by increasing the level of short-term savings, which leads to a current account surplus.

Otherwise, according to [START_REF] Glick | Global versus country-specific productivity shocks and the current account[END_REF], country-specific productivity shocks are a major determinant of the current account. The temporary productivity shock leads to an increase in production and thus has a positive effect on the current account balance. As for the expected effect of the permanent increase in productivity, it is to reduce the current account balance, due to achieving higher returns for investment in increasing capital, and also because the expectation of achieving higher future returns reduces savings. Although a productivity shock may improve the current account balance, indicated by [START_REF] Bagnai | Current-account reversals in developing countries: the role of fundamentals[END_REF], the overall outcome is likely to be negative.

Effects of trade openness on current account balance

The degree of trade openness of a country can has an impact on the external balances of a country through its effect on the relationship between the current account and exchange rate changes. Trade openness can be expressed as the ratio of total exports and imports to GDP. From a theoretical perspective, trade openness can be defined as the level of trade that one country allows to do with the other country. Some economists argue that trade openness could be beneficial in terms of obtaining foreign investment and investing in other countries. Previous research generally recognizes the importance of openness to trade in determining a country's vulnerability to sudden stops. For example, Calvo et al. (2004) and [START_REF] Cavallo | Does openness to trade make countries more vulnerable to sudden stops, or less? Using gravity to establish causality[END_REF] show that more open economies, defined as countries with a larger supply of tradable goods, are less prone to sudden stops in capital flows. The currency crises literature also stresses the importance of trade openness.

For example, Milesi-Ferretti and Razin (2000) find that a higher degree of openness to trade decreases the probability that a country experiences an exchange rate crisis. Similar findings are discussed in [START_REF] Glick | The illusive quest: Do international capital controls contribute to currency stability?[END_REF], who show that greater trade integration reduces a country's likelihood of experiencing a currency crisis. They argue that a greater openness ratio decreases the likelihood of sharp reversals of capital flows, as the country is more able to service its external obligations.

Analyzing the relationship between trade and current account, [START_REF] Ibhagui | External debt and current account adjustments: The Role of Trade Openness[END_REF] discovered a negative relationship between trade openness and current account balance, which implies that a high trade openness increases current account deficit. On the other hand, [START_REF] Sadiku | The persistence and determinants of current account deficit of FYROM: an empirical analysis[END_REF] noticed that fiscal balance, trade deficit, financial development, terms of trade and trade openness are strongly connected to current account in Former Yugoslav Republic of Macedonia (FYROM). [START_REF] Romelli | Current account and real exchange rate changes: The impact of trade openness[END_REF] submitted that trade openness positively and negatively influences current account and real exchange rate, respectively, in developed and emerging economy. On the nexus between trade and exchange rate, Calderon and Kubota (2017) find a negative link between trade openness and exchange rate volatility in selected 82 countries.

However, opinions about the effects of trade openness on external balances seem to be conflicting and do not flow in one direction. As for trade openness, it is expected to have a negative effect on the current account, because it indicates the level at which trade liberalization is achieved, the acceptance of technology transfer, and the state's ability to service the external debt through the proceeds of export [START_REF] Milesi-Ferretti | Persistent current account deficits: a warning signal[END_REF]. Countries with a high level of trade openness tend to be more attractive to capital (Chinn and Pasard, 2003). As a result, domestic expenditures -compared to income -increase through external borrowing, which leads to a deterioration in the current account balance. However, some studies provide opposite results, for example, evidence of the positive effect of trade openness on the current account in Hong Kong was found by [START_REF] Leung | Structural Determinants of Hong Kong[END_REF]. As he explained these positive relations through two reasons, one of which is the role of Hong Kong as a mediator for Chinese trade, and the generation of external income from services exports, which contributed to the current account surplus. The second reason is that the large fluctuations in output that require the accumulation of large net foreign assets to facilitate income and risk diversification, which can only be done through managing or operating a current account surplus. Hence, according to their findings, regarding the trade balance, the expected relationship is positive between the trade balance and the current account. However, there are studies that have indicated the possibility of a negative long-term impact of the trade balance on the current account balance, as documented by a study [START_REF] Ketenci | Major determinants of current account in Russia[END_REF], which indicated that the results of the assessment of the determinants of the current account in different cases, conflicting relationships may appear, due to the different characteristics of each country.

Effects of oil price on current account dynamics

The oil price shocks of the past decades are very noticeable. This may be due to its strong influence on the real economy, future firms plan, and household sector spending (Lee et al,2017). Some studies (Jimenez-Rodriguez and Sanchez,2005;[START_REF] Kilian | Not all oil price shocks are alike: Disentangling demand and supply shocks in the crude oil market[END_REF] indicate that oil prices affect real economic activities on both the supply and demand side. Oil prices are expected to have significant effects on the external balances of oil-importing and exporting countries (Rafiq et al,2015;Kilian et al,2009). For example, in the case of oil-exporting countries, oil price mechanisms are important in determining oil export revenues, especially since these countries suffer from a lack of diversification and are highly dependent on oil revenues. In the case of importing countries, many studies (Rafiq et al,2015;Hamilton,1983;Jimenez-Rodriguez and Sanchez,2005) indicate that oil prices have a wide impact on the economies of these countries, as oil is directly linked to production processes, and they play a major role in inflation, employment, and output.

Given the integration of capital markets, the inter-temporal balance of payments approach predicts that the temporary shock in oil prices should lead to transient (passing) external imbalances. And that permanent shocks must be modified by internal modification.

Thus, the relationship depends on whether the oil shock is offset by the oil trade balance or not.

The theoretical links between the oil market and the currency market are also established in the literature. There is debate as to whether there is a potential impact of exchange rates on oil price movements, which is based on the law that there is a price for a commodity to be traded. Bloomberg and Harris (1995) argue, based on the consideration that oil is a largely homogeneous commodity, traded internationally and its price is also expressed in US dollars.

Therefore, the depreciation of the US dollar lowers the price of oil to foreigners relative to the prices of their goods in foreign currencies, thereby increasing their purchasing power and the demand for oil. Since the US dollar is the primary currency for invoicing and settling in international oil markets, the primary channel through which the oil shock is transmitted to the real economy is the exchange rate of the local currency with the American dollar. Therefore, the effects may differ for both oil-exporting and oil-importing countries (Roboredo,2012).

In addition, a stronger local currency against the US dollar will increase the purchasing power of oil-importing countries (except the United States), while negatively affecting oil-exporting countries. On the contrary, the depreciation of the local currency against the United States dollar can have a negative effect on oil-importing countries and lead to a long-term shock that ultimately affects oil-exporting countries.

Oil prices play an important role in explaining exchange rate fluctuations. Oil exporting and importing countries may witness different variations in exchange rates as oil prices change.

Given the inverse relationship in recent years between US dollar exchange rates and oil prices, it should be noted in this case that increasing exchange rate flexibility will help oil-exporting countries to manage fluctuations in exports and associated government revenues with them (Setser,2007). Many studies have been conducted to understand both macroeconomic behavior and oil prices. Perhaps one of the most important justifications for this effort is that the behavior of oil prices has changed dramatically at different times. As well as the much higher fluctuations in oil prices since the beginning of the first decade of this century. Many economists have tried to present arguments to explain the behavior of oil prices and assess the impact of oil shocks on different economies, which helps shed light on the different transmission channels through which the fluctuations of oil prices can affect the real macroeconomic variables. These studies began through the pioneering work of each of: [START_REF] Mork | Energy prices, inflation, and recession, 1974-1975[END_REF][START_REF] Nordhaus | Oil and economic performance in industrial countries[END_REF][START_REF] Darby | The price of oil and world inflation and recession[END_REF][START_REF] Hamilton | Oil and the macroeconomy since World War II[END_REF]. Their results reveal that the large and unexpected changes in oil prices have major effects on the economy. They concluded that the oil price shock was a major cause of recession and inflation in the years (1974/1975). Moreover, (Sachs,1982) explained that the peak of oil prices in (1973/1974) generated a large surplus in OPEC countries while it led to worrying deficits in both developed and developing countries. [START_REF] Darby | The price of oil and world inflation and recession[END_REF] conducted tests of the importance of oil price variables, where he expanded (Locas-Barro) equations for oil price variables for different countries. However, he was unable to establish a fundamental relationship between oil prices and macroeconomic variables. [START_REF] Hamilton | Oil and the macroeconomy since World War II[END_REF] analyzed oil price booms on production in the United States. His study is an important turning point in oil-macroeconomic research. Most of the literature related to the effects of oil price shocks on macroeconomic aggregates has focused on developed countries, and to a lesser extent, some academic work has explored the relationship between oil prices and the overall economy of developing countries. Some literature has dealt with the impact of world oil prices on macroeconomic aggregates in oil-exporting countries.

For example, [START_REF] Eltony | Oil price fluctuations and their impact on the macroeconomic variables of Kuwait: a case study using a VAR model[END_REF] claim that symmetric oil price shocks play a major role in explaining the behavior of macroeconomic variables in Kuwait. Their analysis showed the sensitivity of government spending to oil price shocks in an oil-dependent country. [START_REF] Ayadi | Oil price fluctuations and the Nigerian economy[END_REF] also studied the relationship between oil price changes and economic development in Nigeria through industrial production. He found that oil price changes only have an indirect effect on industrial production. [START_REF] Olomola | Oil price shock and macroeconomic activities in Nigeria[END_REF] studied the effects of oil price shocks on production, inflation, the real exchange rate, and money supply in Nigeria. They suggest that oil price shocks have an impact on the money supply in the long run. [START_REF] Mehrara | The asymmetric relationship between oil revenues and economic activities: The case of oil-exporting countries[END_REF] explored the asymmetric relationship between oil revenues and production growth in 13 oil-exporting countries. Their study found that the size of the negative oil price shock's impact on GDP is greater than the positive oil price shock.

In another context [START_REF] Farzanegan | The effects of oil price shocks on the Iranian economy[END_REF] looked at the dynamic relationship between oil price shocks and major macroeconomic variables in Iran. They point to the asymmetric effects of oil price shocks, and they found that negative and positive oil price shocks raise inflation clearly. Moreover, a positive correlation was found between positive changes in oil prices and industrial output growth, they also confirmed through their results the Dutch disease hypothesis with an abnormal estimate of the real effective exchange rate.

Berument and Ceylan (2010) assessed the impact of oil price shocks on economic growth in selected countries in the Middle East and North Africa region. Their estimates indicate that the increase in oil prices had a positive and statistically significant effect on production in most of the sample countries, while the effect of high oil prices did not have a significant impact on production.

Bouchaour and Al-Zeaud (2012) investigated the impact of oil prices on the Algerian economy during the period . Using the vector error correction model (VECM), the results revealed that oil prices have a slight effect on most variables in the short term, except for inflation and the real effective exchange rate. In the long term, oil prices have a positive effect on real GDP and inflation. Oil prices also have a negative effect on the effective exchange rate and unemployment. (Krugman, 1983) provides a theoretical analysis of the wealth effect channel and indicates that the increase in oil prices leads to a new equilibrium for the portfolio, and therefore the liquidation of the new assets requires the exchange rates to be adjusted accordingly. By applying the DSGE model to two countries, a study by (Bodestein et al, 2011) shows that an increase in oil prices leads to an increase in the exchange rate in oil-exporting countries.

However, what may be surprising is that there is a small number of studies on the impact of oil price shocks on the external accounts of the economy -the current account, the trade balance, and the net foreign assets position-. The early work of (Agmon and Leffer, 1998), based on the monetary approach to the balance of payments, they found that the trade balance and current account of industrialized countries had deteriorated significantly and immediately after the increase in global oil prices; but they improved after the initial deterioration.

Moreover, adjustments to the trade balance were limited to the oil trade balance only, however, the source of the reversal of the trade balance and the current account deficit was not at all clear.

Then [START_REF] Rebucci | Oil prices and global imbalances[END_REF] found that oil price shocks have a noticeable but relatively short-term effect on current accounts, as well as a noticeable effect on the countries 'net foreign assets position. As for the study [START_REF] Kilian | Not all oil price shocks are alike: Disentangling demand and supply shocks in the crude oil market[END_REF], they found that the net foreign assets position of developed oil-importing countries -except for the United States -tends to decline after an increase in the expected demand in the oil market. Although the decrease is not always statistically significant. Since 2003, the prices of primary commodities such as crude oil have increased, and large surpluses have accumulated in the current accounts in the oilexporting countries (Abul Basher and Fachin,2013;Morsy,2009;Bems and Filho,2009).

However, the sharp declines of oil since 2014, have led to major impacts on the oil-exporting countries. In addition to significant financial pressures, external balances have also come under pressure as many countries have been assigned to register current account deficits.

The ability to finance this deficit varies greatly across countries, with many of them possessing large external wealth, but others may face financing difficulties and pressure on foreign reserves (Ibhgui, 2018). From a normative perspective, the exporters of non-renewable resources should be net savers so that they can finance future imports after their resources are exhausted. So, policymakers in oil-exporting countries are thinking of ways to increase their current account balances.

This section aims to review the main determinants of current account imbalances.

These determinants can be summarized in general terms, global crude oil prices, terms of trade, fiscal balance, per capita gross national product, demographic factors, abundance of savings, and financial development. The main studies on short-term current account fluctuations assume that the current account acts as a buffer against temporary income shocks, facilitates consumption, and maximizes welfare. Large external imbalances can be a source of macroeconomic turmoil as well as impose restrictions on economic growth. Practically, there are many factors that may affect the current account balances of a country, some of which may be related to the state or conditions of the local economy and the other to various external factors. Hence, understanding how these factors work may help structure and implement macroeconomic policies.

On the other hand, the literature on current account determinants in oil-exporting countries appears roughly limited. [START_REF] Morsy | Current account determinants for oil-exporting countries[END_REF] examined the current account determinants in 28 oil-exporting countries. This study attempted to shed light on the effects of confirmed crude oil reserves, as well as crude oil production rates on the behavior of current accounts in oilexporting countries in addition to the effects of the fundamental macroeconomic variables.

They used Dynamic Panel techniques and hence their study found that factors -oil wealth, fiscal balance, oil trade balance, economic growth, and the age dependency ratio -are the main factors in determining current account balances in oil-exporting countries. Bems and Filho (2009) argue that oil-exporting countries differ from other countries in several dimensions regarding the current account state. Their arguments are that the fiscal balance in oil-exporting countries is dominated by fluctuations in oil revenues. While the nature of oil revenues is depleting, issues of equality between generations and facilitating consumption arise accordingly. [START_REF] Arezki | Global imbalances and petrodollars[END_REF] tested the current account dynamics of oil-exporting countries and found that fiscal policy has a strong impact on the external assets of oil states, which is superior to that of other countries.

Thomas and [START_REF] Bayoumi | Today versus Tomorrow-The Sensitivity of the Non-Oil Current Account Balance to Permanent and Current Income[END_REF] They found that long-term wealth considerations and changes in oil wealth revenues provide significant explanatory power for current account balances. They also found that the private sector can play a more important role than the public sector in the economies of oil-exporting countries. Consequently, decisions between time periods must be considered when analyzing movements in macroeconomic aggregates in the oil-exporting countries. [START_REF] Uneze | The determinants of current account balance in an oil-rich exporting country: the case of Nigeria[END_REF] A study by (Le and Youngho, 2013) investigated the impact of oil prices on trade balances in oil importing and exporting countries, through the oil and non-oil components of these balances. This study concluded that for each of the shocks of oil supply and oil demand, there is also a different and various impact on the trade balances of countries in terms of being a net importer or exporter or an economy with oil refining activities. (Rafiq et al 2015) their study investigated the symmetric and asymmetric effects of oil price shocks on trade balances in oil importing and exporting countries. Their study dealt with both short-and long-term interactions. Among other things, their study concluded that an increase in oil prices could boost the balance of oil trade in the oil-exporting countries yet reduce the non-oil trade balance.

Conversely, the decline in oil prices increases both the overall trade balance and the real balance of oil trade.

A study by [START_REF] Kilian | Oil shocks and external balances[END_REF] in which they first divided their sample into two parts (oil exporters and oil importers countries) and differentiates between changes in oil prices resulting from crude oil supply shocks and changes in oil prices resulting from each of global aggregate demand shocks and shocks to expectations for oil. They found that the combined effect of the three shocks explains roughly 89 percent of the fluctuations in the current account of oil exporters.

On the other hand, for total major oil importers, the corresponding quota was lower, but still significant. Such a finding has important implications. Whereas, for some countries differences in the oil trade balance can be compensated for by differences in the non-oil balance so that changes in oil prices do not have a one-on-one effect on the current account balances. The mechanism is just as changes in oil prices will have effects on income changes, which will lead to a change in the value of the local currency and thus an adjustment in the non-oil trade balance through a change in terms of trade exchange. Therefore, the response of the non-oil trade balance to changes in oil prices may have a limited impact on current account balances, as this paper has concluded.

Price crises and oil booms in the global crude market

Disruptions in the global oil market are occurring with great regularity (Guntner,2014) and each of these disturbances has led to widespread debates in both the public and academic arenas. In this regard, great efforts have been made to understand both the macroeconomics and the behavior of oil prices (Hamilton,2009). While crude oil remains an important factor in economic inputs, these frequent disruptions will drastically alter the behavior of oil prices at various times (Haugom,2016).

Changes in oil prices occur across many dimensions, such as expectations of political unrest in oil-producing countries, actual global economic activity, and technological innovations such as the development of exploration and production technologies. which would make it possible to have new quantities of oil at a lower cost (Huntington,2015). Within this framework, the world crude oil market is always subject to various structural shocks, which are reflected in market prices and transaction volume (Guntner,2014). Although crude oil is traded heavily in all regions of the world and is one of the most important commodities in physical and monetary terms, it is still very difficult to predict oil prices (Haugom et al,2016).

Early history of oil prices

Before 1973, oil prices were managed by the Texas Railroad Authority, and a relatively small role by the major international oil companies. Oil companies have pursued a strategy of stable prices since the global industrial economic growth increased the demand for oil. By 1973, reforms in OPEC member states ended the big corporations' control of oil prices.

Consequently, those reforms transferred control of the world's largest oil resources from international oil companies to OPEC countries. However, OPEC's control over oil prices was short-lived. The price increases associated with the 1973 oil embargo and the Iranian revolution in 1979 stimulated the emergence of new supplies, especially from the North Sea and American Alaska. High oil prices also impeded demand for oil as consumers adopted more efficient policies and procedures.

4.2.1.1

The two oil price crises of the 1970s During the sixties of the last century and until 1973, the price of oil was fairly constant, and it was determined by the major international companies that had a monopoly on the market. Until 1973, there was no difficulty in forecasting the price of crude oil, the price that was determined and published was Arab Light Crude, which is the reference price of the crude oil between medium and high quality produced in the Kingdom of Saudi Arabia. The prices of all materials are determined by this index and the price difference is determined, which considers their prices, quality, and marketability. This situation was largely an oligopoly which is characterized by complete control over the supply by the producers. Hence, prices were stable, as producers were able to regulate supply according to any fluctuation in demand.

The Organization of the Petroleum Exporting Countries (OPEC) was established in 1960. The main objective of this organization is to create a form of control in the oil market by establishing coordination between the various countries regarding the structure of contracts for the production of oil wealth. Nevertheless, control of the price of crude oil remained in the hands of multinational companies until 1973. Only the major companies controlled the production of crude oil in addition to their control over all post-production stages, as the operations of these companies were integrated within each other.

In 1973, with the October War, the oil market witnessed the first historic transformation of the global energy market. OPEC dominated crude oil prices and began publishing a price list every year, which is based on Arab Light as an indicator. Under OPEC's control, the price of crude oil rose from $ 2 a barrel to about $ 15 a barrel. However, during the same period certain events occurred which were not of much importance at the time but then led to important transformations in the following decades. In 1974 the International Agency for Energy (Robert McNally,2017) was created. A few years later, crude oil production from the Brent field in the North Sea began in November 1976. On the other hand, the year 1979 was marked by important political events in the Middle East. Then, and then, the Iran-Iraq War broke out in September 1980. These and subsequent events shaped the history of oil in the following decades. These events were seen as a serious and worrying threat to the flow of crude oil supplies to global markets. Oil companies began to increase and raise the levels of their inventories in their warehouses and refineries. This led to an increase in the demand for crude oil, which in turn raised prices. This led to an increase in the level of oil stocks in the consuming countries. Prices rose to $ 40 a barrel, prompting the producing countries to raise their production levels, as the Kingdom of Saudi Arabia reached the level of 11 million barrels per day.

By 1981 oil prices began to fall steadily and OPEC countries tried to maintain a high oil price by reducing their production, as by 1985 their production had fallen by less than 70 per cent compared with 1980. In 1986, Saudi Arabia adopted what is known as a net pricing system to restore its market share, when crude prices collapsed. Thus, by 1988 the OPEC pricing system was replaced by what is known as the commodity market pricing system, which is still in place today, where the London Stock Exchange contracted Brent crude, in addition the New York Mercantile Exchange contracted the West Texas crude. As a result, up to now, these crudes have influenced the contract prices of other types of crude.

The collapse of OPEC in the 1980s

In 1982, most of the world's oil companies reduced their purchases of crude oil from producing countries, particularly from OPEC countries. Thus, a new phase emerged for the oil market, which started in 1973 and ended with the rise of OPEC to control the world oil market.

As a result, a new crisis began in the oil market, which continued throughout the 1980s and led to OPEC losing any role in the market then, either for the organization itself or for its members.

Therefore, while facing the fact of large surplus stocks, OPEC countries have not been able to find a common strategy to adjust production in line with crude oil demand. As a result, amidst the effects of OPEC's own policies as well as the consequences of other developments in the oil market, two parallel markets were established, one at official prices and the other at spot prices. Thus, it became possible for two prices for the same type of crude oil to differ by a margin of $10 per barrel. Nevertheless, OPEC has attempted to remedy these circumstances by taking a series of measures, including lowering the official price and redefining production quotas for its members. Thus, in general, the first half of the 1980s was characterized by continued low crude oil prices due to a number of effects, including, for example: energy diversification policies in consuming countries, as oil refineries began to adopt new methods to improve refining margins In addition, the production started from non-OPEC members gained importance and competitivity in the international market, in particular production in the North Sea which had become a major role in the political and economic equilibrium of the oil world.

In 1985 the Kingdom of Saudi Arabia announced that it would cease playing the swing product to protect the record price. As well as abandoning the official price system and adopting a new pricing system based on net worth. After that, the international oil markets witnessed a state of complete freedom, after OPEC abandoned the production restrictions it imposed in order to defend the price level. The conditions for oligopoly no longer exist in the oil market.

The free market began to operate in the context of perfect competition between OPEC and non-OPEC producers. Market dynamics have changed what is known as the oligopolistic model that links price to supply. A competitive free market has been created.

Crude oil and finished products continued to be pumped into the market, but the market was no longer able to absorb any more quantities. Consequently, the price of products and crude began to decline, and an atmosphere of conflict and confusion was created in the market. As an alternative solution to determining oil prices in the context of the free market, Shell (United Kingdom) published a 15-day Brent contract in July 1986. In a short time, Brent crude became a tool. A reference in the London market, where all oil trading companies were based. After that, oil prices began to decline from the level of 30 dollars a barrel to the level of 10 dollars a barrel. This was the oil price counter-shock.

For the first time in more than a decade, the producing countries experienced a collapse in oil revenues, and it has had to make major cuts to its investment budgets and expenditures, moreover, the effect of these cuts extended to the economies of industrialized countries. Therefore, oil companies were forced to halt their investments in regions where production costs were above the new level of oil prices. It became clear to those interested and dealers in the oil market that the price of oil, which is determined based on the laws of the free market, has decreased to a level that allowed supply to change in line with the volume of demand, and in other words, this means the elimination of all the marginal fields whose production cost was higher than the price. However, many economists saw that this price level was not in line with the global economic equilibrium. It was also not compatible with the guarantee of future supplies and this, in turn, may mean that the free market was not compatible with the oil market.

Research indicates that the fears and the tense climate created by the price collapse in 1986 led to the taking of measures in the process of converting the physical market for Brent to a purely financial market (McNally,2017). In July 1988 the International Petroleum Exchange launched a Brent futures contract where this became the alternative solution instead of return to the official OPEC price system. However, the failure to reach an agreement to control production on the part of OPEC led to the complete abandonment of the official price system and thus its adoption Brent crude as a new standard price. Thus, most crude oil produced since that time by OPEC was priced by Brent crude system and the role of the countries is limited to determining the price difference to be applied to each of them.

It may be useful to note that this new pricing system has not completely eliminated between 100 to 120 dollars / barrel ( Carollo,2012) . Oil prices decreased during 2014, reaching their lowest levels since 2010.

The first half of the year witnessed limited fluctuations in oil prices, while the second half witnessed a sharp decline in prices. It should be noted that the decline in the annual growth rate of oil demand, as well as the abundance of global supplies, were the most prominent reasons for the decline in oil prices. Perhaps one of the reasons that led to this is the success in reaching the exploitation of unconventional oil and gas resources in the United States, which led to a significant increase in its total oil production and a net increase in oil supplies to a group of countries outside OPEC, which approached 2 million barrels / day in 2014. On the other hand, it should be noted that also, a number of other factors played an important role in the decline in oil prices, for example, the rise in the exchange rate index of the US dollar against other sovereign currencies, as well as the tendency of major crude oil producers to try to maintain the volume of their production to ensure their market share, instead of trying to raise prices by reducing production, which created a gap between demand and supply. Also, European markets and China decreased demand for crude oil. Speculation has played a big role as well, considering the prevailing geopolitical factors in the Middle East.

Oil prices continued to decline during 2016, reaching less than their levels since 2005, when the price of crude oil was around $ 40 / barrel. The influence of all the interrelated factors that led to the decline in global oil prices has continued. As global supplies of crude oil continued to be abundant on the one hand, and OPEC on the other, maintained production levels to ensure their market shares. At the same time, the slowdown in global oil demand in general, and Chinese and US demand, both were continued as well. While the US economy has declined significantly, and the Chinese government has taken a new approach in recent years towards promoting China's transition to an economy supported by domestic consumption instead of the export sector, which cast a shadow over the outlook for oil demand. Among the other important factors as well, is the continued increase in global oil reserves of all kinds, especially in the United States. As well as the rise in the exchange rate of the US dollar relative to the major currencies, which contributed to lowering oil prices for fear of high inflation rates.

In this context, the US dollar reached its highest level in 14 years at the end of 2016, i.e. since December 2002 (OPEC annual report). On the other hand, developments in the pattern of price differentials, represented by the widening of the differences between the prices of light and heavy oillow sulfur and high sulfur content-. Where this can be attributed to a large extent to the decrease in the supply of light oil in the global market, especially from Libya.

The economic impacts of global crude price changes

For oil-exporting countries, the oil price mechanism is extremely important for determining the volume of export earnings, which in turn affects external balances. On the other hand, oil-producing countries are often subject to boom-and-bust cycles. In addition to the role of changing oil rents in bringing about real changes in the economy, these countries face significant challenges in how to efficiently manage oil revenues. The large gains during oil booms often undermined the national economy, by restricting the domestic protection structure -open-door policies -and pursuing expansionary demand procedures, as well as cheaper foreign exchange rates. Hence, this allowed for a significant increase in imports and undermined the desirable economic diversification (Mehrara,2006).

Oil price impacts on the global economy

A large amount of the literature indicates an important relationship between oil price movements and economic activity, especially regarding the production. The impacts on net oil importers and oil exporters are expected to be different (Jimenez-Rodriguez and Sanchez, 2005). However, oil price changes driven by the global aggregate demand shock may have a completely different effect from the oil price change driven by the increase in specific oil demand, linked to concerns about future oil supplies [START_REF] Kilian | Not all oil price shocks are alike: Disentangling demand and supply shocks in the crude oil market[END_REF]. Several studies have emphasized the importance of identifying the main sources of oil price shocks, in order to study their macroeconomic consequences. Hamilton (2009) argues that while historical oil price shocks were primarily linked to material supply disruptions, the 2007-08 rise in prices was driven by strong global demand and recession global oil production. Then he concluded that despite the different causes, the consequences of the increase in oil prices on the economy were very similar to those observed in previous periods. Understanding the factors driving crude oil prices is essential to assessing their economic impacts. Negative oil supply shocks are an external shift in the oil supply curve along the oil demand schedule to the left, leading to lower oil production and an increase in oil prices. Often a good example of this shock is the disruption in oil production caused by geopolitical tensions in the Middle East. In contrast, the positive shock to oil demand is driven by global economic activity. And represented by the upward shift in the oil demand curve, along the oil supply schedule on the right. Consequently, this shock increases oil production and prices. Here an example might be the rise in demand on the back of strong economic growth in emerging economies such as China and India.

While some works consider that oil price shocks are exogenous and that they are the result of supply deviations, [START_REF] Kilian | Not all oil price shocks are alike: Disentangling demand and supply shocks in the crude oil market[END_REF] suggested that there is an internal model driving changes in oil prices. As this model consists of three variables including oil production, real economic activity -using the business cycle index -and oil prices. He used this model to dismantle three different shocks that could have an impact on the price of crude oil. Kilian, argues that the global demand shock may have direct effects on the economy in addition to indirect effects through the price of oil and the prices of other industrial commodities. He concludes from his study that the increase in precautionary demand for oil leads to an immediate, continuous, and large increase in the real oil price. The increase in aggregate demand for all industrial goods leads to a somewhat later, but continuous increase in the price of oil, which is also large. Meanwhile, disruptions in oil production led to a slight, transient increase in the real price of oil during the first year. The basic idea prevailing is that the price of oil changes exogenously, ceteris paribus. This hypothesis has been invalidated by the work of (Kilian,2009), which confirms that the price of oil is endogenously in relation to the macroeconomic aggregates of importance. As summarized by (Thomas Cooley and Leroy, 1985) and also according to (Kilian,2008), this means that without knowing what caused the rise in oil prices in the first place, it will be impossible to accurately predict the effects of higher oil prices. Historically, Kilian, claims that the real price of oil responds to many shocks whose composition evolves over time. An example of this is the oil shock of 1980/79. Since there is no evidence of disruption in global oil supplies in 1978/1979, the declines associated with the Iranian revolution were compensated for by an increase in oil production elsewhere. However, there was supply disruption in 1980 linked to the outset of the Iran-Iraq war.

In addition, Kilian noted that the years (1978,1979,1980) were characterized by repeated large positive shocks to aggregate global demand. There was also a significant unexpected increase in the specific demand for oil in 1979. This corresponds to the fact that the Iranian revolution and the Soviet invasion of Afghanistan, all of which raised concerns about the future availability of oil supplies from the Middle East. Consequently, he, believes that the effect of an unexpected expansion of aggregate demand on global real economic activity is a very persistent and very important effect. Likewise, aggregate demand expansions lead to a large and continuous increase in the real price of oil. It also reinforces his conclusions that oil supply contractions in one region led to increased production in other parts of the world at the same time. Thus, they conclude according to their study that unexpected disruptions in oil supplies have only a slight positive effect on the real price of oil. However, he, added that the clear big increase in the real price of oil after foreign political events in the Middle East lies in the sharp increase in the precautionary demand for oil supplies.

On the other hand, and in the same context, they point out in their study that the sharp decline in the real price of oil following the collapse of the OPEC cartel in late 1985 is due to the decrease in the specific demand in the oil market, more than the increase in the direct impact of the increase in Saudi oil production. It is likely that this was due to the perception that the OPEC collapse was irreversible, which also led to a decrease in the prudential demand during that period. This decline was partly reversed in 1978, as OPEC attempts to reunify itself.

In the same context, [START_REF] Kilian | Not all oil price shocks are alike: Disentangling demand and supply shocks in the crude oil market[END_REF] points out that the sharp rise in the real oil price in the period 1990/1991 after the invasion of Kuwait was almost entirely due to the increase in precautionary demand. However, the oil supply disorder had some effect on the oil price in the early 1990s.

This effect is small. The disproportionate decline in the forecast demand in the oil market, in the wake of the Asian crisis in 1997/1998 -when the price of oil fell to an all-time lowindicates that in that period all demand vanished except for the prudential demand. After the recovery of oil prices starting in 1999, Kilian points out that there is clear evidence of a decline in precautionary demand associated with the events of 9/11. Moreover, the sharp rise in oil prices in 1999/2000 was not driven by total global demand or even by OPEC efforts to coordinate production, but again, by the special factors related to oil demand. He also adds that it is interesting to note that the rise in oil prices since early 2002 is almost entirely due to the increase in global economic activity that began in 2001.

Their findings [START_REF] Cashin | The differential effects of oil demand and supply shocks on the global economy[END_REF] indicate that responses of oil exporters to price fluctuations are mostly driven by real exchange rate movements in these countries. As the real exchange rate tends to rise in most of these countries, which limits the effect of high international oil prices on local markets and the government. (Cashin,2014) believes that effective responses to the effective exchange rate vary widely across countries. This can be attributed to the large number of factors that may affect exchange rates, which may include the degree of countercyclical volatility of monetary policies pursued across oil-exporting countries, their exchange rate regimes and the degree of trade and financial openness. On the one hand, this difference can be attributed to the extent to which non-linear factors are present in production processes and labor markets -such as rigid money wages -and finally, the extent to which interest rate adjustments are generally in line with the ongoing effects of world oil prices. (Cashin,2014) notes that there is only importance to differentiate between oil importers and exporters, in the case of the effects of supply-driven oil shocks, as while importers suffer from a long-term decline in economic activity as a response to the rise in oil prices due to the lack of oil supply, the effect Positive for oil-exporting countries, especially those with large proven reserves. There is no difference between countries when it comes to the demand side of the international oil market as a response to oil demand disruptions, and almost all countries are experiencing an increase in real production and facing inflationary pressures. Therefore, several studies assume that causation in the oil market extends from price to production. The spot market also reflects the current configuration of demand and supply shocks for oil at any time. Based on the analysis of [START_REF] Kilian | Not all oil price shocks are alike: Disentangling demand and supply shocks in the crude oil market[END_REF]; oil price fluctuations can be classified into structural shocks to the demand and supply of oil -not all oil shocks are the same-, thus, different structural shocks may lead to different internal responses of oil producers.

A study by (Guntner,2014) indicates that there are no dynamic adjustments to production, meaning that with regard to OPEC's institutional framework and its role in the global oil market, crude oil production at the country level hardly responds to any kind of oil demand shocks. [START_REF] Kellogg | How oil-price shocks affect producers and consumers[END_REF] argues that production from existing wells is mainly determined by physical constraints -such that capacity decreases with reservoir pressure rather than oil prices -. According to (Guntner,2014), the increase in demand for oil -linked to the global business cycle -leads to a temporary increase in total OPEC production and a slight increase in total non-OPEC production. In fact, it is dominated by a few large producers, such as Saudi Arabia and Russia. As for the expected demand shock, it is followed by a decrease in total OPEC production in contrast to a large non-OPEC expansion.

In this context, (Rafiq et al, 2015) indicates that the effect of increased demand for oil is transmitted to international oil prices and does not significantly affect the operations of increasing production in the exporting countries. Even if this happens, it will be part of the future planned investment, and it will not be in the foreseeable future, as a proportional and immediate response to changes in the oil market.

The oil producers are price-taker, they are producing to their full potential. Thus, the total gain from export volume may be negligible. Crude oil is heavily traded around the world and is the most important energy commodity in both physical and monetary terms. The behavior of oil-producing countries varies across several dimensions, which are represented in ownership patterns, mechanisms, and costs of extracting crude oil reserves, and also the importance of oil exports as a source of government revenues and foreign currencies. Thus, producers may respond differently to an increase in oil demand in order to maintain market share or the level of oil prices. In general, for the oil-exporting countries, the most pronounced impact of higher oil prices is positive. This effect can be described as an impact on revenues, as it is likely that increases in oil prices will lead to improvement in terms of trade of oil-exporting countries, leading to improved trade balances as well as an increase in both consumption and investment. The increase in oil prices enhances the real balance of oil trade in the exporting countries, due to the impact of revenues. However, it reduces the non-oil trade balance, which may arise due to higher prices or the effect of government spending. On the contrary, the decrease in oil prices increases both the overall trade balance and the real balance of the oil trade. This positive scenario occurs due to the increase in exports in response to the increasing demand from the economies of the oil importing countries, or what is known as the demand effect (Rafiq et al, 2015).

4.3.2

The impacts of global oil price decline Exporters of non-renewable goods such as oil and gas are a major part of the global economy. They are a mixture of high, middle, and low-income countries, which account for a significant proportion of global GDP and global exports and an important destination also for foreign direct investment (FDI). Oil wealth has enabled some of these countries to accumulate significant assets and these assets provide a buffer in the event of shocks and allow these countries to share the benefits of depleted natural resources between generations. In a number of these countries, these assets have been placed in sovereign wealth funds and invested abroad.

Hence, resource wealth should facilitate financing investment for sustainable growth while allowing government to provide basic social services. However, many resource-rich countries have struggled to take advantage of these resources to raise economic growth and living standards, making them victims of the so-called resource curse. When governments rely heavily on revenues from natural resources, they are subject to unpredictable price declines and rises. Hence, if returns are not managed appropriately, this volatility can lead to disappointing economic performance.

For example, economic activity decreased on average by 1 percent per year in several countries (Iran, Libya, and Saudi Arabia) during the oil price collapse in the 1980s, due to a collapse in public spending by nearly 30 percent. On the contrary, several countries (Angola, Azerbaijan, Equatorial Guinea, Kuwait, and Libya) experienced robust growth during the commodity price boom of 2000--2008 -driven by nearly tripling public spending in real terms -but in some cases not Achieve sufficient reserves to protect their economies from falling prices.

The past few decades, including the recent oil boom, have shown that fiscal policy plays a crucial role in managing the effects of oil price volatility on the domestic economy, but this can be a difficult challenge for many countries. In particular, if public spending growth tends to accelerate during price rises and lows during price fluctuations, the pro-cyclical response may intensify volatility in the economy and may impede economic growth.

Moreover, although some countries accumulated large fiscal reserves during the 2000-2008 revenue boom, which helped them manage the downturn since 2009, many other countries may have to endure severe fiscal contractions due to insufficient buffers. Against this background, several scholars (IMF, 2012) argue that fiscal policies in commodity-exporting countries must take into account the issue of uncertainty. So that appropriate fiscal buffers, institutional frameworks and tax policies can stabilize public finances, along with improvements in public investment management and fuel subsidy reform. Thus, it can ensure that countries are able to benefit from natural resources to achieve higher growth in the long term.

The period between June 2014 and March 2016 saw the average price of Brent crude oil drop by about 65 percent. Although there is no consensus in the literature on the fundamentals of this low oil price, most studies have found that the drop in oil prices was driven by a combination of several factors: (Ӏ) the unexpected increase in oil production due to the rise in US shale oil and (Ⅱ) increases In the production of OPEC member countries and NON-OPEC countries, and (Ⅲ) a significant slowdown in the growth of global oil demand, especially from Europe and the Asia-Pacific region. (Ⅳ) The rise in the exchange rate of the US dollar.

Given the importance of oil revenues to many oil exporting countries, there are significant implications of lower oil prices on their economy. In the first place, the major oil-exporting countries are exposed to the oil market, as there is a close correlation between GDP and government revenues at the oil price. For example, many countries in Sub-Saharan Africa and North Africa show significant economic exposure to the oil market. Combined with limited sovereign wealth resources and per capita reserves, this heavy reliance of the government's budget on oil prices leaves these countries extremely vulnerable. Consequently, countries with a very high share of oil in total exports are more vulnerable to the effects of lower oil prices. A 60 percent drop in the oil price could reduce sub-Saharan Africa's GDP by about 8.5 percent (European Commission, Joint Research Center, 2016), and other governments may decide to increase or decrease public spending, or their tax rates.

The decline in international oil prices had major repercussions on public revenues in oil-exporting countries, as the exporting countries face major shocks, because the weight of oil is large in their economies and budgets. According to (Fiscal Monitar Reoprt, IMF, 2015), weaknesses were accumulating before the price decline began (2014), and the revenues generated by previous price hikes were directed towards covering the large increases in current and capital expenditures. As a result, the price of oil equivalent in the general budget has increased in most of the exporting countries in the Middle East. Consequently, most of the exporting countries need to raise prices to higher levels in order to cover expenditures in the budget. One of the main elements of the impact of the drop in oil prices on the public finances is in the area of fuel subsidies and the energy tax structure. The monitoring report concludes that the greater the transmission of changes in fuel prices to consumers, the lower the fiscal savings.

The windfall gains in terms of trade and income, reflect the direct impact of changes in trade prices on current accounts (shifting greater income while maintaining constant quantities), mainly from major oil exporters (for example, Russia and Saudi Arabia) to net oil importers such as the United States, China, Japan, and Germany. The impact of direct income also contributed to the widening of the deficit of some oil exporters. The fall in oil prices in late 2014, as well as the fall in the prices of some other commodities, had mixed effects on the global pattern of current accounts. Whereas, after several years of relative stability, the price of oil fell sharply in late 2014. The prices of natural gas and other fuels have also decreased.

Exports of oil and natural gas are important to the oil-exporting economies. Consequently, the implications of lower oil prices on the current accounts of oil-exporting countries are clearer and are likely to be greater, in the short term. Immediately, exchange rate responses to the terms of trade shock may tend to cushion the impact on the current account. Also, oil-related income gains (or losses) tend to catalyze increases (or decreases) in expenditures that will partially offset the initial impact on the current account. The size and speed of this countervailing effect may depend on expectations for the duration of the oil price decline, and whether policies allow lower prices to pass for private consumers. When consumers receive unexpected gains and decide that they are permanent, they are expected to treat them as any other source of income.

When the public sector instead receives a gain (loss) in income from lower oil prices, the effect on the current account will depend on the public sector's decision to compensate or realize a gain (loss) in its own incomes. In most of these cases, the imbalances come mainly from the oil trade balance of these countries, driven by lower oil export revenues. There may be exceptions, as in the case of Russia, where the current account surplus has increased, despite the significant decline in oil export revenues. In general, the International Monetary Fund reports indicate that the shifts in the current account in 2015 for oil-exporting countries are related to changes in the trade balance of oil, but do not have a general correspondence with the current account gaps identified for the year 2014. Therefore, bridging these gaps will require adjustment and treatment of the long-term drivers of those gaps.

Moreover, Saudi Arabia, Kuwait, Qatar, the Emirates, and Russia, these economies have achieved large current account surpluses in recent years. Considering this, although these economies together are not a large part of global GDP, their behavior at a time of a major oil price shock is appropriate to the global pattern of current accounts and capital flows. However, among these countries, there is a sharp contrast between Russia and GCC countries in terms of structural characteristics, exchange rates, and exchange rate policies, fiscal policy, and the adjustment of the non-oil current account. The economies of the Gulf Cooperation Council countries, with fixed exchange rate regimes, ran huge current account surpluses and accumulated large reserves. Given the structural characteristics of their oil-dominated economies, the external adjustment is a matter of fiscal policy, and the adjustment in domestic demand does not need to be accompanied by a major adjustment in the rate of return on a fixed income. For these economies, including Saudi Arabia, the spending adjustment appears to have been much less than the loss of oil revenues, and thus current account surpluses have fallen sharply. On the other hand, Russia has achieved current account surpluses, albeit small in the context of flexible exchange rate standards. While it is suffering from the impact of sanctions and a decrease in the supply of external financing, Russia has managed a very large adjustment in the non-oil current account despite the loss of oil revenues.

Channels of oil price transmission

In the literature on energy economics, various channels have been advanced to explain how oil price changes are transmitted and affect the macroeconomy. Though these channels have been widely documented for the case of oil importing countries (Hamilton, 2003;[START_REF] Baumeister | Forty years of oil price fluctuations: Why the price of oil may still surprise us[END_REF], little is known about these channels in the case of oil-exporting countries [START_REF] Emami | Oil income shocks and economic growth in Iran[END_REF][START_REF] Aleksandrova | Impact of oil prices on oil exporting countries in the caucasus and Central Asia[END_REF][START_REF] Alekhina | Impact of world oil prices on an energy exporting economy including monetary policy[END_REF]. By surveying economic theories and empirical studies, four principal channels can be advanced to explain how oil prices affect economic activity.

Exchange rate channel

The effect of oil prices on exchange rates in the medium and long term is derived from the terms of the trade channel and wealth or financial channel. For all economies in which oil plays an important role, the oil shock affects the terms of trade. The effect of oil prices is transmitted to the non-traded commodities and the real stock exchange. As for the wealth channel, a positive oil shock transfers relatively high wealth from oil importers to oil exporters, which leads to an appreciation of the currency in oil-exporting countries (Nikitopoulos et al 2010).

In this context, (Amano and Van Norde ,1998) construct a framework for capturing the continuing impact of oil prices on long-term real exchange rates through the channel of trade exchange. (Cashin et al, 2004) found that trade models -such as purchasing power parityshow limited explanatory power in terms of the effects of commodity prices on exchange rates in 58 commodity-exporting countries. In contrast, [START_REF] Buetzer | Global exchange rate configurations: do oil shocks matter?[END_REF] examined how different oil shocks affected the exchange rates in 44 countries and found that oil prices significantly affect exchange rates through the trade exchange channel in both oil-exporting and industrialized countries.

In addition, changes in oil prices could have impacts on international portfolio decisions and the trade balance. Consequently, oil-exporting countries will experience a transfer of wealth if the price of oil increases (Benassy et al, 2007). The main channel through which the exchange rate affects trade is the diversion of spending. (Obstfild and Rogoff, 2007;Gervais et al., 2017). For example, they argue that a decrease in the nominal value of the local currency will make imports more expensive than domestic goods and thus reduce imports.

Imports may also decline due to a decrease in real income. It would also make exports of traditional goods cheaper relative to the rest of the world, or raise the price received by the exporters, which would stimulate exports. Thus, this means that the effect of volume depends on the transition from exchange rates to relative prices, and from relative prices to trade volumes. Oil exporters have several features that may limit the effect of the exchange rate on trade volumes. For example, the price of oil is set in US dollars internationally and most producers face a completely elastic demand curve. Non-oil exports also make a small contribution to the export basket, especially in less diversified oil-exporting countries.

Moreover, high dependence on imports and limited substitution possibilities reduces the responsiveness of import volumes to relative prices. More specifically, there is no room for the real exchange rate to affect the volume of oil exports. It can also be said that-to varying degrees-there is no tradable sector other than oil and gas, and to a lesser extent oil-derived products, which in turn depend on subsidized energy. Most importantly, oil and gas prices are set in the international markets. Hakura and Billmeir (2008) found that changes in exchange rates in oil exporters are fully translated into local currency rates. Most oil-producing countries do not have pricing power and are producing this differentiated product at full capacity.

Moreover, domestic consumption shows distorted price signals, as domestic prices are lower than international levels before taxes, in many oil-producing countries despite the drop in oil prices. Moreover, the attempt to address current account imbalances through non-oil exports is limited. This is because non-oil goods and services contribute a small share to the export basket.

Thus, it may require a large and unrealistic change in its value to have a tangible effect on the current account balance. Also, for non-diversified economies that contain large import components, the exchange rate passing in general reduces the extent to which currency depreciation can translate into real changes in the exchange rate.

On the other hand, the effect of changes in oil prices can be transmitted to the macro economy through the exchange rate. A distinction can be made between two channels that reflect the transmission of this effect, namely: real exchange rates and nominal exchange rate adjustment. [START_REF] Amano | Oil prices and the rise and fall of the US real exchange rate[END_REF] presented a model that determines the real exchange rate internally as the ratio between tradable and non-tradable goods, with a proportional increase in the prices of tradable goods corresponding to a real decrease in value.

The main result of this work was that the local currency would witness a real appreciation in the event of an increase in oil prices. This is if the non-tradable sector is more dependent on oil compared to the tradable sector. Conversely, higher oil prices lead to a real depreciation of the currency in economies that rely less on oil for the tradable sector. This type of transmission, it passes through relative prices, thus does not directly affect the nominal exchange rate.

Nevertheless, the effect of increased inflation may have long-term effects on the path of the nominal exchange rate in terms of purchasing power parity. This is because the relative increase in domestic relative prices, at least for tradeable goods, will lead to a nominal depreciation.

Also, from another important angle, the labor market characteristics of most oilproducing countries can reduce the scope of competitiveness gains. Some countries use an international flexible labor offer, which works in non-tradable sectors. Similar to countries that use primary commodities purchased at international prices as inputs in export production, and as the wages of expatriate workers will remain at international levels. Hence, devaluation necessitates an increase in wages in local currency, thus eliminating any cost advantages. In contrast, a stronger currency would facilitate the payment of lower nominal wages to migrant workers. And because in many of these countries, a large proportion of citizens work in the public sector, which is used as a mechanism for wealth sharing. Consequently, according to [START_REF] Beckmann | Oil prices and effective dollar exchange rates[END_REF], this will make the wages reserved for citizens in the private sector very high, as it takes a significant devaluation in order for companies to become competitive. And because this would result in a loss in purchasing power, it would put great pressure on the public sector to raise nominal wages.

Consequently, citizens in the private sector would receive higher nominal wages.

On the other hand, an increase in the currency value may lead to a smaller increase in nominal wages, but this may be a slow adjustment and there may be a downward rigidity of nominal wages. Ultimately, there is limited opportunity to switch spending between imports and domestic products, or between tradable and non-tradable goods. On the other hand, a weaker local currency can reduce imports through the income effect. However, this effect may be weak if the relatively large public sector is forced to increase nominal spending. If public sector spending is smoother than private sector spending, the relative importance of government in oil-exporting countries will make the income effects less than in other countries. Regarding the effect of exchange rates on the balance of trade, in theory the sign of the effect of the exchange rate on the balance of trade and the current account is ambiguous. This is due to the amount of competition and price effects. A depreciation of the currency will improve trade balances only if the effects of volume outweigh the effects of prices. This means, that there will be less imported quantities in exchange for higher exported quantities, and on the other hand, paying more for imports and getting less for exports. In this case, volume effects will overcome the price effects.

Government budget channel

Oil prices are highly volatile and unpredictable, which poses significant challenges for policymakers in oil-exporting economies. The shocks to oil exporters are often large and ongoing. Booms and busts can involve price movements of up to 40-80 percent for up to a decade [START_REF] Cashin | How persistent are shocks to world commodity prices?[END_REF]. Even more so in recent decades when oil prices have been highly

volatile [START_REF] Arezki | Global imbalances and petrodollars[END_REF]. The macroeconomic performance of oil exporters tends to move with commodity price cycles (IMF, World Economic Outlook,2012). Oil price shocks, whether positive or negative, can have a direct impact through exports and by affecting the terms of trade of a country, on the rest of the economy. Often, economic activity and external and financial budgets deteriorate (improve) during oil price rises. These price fluctuations can have significant impacts on growth and investment.

One of the main transmission channels appears to be through the government budget, especially for oil-exporting countries, where the oil sector provides a large proportion of government revenues. Indeed, oil price shocks tend to cause large fluctuations in fiscal revenues and, therefore, very large changes in government spending. Empirical studies [START_REF] Mehrara | The relationship between stock market and macroeconomic variables: a case study for Iran[END_REF]Hausmaan and Rigobon, 2003;Devien and Lewin, 2004) for oil exporting countries indicate that oil price shocks affect growth mostly through public spending.

Moreover, the oil shocks appear to have had adverse effects on long-term growth. This is even though some countries have been able to successfully walk through the disruption of oil price cycles and achieve sustainable growth (Norway, for example), but many of them have not. For example, after the boom and bust in the late 1970s, many oil-rich countries endured a long period of low or negative growth, and in some cases GDP per capita in the late 1990s was at or below 1970 levels, (IMF,World Economic Outlook, 2015). Recently, economic growth accelerated in many oil-rich countries during the first decade of the twenty-first century, supported by a large boom in basic commodities. Studies also indicate that oil-rich countries [START_REF] Adler | Commodity price cycles: The perils of mismanaging the boom[END_REF] during periods of oil boom and depression, although they maintained a pegged exchange rate and did not accumulate sufficient financial reserves, grew as quickly as possible during booms, nevertheless, they suffered more from others after the 2011 price crash.

Stabilizing economic activity is a major challenge in resource-rich countries due to the high degree of uncertainty about commodity price shocks. As discussed in (Fiscal Monitor report, IMF, 2015), fiscal policies can reduce production volatility and, also have the benefit of increasing long-term growth. The high volatility of fiscal revenues in resource-rich economies indicates that the role of fiscal policy in achieving these goals is more important, but also more difficult. There are two ways to measure the success of fiscal policymakers in acting in a way that mitigates the effects of cyclical stocks. The first concerns the responsiveness of fiscal policy to the business cycle in the non-resource sector.

The second approach measures the response of the growth rate of public expenditure to annual changes in commodity prices. One of the main policy challenges is to reduce the responsiveness of spending to resource prices from one year to the next in order to protect macroeconomic stability [START_REF] Céspedes | Was this time different?: Fiscal policy in commodity republics[END_REF]. Evidence suggests that fiscal policies in resource exporting countries have not stabilised on average, in particular that government spending growth was positively linked to resource prices in the sense that it was cyclical as it increased when commodity prices rose and decreased when prices fell [START_REF] Arezki | Resource windfalls, macroeconomic stability and growth: the role of political institutions[END_REF]. To some extent, this is expected due to the large resource price shocks and the uncertainty about their persistence and impact on financial equilibrium. However, the strong response of expenditure to prices means that fiscal policy can exacerbate rather than mitigate the impact of commodity price volatility on the economy.

In short, governments tend to soften the fiscal position by strengthening the domestic non-resource economy and tightening the fiscal stance when the economy weakens. Moreover, commodity exporters tend to be more cyclical than other emerging economies. As shown in the literature, pro-cyclical fiscal policy can dampen economic growth. Fiscal Monitor Report, 2015 shows that increased financial stability would boost developing economies 'long-term annual growth rates. [START_REF] Van Der Ploeg | Volatility and the natural resource curse[END_REF], also showed that volatility harms growth among commodity exporters through volatile government expenditures. These results suggest that higher pro-cyclical growth in resource-rich economies could partly explain the countries' long-term weak growth performance. There are several reasons why fiscal policies are pro-cyclical in the face of unexpected fluctuations in commodity prices. In part, this reflects the persistence of shocks exacerbated by pro-cyclical inflation by financial markets [START_REF] Gavin | Fiscal policy in latin america[END_REF]Riascos and Vegh 2003). Studies in this regard indicate that if there is excessive optimism, countries may react to unexpected price gains by increasing expenditures excessively, requiring large adjustments once price dynamics are reversed, leading to procyclical policies [START_REF] Alesina | Why is fiscal policy often procyclical?[END_REF][START_REF] Tornell | The voracity effect[END_REF]. One way to protect the budget from this cyclical trend is to use resource revenues to save for future generations, but it can also serve the purpose of stabilization, while allowing money to be released when the economy the faces an adverse shock.

On the other hand, researchers stress the importance of fiscal policy -irrespective of non-oil revenues -as the government will allocate oil money either in spending or in accumulating foreign assets. Thus, fiscal policy is a critical factor while trying to control the effects of oil prices or terms of trade. Moreover, many studies have indicated that there is evidence of the importance of government spending -conditional on the volume of revenuesin the current account adjustment of oil-exporting countries. In addition, research shows that fiscal expansion during the oil boom can exacerbate macroeconomic volatility and show the effects of Dutch disease, especially if spending is directed towards non-tradable goods [START_REF] Arezki | Global imbalances and petrodollars[END_REF]. Bems and Filho (2009) also argue that the fiscal balance of oil-exporting countries is dominated by fluctuations in tax revenues related to oil exports. Because oil revenues come from the sale of a depleted resource, the transfer of wealth from one generation to another plays an important role in ensuring intergenerational equity. This is therefore related to the strength of the current account, which is more volatile than in the case of non-oil countries. According to [START_REF] Mehrara | The asymmetric relationship between oil revenues and economic activities: The case of oil-exporting countries[END_REF], it is in most oil-exporting countries that oil revenues are paid directly to the government and the government thus becomes the channel of these revenues -revenues related to exploration costs, export taxes, corporate taxes and the profits of public oil companies -into the economy. Therefore, the effect of these returns on the overall economy depends on the saving and investment behaviour that these returns stimulate.

Dutch disease channel

The well-known phenomenon of "Dutch disease" occurs if some of the windfall resources are spent on non-tradable goods whose increased production crowds out tradable sectors (Corden and Neary,1982). The mechanism is an appreciation of the real exchange rate (the relative price of non-traded goods), and the counterpart in the balance of payments is a deficit in the non-resource sector financed by resource exports. The impact of the "Dutch disease" is expected to be mitigated if there are unoccupied resources in the economy. In this case, higher spending may lead to the use of inactive labour rather than the withdrawal of labour from the traded goods sector. Then there is an increase in income, which increases imports rather than reducing non-commodity exports (Van der Ploeg and Venables,2012).

In line with this classic 'Dutch disease' theory, higher oil prices usually lead to a change in the economic structure (sectoral adjustment) in oil exporting countries, making economic activity more concentrated in the oil industry. It is also argued that higher oil and gas revenues lead to an appreciation of the local currency, which may reduce exports of goods and thus weaken the competitiveness of local production in the long run. Together, these two effects will lead to a slowdown in economic activity.

Resource curse channel

This phenomenon indicates that economies dependent on natural resources tend to have lower economic performance than those without natural resources. [START_REF] Frankel | The natural resource curse: a survey[END_REF] considered six arguments that could explain this phenomenon. First, long-term trends in energy prices (for example, energy prices can go through large phases of price declines). Second, the abundance of natural resources can be a source of armed conflict, political instability, and corruption (Lei and Michaels,2014). Thirdly, fluctuating commodity prices lead to excessive macroeconomic instability due to the real exchange rate and government spending, leading to unnecessary costs. Fourth, the rents associated with natural resources can be a source of institutional weaknesses, such as a lack of rule of law and decentralized decision-making. Fifth, high oil price volatility increases volatility and uncertainty, which negatively impacts investment and economic growth in oil-exporting countries. Finally, the abundance of natural resources not only reduces incentives for non-oil sectors but can also be a dead end for some sectors [START_REF] Humphreys | Escaping the resource curse[END_REF]. [START_REF] Auty | Resource abundance and economic development[END_REF] explained this by pointing out that an abundance of natural resources can reduce the potential benefits of skill and human resource accumulation.

Relationship between oil price and current account balances

There is a common idea in the literature that studying the impact of oil shocks on the external accounts -current account, trade balance, net foreign assets -of oil producers is complicated, due to the dual purpose of oil revenues. Where this role is to achieve both stability and preventive savings. Oil shocks could have a countercyclical effect on the current account if oil revenues were used to increase consumption or spent to finance domestic investment. On the other hand, it can also have an inflationary effect on current account balances if they are only used for precautionary savings. In addition, many studies have addressed the issue of income management in several other ways. The permanent income hypothesis shows that open economies that produce depleted natural resources are expected to provide most of the unexpected gains overseas in order to facilitate their consumption, preserve resource wealth, and ensure intergenerational equity. There are other potential channels operating under the precautionary impetus that could generate significant additional savings. A common interpretation of this channel is that oil exporters may view the increase in oil prices as temporary, so oil exporters need to make precautionary savings in response to future uncertainty [START_REF] Bems | The current account and precautionary savings for exporters of exhaustible resources[END_REF].

Windfall gains in oil revenues can also be seen as a growing source of investment financing. This may be consistent with the notion that unexpected resource gains could represent an opportunity for petroleum exporters to expand sources of financing for the investment projects needed to ensure the continuous flow of consumption in a timely manner (Hartwik, 1977;[START_REF] Solow | On the intergenerational allocation of natural resources[END_REF]. Permanent income assumptions assume that consumption will change with change in permanent income rather than total income. Thus, the response to all income may involve a group of agents responding to both permanent and transitory sources of income [START_REF] Campbell | International evidence on the persistence of economic fluctuations[END_REF]. When all incomes fall, oil-importing countries can maintain their current level of aggregate consumption by reducing domestic savings. As they have become net borrowers to offset the drop in domestic savings, they maintain their consumption levels and continue to import more goods and services. This, in turn, leads to a deterioration in their current trade balances. Exactly the same forces work for oil-exporting countries if you view income flows as temporary and not permanent or continuous sources.

They will decide to invest their new resources or income abroad rather than spend more on domestic goods and services. When a country spends less than its temporary income compared to its permanent income, movements in oil prices can cause changes in net savings and thus current account imbalances [START_REF] Huntington | Crude oil trade and current account deficits[END_REF].

Recent literature indicates that countries with large production sectors tend to have higher current account balances. Higher oil revenues tend to stimulate savings more than investment (Cheung et al, 2010). This result has been supported by relatively recent trends, according to which oil producers spend less than their oil revenues, which has improved their current accounts, a trend confirmed by numerous studies (IMF, 2006;Cheung et al, 2010;[START_REF] Arezki | Global imbalances and petrodollars[END_REF].

On the other hand, there are other factors which have aroused increasing interest in the analysis of external imbalances, for example in the level of financial development of countries, where there is an explanation that focuses on the tendency of emerging economies and oil producers to bypass their inefficient financial markets by exporting excess capital to countries with more developed financial markets [START_REF] Bernanke | The global saving glut and the US current account deficit[END_REF][START_REF] Mendoza | Financial integration, financial development, and global imbalances[END_REF]. Studies indicate that financially developed countries are more likely to invest in risky foreign assets with high returns, while countries with low financial development prefer to hold non-advanced foreign assets.

In contrast, another study (Vermeulen and Haan,2014) has shown that financial development, as measured by the ratio of domestic credit to private sector, affects aggregate value as well as the net composition of foreign assets. The impact of financial development depends on financial and trade openness as well as the legal system of the country.

Thus, financial development may lead to a greater increase in savings than in investment. A study [START_REF] Allegret | Current accounts and oil price fluctuations in oil-exporting countries: the role of financial development[END_REF] indicates that the impact of financial development on the current accounts of oil producers is questionable. As they invest part of their oil revenues in foreign assets and not in the local economy.

Hasanov (2013) studied the dynamics of current accounts in oil-exporting countries and the rest of the world. Through their studies, they concluded that, among other factors, financial development -represented by the ratio of private credit to GDP -had a significant and negative impact on current accounts.

Historical evidence confirms and clarifies that many oil-producing countries have failed to cope with the resource boom. Thus, it was confronted with fluctuations in the external balance.

With the significant increase in oil prices over the past decades, followed by the current decline, the question of how to deal with windfall gains and their impacts on external sustainability is once again at the forefront of political and academic debates (Araujo, 2016).

As part of these discussions, he rekindled interest in current account determinants in oilexporting countries. Consequently, this requires identifying the components of the current account with economic fundamentals that can serve as an indicator or benchmark according to the literature and economic theory.

Empirical review: the link between oil prices and current account balances

One of the most discussed topics in international macroeconomics is the interaction between macroeconomics and fluctuations in oil prices (see, for example, [START_REF] Hamilton | Oil and the macroeconomy since World War II[END_REF][START_REF] Burbidge | Testing for the effects of oil-price rises using vector autoregressions[END_REF][START_REF] Gisser | Crude oil and the macroeconomy: Tests of some popular notions: Note[END_REF][START_REF] Hooker | What happened to the oil price-macroeconomy relationship?[END_REF]. This abundance of literature stems from the main role that the development of oil prices played in creating external imbalances -deficits in some countries and surpluses in some countries-and their contribution to economic activity. Consequently, the significant rise in oil prices in the first decade of the twenty-first century was partly responsible for the deterioration and persistence of global imbalances observed during the same period. This view has been conveyed in the literature by some authors such as [START_REF] Rebucci | Oil prices and global imbalances[END_REF], Blanchard and Milesi-Ferretti (2010), and [START_REF] Arezki | Global imbalances and petrodollars[END_REF]. Indeed, the sharp and unprecedented increase in crude oil prices from 2003 to 2008 would have shifted wealth from oil importers to oil exporters, thus accelerating these imbalances.

Despite the growing interest in the current account -oil price association, far fewer are theoretically (Backus and Curcini, 2000;[START_REF] Bodenstein | Oil shocks and external adjustment[END_REF] and empirical [START_REF] Santos-Paulino | Aid and trade sustainability under liberalisation in least developed countries[END_REF]Killian et al., 2009;[START_REF] Özlale | Oil prices and current account: A structural analysis for the Turkish economy[END_REF][START_REF] Le | Oil price shocks and trade imbalances[END_REF] addresses this issue directly.

Moreover, no clear consensus emerged, and the common conclusion from these studies is that the sign and magnitude of the impact of oil prices on the current account depends mainly on the nature of the studied economy (importing or exporting oil), the degree of local financial development, the degree of integration of international financial markets, and management foreign exchange reserves [START_REF] Buetzer | Global exchange rate configurations: do oil shocks matter?[END_REF].

The relationship between the current account and the oil price of oil-exporting countries depends on the tendency of economies to absorb oil shocks (positive or negative), which in turn depend on their level of economic diversification. A country with a low level of export diversification and a prominent oil sector will have a checking account firmly linked to the oil balance, making the regular relationship between the current account and oil prices.

A large number of publications have examined the relationship between oil prices and the overall economy of oil-importing countries by examining one or the other, the impact of the oil price shock on economic activity through the supply and demand channel, or the impact of the world economy on oil price movements. However, little has been done to study the impact of oil price shocks on the external balances of oil-importing and exporting countries, as most discussions have indicated that oil prices play a prominent role in the economic downturn definition of global imbalances (see [START_REF] Rebucci | Oil prices and global imbalances[END_REF]Blanchard and Milesi-Ferretti, 2010;[START_REF] Arezki | Global imbalances and petrodollars[END_REF].

The fairly large literature examines this question in a form through the so-called "Dutch disease" phenomenon. Reference can be made here, among other articles, by [START_REF] Chen | Commodity currencies[END_REF], Cashin et al. (2004[START_REF] Bodart | Real exchanges rates in commodity producing countries: A reappraisal[END_REF], 2015), who indicate a positive long-term relationship between the price of oil (commodity prices in general) and the real exchange rate through the terms of trade. According to this literature, depending on various factors (such as the exchange rate regime, the degree of financial openness, the degree of trade openness, the degree of export diversification, the degree of institutional restrictions).

Rising oil prices will cause the real exchange rate of oil-exporting countries to rise.

Conversely, this appreciation of the real exchange rate will lead to a deterioration in the terms of trade of non-oil exporting companies (income effect) and a diversion of resources from the non-oil sectors to the oil sectors (substitution effect).

Another indirect literature is the correlation of the current account with net savings (savings minus investment) in an accounting identity in order to understand the effect of allocating domestic oil investment savings on external balances (see Chinn and Ito, 2007; Van der Ploeg and Venables, 2012). More relevant to our context, [START_REF] Bruno | Energy and resource allocation: a dynamic model of the "Dutch Disease[END_REF] was among the first who study the direct impact of oil price shocks on the external accounts.

However, these above studies have been not considering the internal and external components of oil price shocks, while some theoretical and empirical models indicate that not all oil shocks are the same (see Killian, 2009, andKillian and[START_REF] Kilian | The role of inventories and speculative trading in the global market for crude oil[END_REF]. Other studies by [START_REF] Kilian | Oil shocks and external balances[END_REF] and [START_REF] Bodenstein | Oil shocks and external adjustment[END_REF] investigated how oil revenues are recycled in the global economy by differentiating between supply and demand shocks.

The common result of these studies is that higher oil prices will lead to a positive external balance for oil exporters at the expense of oil importers. The literature -mostly on oilimporting countries -on the impact of the oil price shock on external accounts indicates that there are often several channels operating: (1) the trade channel and (2) the evaluation channel, in addition to (3) the fiscal channel and (4) the exchange rate channel.

From a macroeconomic perspective, it follows that after the positive oil price shock, oilexporting countries (oil importers) adjust their trade accounts by managing a surplus (deficit)

in the oil trade balance as the trade balance consists of the oil and non-oil trade balance, which that It largely determines the evolution of the current account, and it should be noted that current account adjustments depend to a large extent on the reaction of the non-oil trade balance.

According to the literature, the role of the non-oil trade balance is of paramount importance, because the primary effect -especially for countries that export non-oil forms of goods that could be affected by oil disruptions -can either be amplified or offset by the oil trade deficit (Killian et al., 2009;[START_REF] Buetzer | Global exchange rate configurations: do oil shocks matter?[END_REF]. As noted by Killian et al. (2009), the response to the non-oil trade balance sheds much light on managing foreign exchange reserves.

Given the role of foreign exchange reserves as an adjusting factor, [START_REF] Buetzer | Global exchange rate configurations: do oil shocks matter?[END_REF] explain that while exchange rates in oil-exporting countries do not rise systematically, oil exporters thus face significant upward pressure in the wake of the oil demand shock: to counteract this, countries are accumulating foreign exchange reserves. It follows that non-oil trade is not affected by the oil price shock and that the overall impact on the trade balance is recorded in the oil trade balance alone.

Channels for transmitting the effects of oil prices into current account

Among the common findings from studies is that an increase in oil prices will lead to a positive external balance for oil exporters at the expense of oil importers. Most studies on the impact of the oil price shock on external accounts show that two channels usually operate:

(Ӏ) the trading channel and (Ⅱ) the valuation channel. While the first channel works by adjusting the prices and quantities of exported and imported goods, to reflect the response of trade accounts, the second channel works by modifying income flows and foreign liabilities positions that reflect the structure of the international portfolio of oil importers and oil-exporting countries. Focusing on macroeconomic adjustments to the current account, after the positive oil price shock, the oil-exporting (oil-importing) countries adjust their trade accounts by achieving a surplus in the oil trade balance (deficit), as the trade balance consists of the oil and non-oil trade balance, hence the trade balance largely determines the evolution of the current account, this means that the latter's adjustments depend to a large extent on the reaction of both the non-oil balance and the oil trade balance with regard to oil trade. According to the literature, the role of the non-oil trade balance is of paramount importance, because it can be the initial effect -especially for countries that export non-oil forms of goods that could be affected by oil disruptions -, or offset the oil trade deficit [START_REF] Kilian | Oil shocks and external balances[END_REF][START_REF] Buetzer | Global exchange rate configurations: do oil shocks matter?[END_REF]. As noted by [START_REF] Kilian | Oil shocks and external balances[END_REF], the response to the non-oil trade balance sheds much light on the integration of international financial markets as well as on the management of foreign exchange reserves.

Trade channel

Oil prices can have direct and indirect economic impacts on both importers and exporters of oil. The indirect effect in this regard is the transmission of shock through international trade. The most common belief is that a rise in global oil prices leads to inflationary pressures and raises prices in the trading partner countries. This, in turn, could raise import prices in all the partner countries. As a result, the monetary authorities of the trading partner economies may also raise interest rates to curb inflation and thus, in the end, reduce the demand for many export commodities to the local economy. This can happen in both oil exporters and importers. For oil exporters, the direct impact of the increase in global oil prices is expected to be positive, as they will receive more export revenues. Le and Youngho (2013) argue that it is expected that there will be negative indirect effects, since it is assumed that higher international oil prices will lead to higher domestic import prices for both oil importers and exporters.

On the other hand, the increase in global oil prices may constitute a negative supply shock to net oil importers leading to a slowdown in the domestic economy of oil importers.

Thus, as a result, the gains in an oil-exporting economy may not be as great as some might expect. Thus, it can be concluded that the net impact of oil price shocks depends on the volume of oil export revenues, compared to the change in the import prices of the oil exporting country.

Hence, the large fluctuations in global oil prices could pose challenges to policymakers in oilexporting economies. In addition to the fact that these revenues are receptive, the fact that they originate from abroad, and through the extraction and sale of a resource that is subject to depletion, thus this poses an additional challenge. On the other hand, higher oil prices may increase uncertainty, especially for economies that are perceived as risky such as emerging markets.

Consequently, the capital account may also be negatively affected. This is due to declining foreign portfolios and direct investments in the country or capital flight. Thus, it can be said that the real situation does not prove that a rise in oil prices can be considered completely positive for the economy of a net oil exporter. Despite this, oil-exporting countries may continue to benefit from higher oil prices through improvements in terms of trade, and the resulting increases in oil export revenues can also be used to increase consumption and investment [START_REF] Korhonen | Trade linkages and macroeconomic effects of the price of oil[END_REF]. On the other hand, the increase in oil prices constitutes a negative shock supply to production processes in oil-importing countries, which in turn leads to a slowdown in these countries. Consequently, they may reduce their imports, and this exerts a negative impact on the trade balances of oil-exporting countries. In any case, the benefit or gain from higher oil prices for the oil-exporting countries depends entirely on the interaction between the combined effects of revenues, demand, and supply. Moreover, even if the overall effect is positive, there are likely to be other consequences such as Dutch disease, income volatility, depletion, and dependence on trading partners, all of which are related to the positive effect.

While lower oil prices may lower oil revenues in the case of oil exporters at first glance, there can be a direct impact on increasing oil exports -for some countries -due to the increase in demand from importing countries. Whereas, due to the impact of globalization and free trade, companies and countries are highly resilient to changing the fuel mix in production processes, as oil remains undoubtedly the preferred source of energy in terms of cost-efficiency as well. Trade may also be affected by the direction of the real exchange rate across trading partners [START_REF] Singh | On the GARCH estimates of exchange rate volatility in India[END_REF]Chinn, 2004;[START_REF] Ozturk | Exchange rate volatility and trade: A literature survey[END_REF]Le and Youngho, 2013). In addition, according to [START_REF] Baumeister | Forty years of oil price fluctuations: Why the price of oil may still surprise us[END_REF] -on the basis of the change in the global trade scenario arising from the large overlap between countries and production processes -thus it is difficult to determine the exact and actual impact of oil shocks on the economies of oil-exporting and importing countries. Kilian adds that it is not sufficient to consider the effects of oil shocks on the total balance of trade, because a country or group of countries can benefit from the mixing of trade and the allocation of production between the oil and non-oil sectors. He also adds that differences in exchange rates between exporters and importers can lead to a reduction in trade interference.

The existence of the theoretical relationship between the price of oil and the balance of trade was confirmed by the model of elasticity of the trade balance [START_REF] Krueger | Exchange-rate determination[END_REF]. Whereas a decrease (increase) of the nominal exchange rate is assumed to change the real exchange rate.

Consequently, this has a direct impact on the balance of trade, as the country may devalue its currency to gain international competitiveness and improve its trade balance (Bahmani-Oskooee, 2001). The depreciation or devaluation of the currency can also lead to an increase in exports by making exports relatively cheaper, and on the other hand, it discourages imports by making imports relatively more expensive, which may help improve the trade balance.

However, there is an argument that there will be a short-term phenomenon called the "J-Curve" effect in the movement of the trade balance. That is, there will be an initial deterioration before the country's trade balance eventually improves.

Evaluation (financial) channel

According to [START_REF] Arezki | Global imbalances and petrodollars[END_REF], the economies of oil-producing countries have recently accumulated large external assets in sovereign wealth funds. One of the reasons for this is that the increase in government spending by oil exporters was at a smaller percentage than oil revenues. According to their study, the accumulated net foreign assets can be used to facilitate future consumer spending, independent of oil revenues. In addition, many studies indicate that many countries are investing foreign assets in both long-term portfolio investments, US Treasury bonds, and foreign direct investment. The policy of sovereign wealth funds in terms of using the accumulated funds and investing them in the net foreign assets could have an impact on the external balances of the country. On the other hand, (Bems and Filho, 2013) studies the current account and the precautionary saving component resulting from uncertainty in oil prices, for oil exporters. Whereas, in order to avoid the impact of the sharp decline in oil prices, foreign assets are accumulated, and therefore the income from these assets is used to offset future declines in the flow of oil income, so it is expected that large surpluses will appear in current accounts and also net foreign assets in oil-exporting countries.

The study by [START_REF] Kilian | Oil shocks and external balances[END_REF] reached conclusions regarding the existence of significant impacts in response to oil shocks. These effects are evident through the revaluation of assets in capital gains or capital losses. According to this study, these capital gains, or losses play an important role in explaining the dynamics of changes in net foreign assets positions.

These results assume the need to consider the degree of international financial integration of a country, and the composition of its properties and liabilities from foreign assets. This is necessary when trying to understand the effects of oil shocks. Consequently, their study concludes that international financial integration tends to mitigate the impact of shocks on the change in the net foreign assets position of both oil exporters and importers. It may be important

to note that what is known as the evaluation effect, is. It works through changes in gross asset return spreads, and thus this is reflected in income streams and changes in valuation. However, this is conditional on the initial value of the total foreign assets, as well as the exact composition according to the financial instrument as well as the currency held.

Diversification in asset holdings can play an important role under the assumption that an increase in oil prices will lead to an increase in profits as well as asset prices in oilexporting economies, against a decrease in oil-importing countries. It is worth noting that, according to [START_REF] Kilian | Not all oil price shocks are alike: Disentangling demand and supply shocks in the crude oil market[END_REF], in the long run, asset prices return to their stable state and the valuation effects disappear. When looking at the impact of oil prices on external balances, it should be noted that international financial integration tends to mitigate the impact of oil price shocks on the net foreign assets positions of both importers and exporters of crude oil.

However, [START_REF] Bodenstein | Oil shocks and external adjustment[END_REF] argue that the nature of financial market risk sharing may have a significant impact on the response of external balances to oil price shocks, as they investigated how higher oil prices affected trade balances and non-oil trade terms for the United States. They found that under full markets the terms of non-oil trade remain unchanged and thus the non-oil trade balance does not change. In light of the non-integrated markets, the terms of trade will suffer from a decline in value, which will push the non-oil trade balance to improve enough to correct the deficit.

However, it is worth noting that the results of this study may not be generalized to other countries that have specific characteristics in terms of oil. That is because the parameters used in this study were calibrated based on US data. Movements in oil prices could change the external portfolio and asset prices situation. In this regard, the relevant literature that studies the link between macroeconomic volatility and the current account emphasizes the importance of fluctuations in income and their impact on external savings.

On the other hand, [START_REF] Fogli | Macroeconomic volatility and external imbalances[END_REF] study showed empirical evidence for a positive relationship between macroeconomic volatility and changes in net external position in the OECD economies. They explain this pattern through the business cycle model, in which changes in productivity fluctuations lead to changes in protective income. On the other hand, [START_REF] Sandri | Precautionary savings and global imbalances in world general equilibrium[END_REF] argues that although GDP volatility can have significant impacts on net external positions, its impact on the current account is much weaker as ideal stocks are slowly built over time. On the other hand, and in a similar fashion [START_REF] Borensztein | Macro-hedging for commodity exporters[END_REF] estimate gains from exports and macro-hedging assets, they argue that hedging reduces the volatility of export income and the stock of net foreign assets which leads to a permanent increase in consumption.

Conclusion

The current account balances of selected oil-exporting countries have shown significant fluctuations over the past decades. Because deficits sometimes threaten the economic and financial stability of these countries. Thus, understanding the driving forces behind these developments is important both from an academic point of view and for the development of effective policies in these countries. Accordingly, the possible development of current account imbalances in oil-exporting countries needs to be assessed. And also the possibility of adjustment that could be obtained through changes in relevant economic policies.

We aim to focus on several macroeconomic factors that have the potential to affect current account developments. These factors have been highlighted in the literature and considered in relevant empirical analyses. In addition to economic and financial variables and population factors, oil prices can play an important role in determining the current account level and determining the external balances of crude-exporting countries. Those countries which are still struggling to reach an elevated level of economic development. In this part of our thesis, we seek to understand in depth and broadly the determinants of the current account of oil exporting countries and try to understand the mechanisms of the potential impact of these variables on the current account balance.

Furthermore, we consider the most important developments in the global oil market and the evolution of oil prices over the past decades. As such, we try to explain the potential impact of oil prices on the current accounts of crude oil exporting countries. Consequently, on the assumption that oil export revenues continue to play a crucial and significant role as a source of government revenue and access to foreign exchange, and hence major developments in international oil markets are likely to have important implications for the current account position and hence for the economies of oil exporting countries. As a preferred and relatively cheap source of energy, oil may remain an important component of the volume of international trade in the coming decades. Therefore, given this insight, it is important to examine the current account determinants for oil-exporting countries in order to enrich the economic literature in this area. In the following chapters, we will conduct empirical studies using econometric methods and annual data for a group of oil-exporting countries. And thus analyses the relationship between the current account and its main determinants to identify the variables that determine this relationship.

A review of the previous literature and the economic relationships governing current account behaviour clearly showed that oil-exporting countries are not immune to the effects of domestic and external macroeconomic fluctuations that could adversely affect their current accounts, which would have serious consequences for their financial stability and economy.

Introduction

We start the second chapter with an introduction to the issue addressed in this chapter, namely, the role of exchange rate regimes in adjusting current account imbalances. This issue has recently received increasing attention in the macroeconomic literature, which has focused on the issue of the external balance and economic stability of countries, especially in view of the increasing role of international trade in driving economic growth and the economic and social welfare, especially in light of economic globalization and increasing capital flows and trade and financial openness.

On the other hand, this issue is of major importance to oil-exporting countries, especially in light of global economic developments, whether at the level of the global economy or at the level of successive evolutions in world crude oil markets. Oil-exporting countries are more vulnerable to fluctuations at the level of their macroeconomies because of their heavy reliance on the external sector for foreign income, on the one hand, and the facilitating of their domestic consumption, which depends heavily on imports from abroad. On the other hand, these countries are very vulnerable to the effects of fluctuations in world crude oil prices on their external balances, especially their current account balances, and on their real economic indicators. Thus, this situation can pose serious concerns for oil-exporting economies, requiring these governments to develop appropriate economic policies and to take the necessary measures to face these challenges in order to ensure that economic and financial stability for their countries.

Therefore, in this part of the study we considering the importance of the current account as one of the key economic indicators at the macroeconomic level and address the research problem and its aspects that have motivated us to conduct this study. On the other hand, we introduce the research questions, objectives, and importance, in addition to the research contribution.

Background information on current account balances

The current account is one of the most important sources of documented external accounts for any country. It also represents the most important balance of payments accounts.

It reflects the most important data for the value of trade and economic transactions with other countries. Thus, the deficit, surplus or fluctuation of the main components of the current account can affect the foreign exchange earnings and payments of the country concerned.

However, when analyzing the current account, it is possible to refer to certain economic implications. The current account balance can take two main positions: The case of reaching a positive balance, and this could mean that the country has the capacity to finance, as it has been able to create net savings through its foreign relations. The second case is that the country reaches a negative balance, and this could therefore indicate that the country needs to finance its consumption through borrowing (Kouadio and Guessan,2021).

Thus, it can be assumed that the current account balance can affect the financing capabilities and needs of the economy. On the other hand, the surplus is a sign of the country's economy as a net creditor to the rest of the world; this means that the country is likely to provide an abundance of resources to other economies, and in return, the recipient country owes them money. Surplus countries present an opportunity for other economies to increase their productivity while eliminating a deficit; by giving them these resources. In contrast, a deficit reflects the fact that the country's government and economy are in net debt to the rest of the world. This is when the country's investments exceed its savings and use resources from other economies to meet the needs of domestic consumption and investment operations (Garg and Prabheesh,2017).

On the other hand, research that have focused on the foreign trade structures and external balances of countries indicate that there is a close relationship or correlation between the economic structure and the state of the current account balance (Nusair,2016). Thus, it can be said that the current account remains one of the most important tools of economic analysis, which can provide an important amount of knowledge about the characteristics of the economic structure of any country in its international environment, as well as provide a picture of the stages the national economy is going through and the challenges that may be imposed on it in the foreseeable future (Ploge and Venables,2012).

Conceptually, the current account balance is assumed to be zero, but this is unlikely to be the case in the real world; meaning that each current account surplus or deficit can indicate the economic situation of the country, either individually or in comparison with other world markets. Thus, when trying to understand current account analysis, it is important to know where the deficit or surplus is coming from, which means looking at what is supporting the increase in the credit or debit side and how to counteract these influences. A trade deficit is often defined as the deficit between exports and imports of goods and services combined.

Therefore, this deficit means that the government imports more to increase its productivity, and ultimately exports as much as possible to finance and mitigate this deficit [START_REF] Milesi-Ferretti | Persistent current account deficits: a warning signal[END_REF].

The deficit could also arise from increased investment abroad and thus increase the pressure of obligations on the local economy to pay out investment income, which is recorded on the debit side and reduces current account income. On the other hand, overseas investment can still have a positive effect on the domestic economy -if used rationally -as it increases the value of the market price and raises the productivity of the economy in the future. Ultimately, this allows the local economy to increase its exports and bridge its own deficit; thus, a deficit is not necessarily a negative thing for the economy -especially for developing economies in the early stages of development. On the other hand, the economy sometimes must spend money to make a profit and so it creates a deliberate deficit, however, the economy must be qualified to finance the deficit with various resources which in turn help it to reduce the debtor side and increase the credit side. For example, financing a current account deficit with a short-term investment portfolio or borrowing is riskier; because if there is an imbalance in the emerging capital market or a sudden cut-off of foreign government support, this can lead to a halt in credit-side activity in the current account (Summers,2004).

Current account imbalances

Thus, it may be useful to review the cases in which any country's current account may be in a state of balance or imbalances, including a surplus or deficit. Where the state of balance of the current account indicates the efficiency and effectiveness of the economic policies in place or being pursued in the country, and the achievement of external balance may indicate that the country has been able to achieve internal balance of the economy in terms of balance with the outside world or international transactions. In this respect and in the context of the study of the current account of a country, it may be appropriate to refer to the economic balance of the country in general. Thus, according to the economic theories that dealt with the question of economic equilibrium, this is achieved when the volume of imports that economic units wish to consume is equal to the volume of resources that they wish to possess.

According to this definition, imbalance can be expressed as the situation in which the volume of self-available resources differs from the actual volume of resources needed by society at the level of the national economy. Thus, it can be said that economic equilibrium is achieved when aggregate demand is equal to aggregate supply. As for the economic balance based on the notion of current account or international balance of payments, it is generally expressed in the case where the country's indebtedness or debts to the outside world are equal to the credits or amounts owed by the outside world to the country. In this case, budgetary items are absent or disappear and are equal to zero (Debelle and [START_REF] Faruqee | What determines the current account? A cross-sectional and panel approach[END_REF]Uneze and Ekor,2012).

It may be important to note that the achievement of the balance of accounting concepts or the accounting regulation of the current account is a matter that involves the movement of the various accounts or accounting components of the current account balance.

However, the correction of the economic imbalance of the current account is another matter, as it requires the confluence of economic factors related to the evolution of the country's economic performance, and then directs it in the direction of a correction of the balance. From an economic point of view, current account balance can mean the equalization of assets and liabilities for current account items. Therefore, the state of equilibrium means the situation in which the government's income from its current transactions equals the debts resulting from its imports of goods and services to the outside world.

Thus, in many cases, reality does not allow the current account to be balanced. As a state's rights can exceed or excess its debt level, and a surplus occurs, or the opposite occurs as a state's debts exceed its rights or income, in which case a deficit occurs. It is therefore important to point out that imbalances are a dominant feature of countries' current account balances, while states of equilibrium are mostly exceptional or conceptual.

In order to determine the causes of current account imbalance, it is necessary to study the determinants of the current account in order to try to mitigate the negative effects that might arise from it. In this respect, two basic types or cases of imbalance can be distinguished as follows.

Current account deficit

The current account balance is equal to the difference between savings and investment in the national accounts, and therefore reflects the consumption and investment decisions of residents. When a country has a current account deficit, its savings are lower than its investments. In other words, a country experiences a negative movement of financial wealth across borders when purchases of goods and services abroad and income paid to non-residents exceed the amounts received by residents from abroad.

However, the current account deficit may reflect structural imbalances, such as a lack of price and wage flexibility. In addition, in many cases, the deficit may be an indicator of negative competitiveness developments or negative expectations about future income growth, investment returns for the country and, consequently weak investment-related economic activities. In addition, the current account deficit can negatively affect the value of the local currency in the foreign exchange market as the current account deficit leads to an increase in the supply of the local currency relative to the demand. In this case, governments often resort to monetary and fiscal policies to correct this imbalance. Some studies (Summers1996,2004[START_REF] Milesi-Ferretti | Persistent current account deficits: a warning signal[END_REF] indicate that the current account deficit or imbalance should not exceed 5% of the total value of income and payments made from the government's economic transactions with foreigners in a given year.

Current account surplus

In the case of a current account surplus, the balance of the account is positive, which means that receipts from the external world exceed payments, but the surplus can be considered as an indication of the inefficiency of the economic policy pursued by the government to achieve external balance. The problem in this case is the need for the country to renounce part of its real resources used in production, in addition to the possibility of unused funds without investment, and this can therefore mean the accumulation of cash balances which can lead to inflation levels in the local economy, due to the increased demand for the country's exports.

On the other hand, the country can avoid accumulating surpluses in its current account by providing loans to other countries in exchange for interest rates as a return on investment, and also by providing grants and donations to countries going through critical economic periods or economic crises, especially in the short term, but in the long term, the effect of the balance of payments imbalance can have a greater impact and significance.

Therefore, it can be stated that the diagnosis of the causes of the current account imbalance is extremely important and constitutes the most important step in the process of addressing the external imbalance. This can be attributed to the importance of the relationship between the nature of the imbalance itself and the policies followed to address the imbalance.

Perhaps the link between the nature of the current account imbalance and the economic policies pursued to address that imbalance can stem from two main pillars; first the external factors represented in the knowledge of the causes and source of real external shocks. The second is to determine the appropriate financial and monetary tools to deal with the current account imbalance, depending on the characteristics and structure of the economy concerned taking into account the time phase the economy is going through.

Differences in national current account balances between countries are natural and an advantage for each country. These differences reflect each country's capital inflows, savings, and investment decisions, and thus the growth prospects and potential rates of return. In addition, these differences are often related to reform policies and investment and financing opportunities. All these factors contribute to different developments in current account balances across countries, a natural consequence of the responses to the different shocks to which each economy is exposed.

Examining these factors as well as national monetary and exchange rate policies, would help to identify possible mechanisms to deal with shocks and ensure their smooth functioning. It can also ensure the effective and smooth performance of the policies and adjustments to be implemented. Thus, the state of the current account can be a response to many economic factors and causes, with the literature referring to output growth, terms of trade fluctuations and financial deepening. The level of the current account may also reflect structural factors in the economy, such as the level of economic development and the demographic stage of the country. In addition, the level of the current account may also reflect cyclical conditions such as a positive output gap or negative terms of trade shocks.

Therefore, in the face of these factors, the current account imbalance may take time to adjust to equilibrium conditions and, in some cases, the current account deficit may require the consideration of corrective policies if the deficit is unbalanced or unsustainable. Thus, corrective policies taken by governments can have a beneficial effect. However, government policies can also lead to abnormal current account deficits when these policies distort prices and production costs. Thus, such policies can sometimes encourage the exaggeration of risk and reflect imprudent financial and monetary systems.

Most oil-exporting countries depend heavily on crude oil export revenues. However, these countries are driven by different dynamics. For example, they have different histories of economic development and different patterns of economic diversification, oil production and costs, oil mix and oil and non-oil exports. Thus, they also have different profit margins relative to their production costs. On the other hand, these countries differ in terms of their objectives and needs for revenue utilization, depending on their demographic level, unemployment and poverty rates, size of the economy and GDP per capita.

However, these countries share a set of common characteristics or challenges due to their economic nature, such as the structure and financing of public employment and dependence on cheap foreign labour. They also face the challenges of the accumulation of direct and hidden unemployment, as well as obstacles to private sector economic development and the depletion of natural resources. On the other hand, some literature (Mehrara and Oskoui,2007;Nusair,2016) indicates the dominance of the hydrocarbon sector and the absence of other sectors such as private sector services, manufacturing, agriculture, private sector services and Small and Medium Enterprises (SMEs).

Oil-producing countries face large and significant fluctuations in global oil prices as they are a major source of macroeconomic fluctuations, especially in the financial and external sectors, due to the high dependence of government and export revenues on oil prices (Hasanov, 2013). When oil prices fell in 2014, most oil-producing countries experienced a significant decline in government revenues, public expenditures, current account balances and international reserves (Al- Rasasi,2017;Nassir,2016). In addition, the decline in oil revenues may affect domestic consumption, as many jobs in oil-exporting countries are directly or indirectly linked to the performance of the oil sector. In addition, lower oil revenues can lead to lower fiscal spending, such as reduced investment programmers, which in turn affects economic activity in the short term and can reduce potential growth in the medium term (Hamidi and Sabia, 2013;[START_REF] Al-Khater | The Challenges of Oil Price Crises and Economic Diversification in the GCC States[END_REF].

Excessive and persistent dependence on unsustainable and depleted oil revenues will undermine efforts to achieve sustainable economic development and desired economic diversification in oil exporting countries in order to create stable economies. It is therefore important to examine and identify these various factors to shed more light on the current account trajectory in the case of oil exporting countries. This study aims to keep pace with the previous literature by focusing on examining the factors that can shape the current account balance of oil exporting countries.

Problem statement

The acceleration in the formation of global current account imbalances across countries since the 1990s has again raised the question of whether exchange rate regimes affect current account adjustment. However, recent empirical attempts to assess this question have yielded conflicting and uncertain results on the role of exchange rate regimes in the adjustment of current account imbalances (Dissou and Nafie,2019;Sfia,2011). In this context, we focus on oil exporting countries and examine whether exchange rate regimes in oil producing countries play an effective role in adjusting external imbalances. In other words, whether the exchange rate regime leads to greater current account stability or accelerates the correction of imbalances.

To this end, we examine the current account determinants of 27 oil producing countries. Where we review a set of previous literature of interest to identify the most important determinants affecting the current account situation. And then testing these variables on a sample of countries under study from 1996 to 2016. The selected determinants of the study are:

trade openness, real effective exchange rate, net foreign assets, age dependency ratio (population above and below working age), population growth, domestic credit to private sector ratio, global crude oil price, underground oil wealth and export diversification ratio.

However, when considering a current account model with these determinants, we include the dynamic effect via a lagged current account variable. Thus, our study relies on a dynamic panel econometric method called bias correction least squares dummy variable (LSDVC) to analyses the data used in the study. Thus, we analyze the set of current account determinants used in the model, in addition to accounting for the exchange rate regime employed among the sample countries. Thus, through this procedure we aim to investigate the impact of exchange rate regimes on current account adjustments in oil exporting countries.

Thus, we use a classification of exchange rate systems based on (Ilzetzki, Reinhart, and Rogoff, 2016).

This study aims to examine the factors and determinants that may determine the current account path of oil-exporting countries, in addition to focusing on the role of exchange rate regimes in influencing current account imbalances in oil-exporting countries. In this context, examining current account imbalances and the factors that can reduce or exacerbate them are among the most important issues that significantly affect the economic and financial stability of oil-exporting countries. In this context, many important studies point to the major role that exchange rate regimes play in maintaining countries' current account balances and, hence, their role in adjusting the current account to limit the undesirable effects of current account imbalances on economic stability [START_REF] Lv | Does exchange rate management affect the causality between exchange rates and oil prices? Evidence from oil-exporting countries[END_REF].

Oil exporters are among the countries most vulnerable to external shocks and their potential negative impact on real and financial economic activity. In this regard, International

Monetary Fund reports on exchange rate arrangements and exchange restrictions indicate that oil-exporting countries use different arrangements for exchange rates of their currencies according to their different economic systems [START_REF] Lv | Does exchange rate management affect the causality between exchange rates and oil prices? Evidence from oil-exporting countries[END_REF]. Thus, exchange rate policies may affect the current account balances of countries differently, depending on the exchange rate regime, in addition to the determinants that may govern the current account balances of those countries. On the other hand, the risks, and challenges that an oil exporting economy may face may depend, among many factors, on the exchange rate policies adopted by a country, as well as on the characteristics and conditions under which an economy operates over a given period of time. On the other hand, a study (Al-Mukhtar, 2014) shows that the US dollar peg or dollardominated basket system is the most common system in many oil-exporting countries, especially those with smaller economic size. Arguably, the target is to stabilize oil revenues and maintain confidence in central bank or monetary policy in these countries [START_REF] Al-Khater | The Challenges of Oil Price Crises and Economic Diversification in the GCC States[END_REF][START_REF] Haciyev | The peculiarities of stabilization policy and problems of economic growth sustainability in Azerbaijan / A.-K. Haciyev // Collection of Scientific Works of the Cherkasy State Technological University[END_REF]. Despite this, these countries' reliance on fixed exchange rate policies from the 1970s to the beginning of this century may have been defensible because the relationship between oil prices and the US dollar exchange rate was more stable. However, the oil-exporting economies were in the early stages of the economic development process.

In contrast to the situation today, many oil-exporting countries include developed financial and capital markets that are integrated with the external world and in which monetary policy instruments based on market economics are managed [START_REF] Haciyev | The peculiarities of stabilization policy and problems of economic growth sustainability in Azerbaijan / A.-K. Haciyev // Collection of Scientific Works of the Cherkasy State Technological University[END_REF]. It is therefore important to consider the extent to which economic policies in oil-exporting countries are consistent with global economic conditions and developments that could disrupt the economic stability of oil-exporting countries.

Increasing financial deepening and global financial innovation may lead to reduced controls and restrictions on capital. Therefore, in the presence of greater liberalization of capital flows, this may lead to an increase in trade and financial flows of oil exporting countries. As a result, international capital flows are expected to be an additional and serious challenge to the financial stability of these countries. Especially if the exchange rate regimes they adopt are not adequate to control the situation.

Thus, it can be argued that there are several potential channels that can transfer the effects of global economic developments to the economies of oil exporting countries, and perhaps the most important of these channels is : interest rates in light of the divergence of business cycles between oil exporting countries -with the fixed exchange rate regime -and the United States of America, and the exchange rate channel which can completely pass the fluctuations of oil prices on to the oil economies under the fixed exchange rate regime, in addition the channel of fluctuations of the US dollar exchange rate against other currencies.

Consequently, these fundamental changes and developments in the world economy have sparked a debate on whether oil-exporting countries should move to a more flexible exchange rate regime. The most important of these developments and their potential impact on the economies of oil-exporting countries can therefore be elucidated.

Depreciation of the US dollar

This development can be seen in the emergence of a strong inverse relationship between international oil prices and the US dollar exchange rate [START_REF] Lv | Does exchange rate management affect the causality between exchange rates and oil prices? Evidence from oil-exporting countries[END_REF]. Research indicates that there is a reciprocal relationship between oil prices and the US dollar exchange rate. In this context [START_REF] Akram | Commodity prices, interest rates and the dollar[END_REF] presented empirical evidence that a weak US dollar could lead to higher oil prices. Moreover, some studies confirm the short-run transition between exchange rates and oil prices. While (Chang et al., 2016 andBeckman et al. 2017) noted that the combined movement of oil prices and exchange rates may be rapid or short term, meaning that oil prices and exchange rates will adjust quickly in response to active financial market fundamentals via the portfolio channel and the naming channel.

On the other hand, several studies have confirmed a causal relationship between oil prices and exchange rates in the medium and long run. The literature indicates that this effect arises mainly through the terms of trade channel [START_REF] Amano | Oil prices and the rise and fall of the US real exchange rate[END_REF] and the wealth channel (Butzer et al., 2016;Krugman, 1983). In this context, also [START_REF] Nguyen | The relationship between oil prices and exchange rates: evidences from Norway, Canada and Mexico[END_REF] confirmed the existence of a relationship between oil prices and exchange rates in the case of Canada, Norway and Mexico. A study by [START_REF] Zhang | Exchange rates and commodity prices: Measuring causality at multiple horizons[END_REF] documented the existence of two-way effects between oil prices and exchange rates in the case of Canada, Australia, Norway and Chile. On the other hand, some studies have shown that exchange rate constraints in oil exporting developing countries can distort the two-way causality between oil prices and exchange rates (Bashir et al., 2016;Bouiyour et al., 2015;Buetzer et al., 2016). In the same context (Akram,2004) discussed the role of exchange rate policy in the relationship between oil prices and exchange rates. Where he explained that interventions by monetary authorities can distort the relationship between oil prices and exchange rates. Thus, in his study of the Norwegian economy he provided evidence that monetary authorities' interventions in the local currency led to a strong correlation between the exchange rate and oil prices, especially when the oil price is significantly low or high. Thus, fluctuations in the US dollar exchange rate can lead to fluctuations in oil revenues in countries that use a fixed or pegged currency system. If oil prices rise, the US dollar exchange rate will fall -and vice versa -relative to the currencies of oil countries that follow a fixed exchange regime. Thus, it can be claimed that the peg to the US dollar no longer provides stability to oil countries' revenues from their oil exports as long as the exchange rate of the US dollar fluctuates against other major currencies and oil prices. Thus, it can be argued that an oil-exporting country with a pegged exchange rate regime will not be able to benefit from the economic policies needed to mitigate external shocks. Consequently, such developments would force countries with a pegged US dollar regime to face long-standing real exchange rate imbalances, which could lead to significantly higher inflation (or deflation) as well as large imbalances in their current accounts [START_REF] Yousefi | Exchange rate of the US dollar and the J curve: the case of oil exporting countries[END_REF][START_REF] Coudert | Currency misalignments and exchange rate regimes in emerging and developing countries[END_REF].

Emergence of new centers of global economic power

Another important development is the shift in the direction of oil exporters' trade away from the United States (Al Khater,2015) and, more importantly, the shift in the weight of their oil trade towards the euro area, east Asia, China and Japan. This is in addition to the increased cyclical swings of oil exporters with the US business cycle. In this regard, many studies (Melo et al., 2009;[START_REF] Quah | The global economy's shifting centre of gravity[END_REF] (Sister, 2007;[START_REF] Habib | Oil exporters: In search of an external anchor[END_REF]. Consequently, some arguments suggest a preference for pegging the local currency of oil-exporting countries to oil prices or including it in a peg to a basket of currencies of trading and financial partners instead of a direct peg to the US dollar. As such a measure could help stabilise crude oil revenues of exporting countries (Almukhtar,2014).

Different economic cycle

In this regard, it can be noted that the divergence factor of the business cycle -the relative boom in the pegged currency country with a relative bust in the base currency country or vice versa -could lead to a monetary policy conflict between the two countries. This can be reflected in the presence of effects that can destabilize domestic policies in the pegged currency country, as the desired economic policies in a boom differ from the policies required in a bust.

Since the boom cycle is often an inflationary cycle, the remedy is therefore to adopt a restrictive monetary policy, raise interest rates to calm inflationary pressures, and then keep inflation rates under control to enhance monetary and financial stability, and then economic stability. On the other hand, following the opposite of this policy will lead to the accumulation of excess liquidity in the money markets; this leads to an increase in the growth of the money supply and credit extension, and to higher inflation rates. Consequently, this may lead to the creation of so-called asset bubbles, in addition to an increase in speculation on the local currency [START_REF] Al-Khater | The Challenges of Oil Price Crises and Economic Diversification in the GCC States[END_REF].

Furthermore, the study by [START_REF] Grubišić | Impact of government balance and exchange rate regime on current account during the economic cycle: evidence from CEE countries[END_REF] indicated the interlinkage of macroeconomic variables that depend on the stages of the business cycle, as they indicated that cyclical fluctuations could affect current account adjustments. Furthermore, they pointed out that large and persistent imbalances (deficit -surplus) in the current account can generate economic crises, especially if they are caused by internal structural imbalances combined with large external shocks. Also, in this context [START_REF] Corsetti | What drives US foreign borrowing? Evidence on the external adjustment to transitory and permanent shocks[END_REF], they point out that permanent shocks can have an impact on the external assets and liabilities of the economy.

Transitory shocks can also explain most of the variance in the current account (Singh,2017).

The exchange rate is an important tool for macroeconomic management, as it is one of the macroeconomic policies that make up the overall framework that enhances the stability of the economy, and to increase the benefits of the macroeconomic policy group.

Therefore, in order to make the economy work with the required efficiency and at the lowest possible cost, the exchange rate is supposed to be activated as a management tool for the overall economy. However, the effectiveness of the exchange rate may depend to a large extent on the exchange rate regime or arrangements adopted by the central bank and the monetary authorities of the country.

The effect of the external shock, whether caused by fluctuations in oil prices or by fluctuations in the exchange rate of the US dollar -as the price setting currency for crude oil -against other currencies, can be fully passed on to oil exporting economies, particularly those pursuing (following) less flexible exchange rate regimes.

In such a case, the role of the exchange rate should be activated as an economic correction tool to absorb or mitigate shocks. Thus, parallel fluctuations in oil revenues caused by price fluctuations can be avoided or mitigated. Thus, it can mitigate the impact of oil revenue fluctuations on public budgets and allow for greater stability in public spending, which would support domestic economic activity in oil-exporting countries.

The increase in the size of global current account imbalances, as well as the increase in sharp fluctuations in international oil prices and the emergence of the inverse relationship between oil prices and the US dollar exchange rate, have raised real concerns about adjustments to current account imbalances, as well as important questions about the role of exchange rate systems in adjusting current account imbalances. This raises the question of the effectiveness of exchange rate regimes in oil countries that follow the fixed exchange rate system, and therefore, which regimes are most appropriate in light of these concerns?

Study questions

In order to achieve the research objectives, the study must answer the following questions:

-What are the most important channels through which the exchange rate system affects current account persistence?

-What are the most important determinants of current account developments in oil exporting countries, and do these determinants and their effects vary from one geographical area to another?

-Does exchange rate flexibility reduce current account imbalances in oil exporting countries?

-Is higher elasticity of exchange rate regimes associated with higher or lower current account persistence level?

Research aims and objectives

The study aims to analyze the determinants of the current account in oil exporting countries, with particular attention to their exchange rate systems. More specifically, we try to explore whether the exchange rate regime is relevant for adjusting current account imbalances.

This is performed by assessing the consistency coefficient, which is expressed through the estimated parameters of the current account lagged variable. For this purpose, we analyze the determinants of the current account of oil exporting countries according to the exchange rate regime employed.

The main problem is that, according to our study sample, despite the differences in exchange rate arrangements among oil-exporting countries, most oil-producing countries operate a fixed exchange rate regime. We therefore seek to identify the degree of inconsistency in the relevance of exchange rate regimes to adjusting the current account imbalances of oil exporting countries. This is because these countries are highly vulnerable to terms-of-trade shocks caused by oil price fluctuations. Thus, we analyze the impact of different exchange rate regimes (fixed -intermediate -floating) on the current account adjustment path.

Therefore, and based on the idea that the current account is not a primary economic force in itself, but rather a manifestation of the interaction of the general equilibrium between many factors. Thus, we focus on the extent to which these factors, and more specifically the exchange rate regime, are able to generate the equilibrium path through the determinants and factors that can form channels of adjustment through which the exchange rate regime acts as a force affecting the path of the current account towards equilibrium or the self-adjustment of external imbalances, which arise from factors affecting trade flows and financial assets. In addition to the internal influences and factors represented by savings and investment forces, which may also govern the evolution of the current account at a given time for a given country.

Thus, with respect to the role of exchange rate systems in adjusting current account imbalances, instead of including the exchange rate regime variable as a dummy variable in the model, we considered that in the case of our study it was preferable to split the main sample The so-called Gulf Cooperation Council, North Africa, oil-exporting countries in Latin America and Asia in addition to Russia. Thus, although there is a large body of research on the issue of current account imbalance adjustment in many regions and countries of the world, surprisingly, the role of exchange rate regimes in the adjustment of current account imbalances of oil-exporting countries has been addressed in only a few studies.

Significance of study

The study attempts to identify potential relationships between each of the exchange rate system mechanisms and current account adjustments of oil-exporting countries, taking into account the most important major determinants of current account balances in these countries, which may act as channels for exchange rate regime influences on current account adjustments.

Perhaps one of the most important rationales and motivations for this study is that, despite the economic and financial importance of oil-exporting economies, there is limited research on the impact of exchange rate regimes on current account adjustments for oilexporting countries. On the other hand, given that many oil-exporting countries have made significant progress in liberalizing trade, opening up their financial systems and adopting market-based monetary policy instruments. In this respect, not to mention some oil-producing countries in our study sample which have already made significant progress in this area, some other oil-producing countries with smaller economies have also made important efforts in this regard; as in Sub-Saharan Africa and the Gulf Cooperation Council countries, these countries have taken steps to establish monetary unions and a supranational central bank. On the other hand, most oil-producing countries, including the North African countries, have sought to integrate more actively into the international trading system through economic reforms,

restructuring their economies in accordance with the market economy and making efforts to become part of active economies and trade blocs.

Thus, these fundamental international and domestic developments are likely to increase the number and volume of trade and financial flows into oil-producing countries, so international capital flows could pose a serious challenge to the financial stability of these countries. Especially if the exchange arrangements it has adopted are not adequate to deal with potential economic changes and challenges (Sfia,2011;[START_REF] Habib | Oil exporters: In search of an external anchor[END_REF]Sister, 2007).

We seek to focus on 27 oil exporting countries. Our sample includes emerging and developing oil countries and varies according to the importance and weight of oil in their local economies. In addition to the issue of exchange rate regimes, we pay attention to the geographical dimension and its potential importance as well as to some fundamentals and financial factors that are important in shaping the status and evolution of the current account of oil exporting countries, thus filling gaps in the current body of knowledge on the subject.

Moreover, our study covers a significant period from 1996 to 2016. Therefore, we take into account the period in which oil price fluctuations have increased significantly and dramatically over the history of international oil prices compared to previous decades. We join the working group in the empirical investigation to study the determinants of the current accounts of exporting countries, as well as to determine the role that exchange rate regimes played in the adjustment of current account imbalances. In this regard, we seek to document the link between our results and the most important empirical results testing this relationship in the previous literature, thereby shedding further light on the issue of adjustments to current account imbalances, as well as the role of the exchange rate systems in adjusting these imbalances, and then the extent to which countries' current account balances are affected.

Contribution of the study

Understanding the behaviour of the current account is an important issue for open economy models. The literature on current account dynamics includes a long list of variables that are considered relevant for understanding long and short-run movements in the current account of oil exporting countries (Debelle and Faruqee 1996; Calderon et al, 2002;Mehrara and Oskoui,2006;Thomas and Bayoumi,2009;[START_REF] Allegret | Current accounts and oil price fluctuations in oil-exporting countries: the role of financial development[END_REF]Morsy,2009). Thus, we examine the role of a set of explanatory variables for a group of 27 oil exporting countries, over the period . We consider the exchange rate regimes, where we estimate the regression model using the unbalanced panel, for three linear models depending on the exchange rate regime (float -intermediate -fixed). On the other hand, we estimate five panel regression equations for sub-samples by geographical area. We use the dynamic panel model least squares dummy variable corrected (LSDVC).

Thus, we investigate whether exchange rate regimes impose a different way of adjusting the current account in the countries under study. Therefore, the empirical novelty of this study is to assess not only the underlying model with the explanatory variables most used for current account models in terms of the empirical literature and the historical context of the phenomenon in question, but also to consider the role of the exchange rate regime. Our model therefore includes three different measures for the sample under investigation in terms of exchange regimes. In addition, we aim to examine current account dynamism and focus on the role of exchange rate regimes in modifying current account imbalances. We also examine the impact of geographic area and its role in determining the current account dynamics of the sample countries.

There is an important debate in the literature about the role of exchange rate regimes in adjusting the current account and hence the stability of the current account. In this regard, [START_REF] Friedman | Essays in positive economics[END_REF] suggested that a flexible exchange rate regime can affect a country's ability to cope with shocks and thus absorb external imbalances. At the same time, there is debate in this field about whether the degree of flexibility in a country's exchange rate regime affects the ability of that country to maintain its current account at a sustainable level. A group of studies supports the hypothesis proposed by Friedman. These authors include (Tippkotter, 2010;[START_REF] Herrmann | Do we really know that flexible exchange rates facilitate current account adjustment? Some new empirical evidence for CEE countries. Some New Empirical Evidence for CEE Countries[END_REF][START_REF] Broda | Terms of trade and exchange rate regimes in developing countries[END_REF][START_REF] Ghosh | Is the exchange rate regime really irrelevant for external adjustment?[END_REF]. On the other hand, some authors emphasise that countries with a fixed exchange rate regime experience larger imbalances in their current accounts than countries operating under a flexible or intermediate exchange rate regime [START_REF] Coudert | Currency misalignments and exchange rate regimes in emerging and developing countries[END_REF][START_REF] Dubas | The importance of the exchange rate regime in limiting misalignment[END_REF]Holtemöller and Mallick, 2012).

Despite this, some studies question the advantage of flexible exchange rates for developing countries as they provide a lot of discretion to the monetary authority [START_REF] Calvo | Fixed versus flexible exchange rates: Preliminaries of a turn-of-millenium rematch[END_REF].

On the other hand, other studies indicate that fixed exchange rate regimes can lead to prudent fiscal policies, which can lead to sustainable current accounts [START_REF] Blanchard | Current account deficits in the euro area: the end of the Feldstein-Horioka puzzle?[END_REF].

We attempt to join the current literature by investigating the role of exchange rate regimes in the adjustment of external imbalances of oil exporting countries. Thus, enriching the existing debate on the subject by trying to provide empirical evidence on the role of exchange rate regimes in the correction of current account imbalances.

Literature review

In this part, we attempt to provide a review of the most important empirical literature on the determinants of the current account and the role of exchange rate regimes in the adjustment of current account imbalances in oil-exporting countries. In this context, we divide this literature into two parts: In the first part, we focus on the most important empirical studies that have examined the determinants and factors affecting the path of current account balances. For the second part of the literature review, we have sought to review the most recent economic literature on the issue of exchange rate regimes and their role in adjusting current account imbalances.

Determinants of current account balances literature

According to the national accounts identity, the current account balance is equal to the difference between domestic investment and domestic savings accumulated in the public and private sectors. Thus, in the case of a current account deficit, this means that there is an excess of investment over savings, and vice versa in the case of a surplus. Thus, in such a situation, one can imagine the existence of a variety of factors that can cause the country to record a current account deficit or surplus.

In this context, the determinants of the current account position can be determined by the variables that have an impact on investment and savings decisions. Therefore, according to [START_REF] Lee | Exchange rate assessments: CGER methodologies[END_REF], in general, there is a list of variables that can determine the evolution of a particular country's current account, which may include: GDP per capita, government budget balance, population growth, age dependency ratio, net foreign assets, real interest rates and institutional framework factors. For example, an expansionary fiscal policy can reduce national savings and the current account balance, especially if it is not accompanied by an increase in private savings or a decrease in private investment. In addition, higher net assets can improve the current account position, as they increase net investment income. In addition, the reduction of price and wage restrictions and the liberalization of financial markets can improve competitiveness and provide incentives to increase investment, thus leading to an increase in the current account deficit [START_REF] Abbas | Ricardo, Fiscal Policy and the Current Account[END_REF].

Current account imbalances between countries can be normal and characteristic of each country. These imbalances reflect capital flows, savings, and investment decisions in the interest of each country. It thus reflects growth prospects and potential rates of return. In addition, these imbalances are often linked to reform processes, macroeconomic policies, investment, and financing opportunities. Thus, all these factors contribute to different developments in current account balances across countries, as a natural consequence of the responses to the different and inequitable shocks to which each economy is exposed. Thus, the current account deficit can reflect structural imbalance and stagnation in macroeconomic factors such as inflexible prices and wages. For example, a deficit may occur in conjunction with high debt, this could be an indication of negative competitiveness developments or negative expectations of future income growth and investment returns for the country, and thus weak investment-related economic activities.

The prevailing believe is that large and persistent current account imbalances (deficit -surplus) can generate economic crises, especially if they are caused by internal structural imbalances in combination with large external shocks. Initially, the interface between fiscal policy and the current account has been the subject of empirical research for some time.

In this context, (Debelle and Faruqee, 1996) used the investment and savings perspective to address the potential structural determinants of the current account, in order to understand long and short-run changes in the current account. Their results indicate that the financial surplus, terms of trade and capital controls play no significant role. This contrasts with relative income, public debt and demographics, which have been significant in the long run. In the short run, fiscal policy, the terms of trade, the business cycle and the exchange rate have an impact on the current account.

In this context, the literature emphasizes the importance of demography in understanding the dynamics of the current account, as it plays an important role as one of the determinants of national savings. Moreover, population profiles should play an important role in relation to the current account, especially if they are related to the difference in savings between countries. Usually, this effect is controlled through the difference in the percentages of the working population which consists of old and young dependents (above and below working age).

The study by (Chinn and Prassad, 2003), which complements the work of (Debelle and [START_REF] Faruqee | What determines the current account? A cross-sectional and panel approach[END_REF], focused on the medium-term determinants of the current account. Their results showed the absence of an effect of the government's fiscal balance on the current account in industrialised countries, whereas such an effect was noticeable in the case of developing countries. They interpreted their results through incomplete Ricardian compensation for changes in government savings. On the other hand, a study (Calderon et al., 2002) examined the determinants of the current account of developing countries, as their results

indicate that GDP growth has a positive impact on the current account deficit. On the other hand, they are convinced that external GDP growth (for industrialized countries) reduces the current account deficits of developing countries. In addition, changes in private and public savings rates reduce the current account deficit. They also pointed out that real exchange rate appreciation, terms of trade deterioration and lower real international interest rates lead to an increase in the current account deficit. They also pointed out, with reference to the stages of development hypothesis, that countries with higher GDP per capita have lower current account deficits. In the same context, [START_REF] Calderon | Current account deficits in Africa: Stylized facts and basic determinants[END_REF] pointed out that real exchange rate appreciation and terms of trade deterioration are related to the current account deficit of African countries.

In a different context, the study by (Gruber and Kamin,2007) In their study Chinn and Ito, 2007, they examined the main determinants of global current account imbalances, focusing on the US deficit. Thus, they focused on explaining the role of low world interest rates as well as expansionary fiscal policies. In contrast, they estimated the current account model with particular emphasis on institutional development,

where their model includes variables that proxy for financial openness and legal development.

Their results indicate that, for industrialized countries; the government financial balance is an important variable for current account adjustment. They also provide evidence supporting the role of financial factors and excess savings in East Asian countries in understanding global current account imbalances. On the other hand, [START_REF] Aristovnik | Short-and medium-term determinants of current account balances in Middle East and North Africa countries[END_REF] found that trade openness, high oil prices and domestic economic growth have a positive impact on current account balances in MENA countries. While domestic and foreign investments have a negative impact.

In another context, [START_REF] Morsy | Current account determinants for oil-exporting countries[END_REF] examined the determinants of the current account balance in oil exporting countries and concluded that the public finance balance and underground oil wealth are important determinants of the current account balance.

Literature review of exchange rate regimes

In the economic literature, the issue of current account imbalances has been addressed from several angles, the most important of which is to identify appropriate treatments and describe policies that would reduce the impact of these imbalances on countries' external balances. On the other hand, the issue of external imbalances has attracted the interest of many researchers and academics in the functioning of exchange rate regime [START_REF] Arghyrou | Current account imbalances and real exchange rates in the euro area[END_REF][START_REF] Belke | Current Account Imbalances in the E uro A rea: Does Catching up Explain the Development?[END_REF][START_REF] Schoder | Are the Current Account Imbalances Between EMU Countries Sustainable? Evidence from Parametric and Non-Parametric Tests[END_REF][START_REF] Chen | When do fixed exchange rates work? Evidence from the Gold Standard[END_REF][START_REF] Lane | External adjustment and the global crisis[END_REF]; Gourinchas and Rey, 2005;[START_REF] Martin | Exchange rate regimes and current account adjustment: An empirical investigation[END_REF][START_REF] Gervais | Current account dynamics, real exchange rate adjustment, and the exchange rate regime in emerging-market economies[END_REF].

Academic debate on this issue has largely focused on exchange rate flexibility and its relationship to the acceleration of current account imbalances. In this context, Milton

Friedman argued for a flexible exchange rate mechanism in the early 1950s. He argued that in an economy characterized by fixed price and wage levels, the institutional mechanism of a floating nominal exchange rate protects the economy from real external shocks. Thus, flexible systems have an automatic and continuous adjustment mechanism that limits the real size of shocks and allows for faster adjustments and added that less flexible exchange rate regimes simply suppressed rather than eliminated external imbalances [START_REF] Friedman | Essays in positive economics[END_REF].

The rationale for Friedman's original intuition as explained by Dornbusch (1980) is that flexible systems allow central monetary authorities to respond to external shocks by devaluing their currency and raising the domestic prices of exported goods. This price increase would compensate for the decline in international prices of these commodities following the negative shock. In addition, negative shocks reduce production, which leads to a decrease in labour demand. At the same time, the depreciation of the currency puts downward pressure on real wages, allowing for a smoother organization of the labour market, as well as the market for goods and services.

In contrast, central monetary authorities in fixed exchange rate regimes cannot respond to negative shocks by devaluing their currency due to currency peg requirements, so the negative impact of an external shock has to be borne by the real economy, as it is mainly macroeconomic variables that destabilize the economy such as consumption and production that are the most vulnerable to the impact of external shocks [START_REF] Hoffmann | Fixed versus flexible exchange rates: Evidence from developing countries[END_REF]. Whereas with greater financial integration and capital mobility, the "impossible triad" model proposed by Fleming and Mondel (1964) states that it is impossible for a country to have a fixed exchange rate, free capital movement and an independent monetary policy. Thus, a country that has an open capital account and decides to fix its exchange rate must abandon its monetary policy and submit it to the base currency policy. Thus, output continues to fall until wages fall and prices slow down due to the nominal value. This process makes adjustment slower and more costly (Obstfeld and Rogoff, 1995).

Thus, according to economic theory, adjustment of external imbalances can be achieved through both income, output, and expenditure in the so-called classical adjustment,

where an adjustment will occur in the rate of return to capital on a market basis in response to the current account imbalance, and this is done through movements in the money supply and price level at a fixed exchange rate. However, income and expenditure adjustments have proven more costly in terms of lost output and labour [START_REF] Gervais | Current account dynamics, real exchange rate adjustment, and the exchange rate regime in emerging-market economies[END_REF]. External adjustment can also occur through movements in a flexible exchange rate according to the adjustment treatment (Milton Friedman, 1953) which suggests that a flexible exchange rate facilitates the adjustment of the rate of return to income due to the stickiness effect and the slow adjustment of domestic wages and prices. On the other hand, according to (Obstfield and Rogoff, 1995), the external adjustment theory indicates that the adjustment of external imbalances can be achieved more effectively through the adjustment of the real exchange rate, where relative price movements cause the exchange of expenditures between domestic and foreign goods, which can occur when the economy is operating close to full employment.

In his study, [START_REF] Martin | Exchange rate regimes and current account adjustment: An empirical investigation[END_REF] pointed out that the exchange rate regime can affect the ability of a state to cope with shocks. He added that under the conditions of critical elasticity theory (the Marshall-Lerner case), countries that have adopted flexible exchange rate regimes can devalue their currency to rebalance the balance of trade. Whereas countries with pegged currencies cannot use this instrument without significant costs. [START_REF] Gervais | Current account dynamics, real exchange rate adjustment, and the exchange rate regime in emerging-market economies[END_REF], they found that the current account position in terms of surplus and deficit can affect the function of the exchange rate regime in the adjustment of current account imbalances. Through their studies, they documented that in the case of countries with a fixed nominal exchange rate and current account surpluses, the process of real exchange rate adjustment is often frustrating by restricting the impact on the domestic money supply. Whereas in the case of countries with current account deficits, real exchange rate adjustment often occurs in a fixed exchange rate regime following an exchange rate crisis in which the nominal rate collapses and economic activity is severely disrupted. They also found that episodes of current account reversal from deficit to surplus were associated with significant declines in the real exchange rate. Their results also indicated that there is a trade-off between adjustments through the real exchange rate, domestic income, demand, and output. In other words, if the economic rate of return cannot be adjusted quickly -either because of a fixed nominal exchange rate or because of a slow adjustment of relative price levels -then output must bear a greater adjustment burden.

On the other hand, adjustment is more costly in terms of lost output for countries with a fixed exchange rate regime at the time of the reversal, and the internal rate of return ends up falling further. Thus, their results suggest that faster adjustment of external imbalances occurs either through a more flexible nominal exchange rate movement or more dramatically following the exchange rate crisis. Thus, since adjustment through an exchange rate crisis would be more costly in terms of lost output due to financial turmoil, they believe that a flexible exchange rate allows for a faster and more orderly adjustment of the current account.

In this context, since the collapse of the Bretton Woods system in 1973, flexible exchange rate regimes have been widely adopted. This approach may imply acceptance of Friedman's view of the effectiveness of flexible exchange rate regimes for external adjustment [START_REF] Gnimassoun | The importance of the exchange rate regime in limiting current account imbalances in sub-Saharan African countries[END_REF]. Despite this, several empirical studies have concluded that there is no conclusive evidence that a more flexible nominal exchange rate accelerates current account adjustment (Chinn and Wei,2013;[START_REF] Markiewicz | Choice of exchange rate regime in transition economies: An empirical analysis[END_REF]. Thus, it can be said that Friedman's hypothesis is not supported by sufficient empirical evidence.

A significant body of empirical work examining the role of exchange rate regimes in current account dynamics addresses this issue by focusing on the involvement of the current account on its equilibrium values. In this respect, the study [START_REF] Edwards | Financial openness, sudden stops, and current-account reversals[END_REF]) is one of the first studies that examine how the intertwining of current account and exchange rate regimes affects real economic activity. The subsequent empirical literature has since dealt more explicitly with the role of exchange rate regimes in current account adjustments. For the most part, the results of the empirical work provide evidence that flexible systems are more useful for current account adjustment and thus external stability. Nevertheless, some economists question the advantage of flexible exchange rates for developing countries [START_REF] Calvo | Fixed versus flexible exchange rates: Preliminaries of a turn-of-millenium rematch[END_REF].

On the other hand, Ghosh (2010) revisited Friedman's view. Where he followed a different strategy, focusing on the relationship of exchange regimes with the size of current account imbalances rather than the speed of adjustment. Thus, their results showed that floating regimes are associated with smaller imbalances, supporting Friedman's view. However, this study has been criticized as being similar to Friedman's study, it focused on the effect of the exchange rate regime for the country itself, without taking into account the impact of trading partners' regimes when studying the effect of the exchange rate regime on external adjustment.

The importance of this criticism may lie in the fact that external balances are transactions with many trading partners and that the flexibility of bilateral or effective exchange rates is determined by the exchange rate regime of the home country and its trading partners.

In this context, the study by [START_REF] Singh | Reexamining the Nexus Between Nominal and Real Effective Exchange Rates in India: An Application of Autoregressive Distributed Lag Model[END_REF] paid new attention to how the country's external adjustment was affected by the exchange rate regimes of its trading partners in addition to its own regime. Their results showed that flexible exchange rate regimes in trading partner countries accelerate the external adjustment of the home country. Compared to a non-floating trade system, this study also provides evidence to support Friedman's view. [START_REF] Gnimassoun | Current account sustainability in Sub-Saharan Africa: Does the exchange rate regime matter?[END_REF], investigate the sustainability of the current account in selected sub-Saharan countries over the period 1980-2011 by examining the cointegration relationship between imports and exports. They also applied the corrected least squares dummy variable (LSDVC) method to test whether the exchange rate regime affects the sustainability of the current account in sub-Saharan Africa. Their findings show that the level of current account sustainability is higher in countries with flexible exchange rate regimes than in countries with intermediate or fixed regimes.

In a parallel fashion [START_REF] Ghosh | Exchange rate management and crisis susceptibility: A reassessment[END_REF], they argue that exchange rate regime arrangements can mask heterogeneous relationships between countries. Thus, they stressed the importance of examining bilateral exchange rate arrangements and trade flows to assess the validity of the Friedman hypothesis. Through their study, they found that flexible bilateral exchange rates reflected the bilateral trade balance more quickly. However, they note that this approach has several criticisms. Whereas, despite the existence of bilateral exchange rates, countries can adopt a single monetary regime. Thus, the flexibility resulting from the policy is a product of several parties, not bilateral. Furthermore, corrective movements in flexible exchange rates may occur at the aggregate level rather than on a bilateral basis. Several studies have argued that exchange rate regimes have an impact on current account sustainability and the formation of global imbalances and have argued that -according to Friedman -nominal exchange rate changes occur rapidly, spontaneously and are persistent. Thus, it produces corrective movements that prevent the accumulation of tensions and can restrict the development of international balance of payments crises (Harkmann and Staehr, 2020;[START_REF] Ambe | External adjustment and trading partners' exchange rate regimes[END_REF].

In another context, a study [START_REF] Chinn | A faith-based initiative meets the evidence: does a flexible exchange rate regime really facilitate current account adjustment?[END_REF] shows contradictory results regarding Friedman's claim that flexible exchange rates provide faster rates of current account reversion. Thus, this indicates that the results are still inconclusive on the merits of flexible exchange rate regimes and their ability to produce a faster rate of adjustment to current account imbalances. In their study, they modelled current account dynamics as an autoregressive process, thus allowing to estimate the values of the transactions that govern the sustainability of the current account under the applied exchange rate system. Thus, based on the difference between the estimates of the autoregressive coefficients corresponding to each exchange regime, they determined whether these regimes offered different degrees of current account persistence. Therefore, according to their results, the difference in the coefficient of the current account reflects the exchange rate regimes, not only from a statistical point of view, but also important from an economic point of view, as it indicates the extent to which there is greater stability in the current account balances.

Thus, it can be claimed that the study (Chin and [START_REF] Chinn | A faith-based initiative meets the evidence: does a flexible exchange rate regime really facilitate current account adjustment?[END_REF]) is one of the first studies that documented the absence of a relationship between the flexibility of the exchange rate system and the current account imbalance, which means a rejection of Friedman's hypothesis.

On the other hand, they tried to justify their results by arguing that the choice of control variables could offset the full effect of exchange rate regimes. In the same context, [START_REF] Kovačević | Financing the current account deficit in Southeastern European countries[END_REF], confirmed that all Southeast European countries had large current account deficits in the pre-crisis period of global financial, regardless of their exchange rate regime. While the increase in global imbalances during the first decade of the twenty-first century has led to an increased interest in the literature on current account sustainability, little attention has been paid to the relationship between current account imbalances and exchange rate regimes. In context of our concern, the dynamics of current account imbalances in oil-exporting countries in recent years suggest that current account deficits have worsened in some of these countries in most cases, while at the same time these imbalances have been reflected in increasing surpluses in the rest. The presence of chronic current account imbalances increases the risks associated with the disorderly adjustment of these imbalances, so a discussion of the role of exchange rate systems in correcting these imbalances is closely linked to macroeconomic policy in the oil exporting countries.

In this context, understanding the facts about the current account determinants requires more attention to examine and identify these determinants in order to propose policy measures that reduce current account imbalances. On the other hand, most oil-exporting countries are heavily dependent on imports of various types of consumer goods and capital goods. Moreover, the export sector in most of these countries remains unable to compete on the international market. Thus, the growing gap between the rapid growth of imports and the earnings of volatile export sectors may make their external balances vulnerable to further imbalances over time. Although external imbalances pose a serious challenge to their development, little attention has been paid to the situation of oil-exporting countries. Moreover, the focus on oil-producing countries is particularly justified by the fact that their external imbalances also challenge the stability of the world economy.

Research methodology

We join the empirical literature in the context of examining the determinants of current account and external imbalance adjustments. We have grouped oil exporting countries into three different exchange rate regimes (fixed, intermediate, and flexible) as in [START_REF] Chinn | A faith-based initiative meets the evidence: does a flexible exchange rate regime really facilitate current account adjustment?[END_REF]. As noted above, we aim to examine the impact of the exchange rate regime on current account adjustments. Thus, the speed of current account adjustment is expected to vary depending on the exchange rate regime.

To examine this claim, we analyze the persistence of the current account by estimating a firstorder autocorrelation coefficient. A higher value of this coefficient indicates that the current account shock will be more consistent for the groups of countries under study, and vice versa.

To estimate this autocorrelation coefficient, we rely on the corrected least squares dummy estimate (LSDVC) originally developed by [START_REF] Kiviet | On bias, inconsistency, and efficiency of various estimators in dynamic panel data models[END_REF]. In addition, we estimate the current account determinants of oil exporting countries. In this context, we split the study sample into five subsamples according to the geographical zone of each country. Thus, we consider whether the current account determinants differ depending on the geographical area of an oil-exporting country.

The corrected LSDV allows the introduce the lagged dependent variable to capture the persistence and dynamic behavior of the dependent variable. However, the presence of a lagged dependent variable generates an endogeneity problem, as the use of least squares estimation will be biased. The endogeneity problem can be solved by a dynamic model with an instrumental variable (IV) estimation approach, for example, GMM can be used in such a case [START_REF] Shuaibu | Impact of credit market conditions on agriculture productivity in Sub-Saharan Africa[END_REF]. Despite the widespread use of GMM, a body of literature indicates that GMM estimators perform poorly when the cross-sectional panel (n) is small (Andersen and Sorensen, 1996;[START_REF] Meschi | Trade and income inequality in developing countries[END_REF] and furthermore, instrument proliferation can also be a major concern [START_REF] Dahir | Capital, funding liquidity, and bank lending in emerging economies: An application of the LSDVC approach[END_REF][START_REF] Bun | The weak instrument problem of the system GMM estimator in dynamic panel data models[END_REF].

Moreover, the LSDVC estimator provides efficient and robust estimates compared to other dynamic estimators as it can solve the endogeneity and simultaneity problem (Shuaibu, 2021) and works best when the sample of cross-sectional units is small and the panel data is also unbalanced (Bruno, 2005;[START_REF] Dahir | Capital, funding liquidity, and bank lending in emerging economies: An application of the LSDVC approach[END_REF].

However, in the context of our study, the panel of 27 oil-exporting countries has been selected. Therefore, the LSDVC suggested by [START_REF] Kiviet | On bias, inconsistency, and efficiency of various estimators in dynamic panel data models[END_REF], Bun and Kiviet (2003) is more appropriate for the analysis. This method is initialized by a dynamic panel estimation and based on a recursive bias correction of the fixed effects estimator. Bruno (2005) extended the LSDVC to unbalanced panels by Monte Carlo experiments, the LSDVC is preferred to GMM estimators as recommended by many authors when the number of effective sections is small and the panel is unbalanced [START_REF] Singh | Quantifying the effect of eWOM embedded consumer perceptions on sales: An integrated aspect-level sentiment analysis and panel data modeling approach[END_REF].

Specification of the empirical model

We define the relationship between the current account balance and its macroeconomic and fundamental determinants. Thus, we define the dynamic empirical model which is denoted by the following regression equation:

CAB it = αCAB it-1 + βX it + μ i + ε it ………………...…. (2-1)
where:

CAB it =Current account balance as % to GDP, represents dependent variable In order to estimate the relationship between current account and their determinants as well as assessing the role of exchange rate regimes in adjusting the current account imbalances. We redefine the dynamic empirical model described above in regression equation (2-1) as follows.

Overall current account balance's persistence

Under this sub-model, we analyze the relationship between the overall current account balance and its determinants according to the exchange rate regimes adopted by the sample countries during the study period. Thus, we analyze the current account balances of the three subsamples separately according to the following formula:

CAB it reg = f[(CAB it-1 , X it , ε it )] ………..……………………… (2-2)
Thus, from this formula expressed in equation (2-2), we obtain three sub-equations, each representing a current account balance according to the different exchange rate regimes included in the model. These are as follows:

CAB it fixed = f[(CAB it-1 , X it , ε it )] …………..….……………………..(2-2-1) CAB it intermediat = f[(CAB it-1 , X it , ε it )] …………….………………………(2-2-2) CAB it float = f[(CAB it-1 , X it , ε it )] ………………..…………………(2-2-3)

Case of current account surplus persistence

Within this sub-model, we assess the relationship between the current account surplus and its explanatory variables according to the exchange rate regimes adopted by the sample countries during the study period. Thus, we assess the current account surplus for the three subsamples separately using the following formula:

d it Reg (CAB it surplus ) = f[(CAB it-1 , X it , ε it )] ………….………………………...( 2-3)
where:

d it 𝑅eg = The dummy variable defining the exchange rate regime takes the value 1 when the exchange rate is fixed, intermediate or flexible, and 0 otherwise.

Thus, from this formula expressed in equation (2-3), we obtain three sub-equations, each representing a current account surplus according to the different exchange rate regimes included in the model. These are as follows:

d it fixed (CAB it surplus ) = f[(CAB it-1 , X it , ε it )] ……...………………………….(2-3-1) d it intermediat (CAB it surplus ) = f[(CAB it-1 , X it , ε it )] ……...………………………….(2-3-2) d it float (CAB it surplus ) = f[(CAB it-1 , X it , ε it )] ……….……….……………………..(2-3-3)

Case of current account deficit persistence

In this sub-model we estimate the relationship between the current account deficit and its independent variables according to the exchange rate regimes employed by the sample countries during the study period. Thus, we analyze the current account deficits of the three subsamples separately using the following formula:

d it Reg (CAB it deficit ) = f[(CAB it-1 , X it , ε it )] ………………………..……………….(2-4)
where:

d it reg = The dummy variable defining the exchange rate regime takes the value 1 when the exchange rate is fixed, intermediate or flexible, and 0 otherwise.

Thus, from this formula expressed in equation (2-4), we obtain three sub-equations, each representing a current account deficit according to the different exchange rate regimes included in the model. These are as follows:

d it fixed (CAB it deficit ) = f[(CAB it-1 , X it , ε it )] ……………….………………………( 2-4-1) d it intermediat (CAB it deficit ) = f[(CAB it-1 , X it , ε it )] …………..……………………….(2-4-2) d it float (CAB it deficit ) = f[(CAB it-1 , X it , ε it )] ……………...……………………….
( 2-4-3)

Case of current account persistence by geographic area

In this last sub-model, we investigate the relationship between the overall current account balance and its independent variables depending on the geographic area to which the countries in the sample under study belong. Thus, we analyze the current account balances of the five subsamples separately using the following formula:

CAB it area = f[(CAB it-1 , X it , ε it )] …………………………………………… (2-5)
Thus, from this formula expressed in equation (2-5), we obtain five sub-equations, each representing a current account balance according to the different geographic area included in this model. These are as follows:

CAB it SSA = f[(CAB it-1 , X it , ε it )] ……………………………………….(2-5-1) CAB it Asia&Russia = f[(CAB it-1 , X it , ε it )] ………………………………………. (2-5-2) CAB it N.Africa = f[(CAB it-1 , X it , ε it )] ………………………………………..(2-5-3) CAB it L.America = f[(CAB it-1 , X it , ε it )] .……………………………………… (2-5-4) CAB it GCC & Iran = f[(CAB it-1 , X it , ε it )] ………………………………………..(2-5-5)

Estimation procedure

To achieve the objectives of the study, we analyze the relationship between current account balances and their main determinants in order to determine the level of current account persistence corresponding to the exchange rate regime used for each sub-sample. Thus, we analyze four sub-models, where in the first, second and third models we deal with the overall current account status, the surplus status, and the deficit status respectively. Regarding the fourth sub-model, we analyze current account balances by geographic area without considering differences in exchange rate regimes between the sample countries. To do so, we use the pooled, fixed, and random panel estimators in the first stage of the analysis and then use the dynamic panel data method called corrected least squares dummy variable (LSDVC)in the second stage.

Estimation of cross-sectional time series models

Based on cross-sectional time series data technology (panel data), we estimated the basic models represented by the pooled regression model, the fixed effects model and the random effects model. After that, we compared these models in order to select the best model.

Therefore, to determine the most appropriate analysis method for the study data and to determine the specifications of the appropriate model for the determinants of the current account, as well as to study the adjustments of the current account imbalances, we determine the appropriate model through the results of the following tests:

-Breusch-Pagan test to determine the appropriate model between the pooled regression model and the random effects.

-Fisher's statistical test to determine the appropriate model between the pooled regression and the fixed effects.

-The Hausman test to determine the appropriate model between fixed versus random effects.

After performing the above tests, and through the result of the (Breusch-Pagan) test, we reject the null hypothesis and accept the alternative hypothesis at a significance level of 1%, meaning that the random effects model is appropriate compared to the pooled regression model. Furthermore, through the Fisher's test (F) presented in Table (1-2), we find that the critical value of (0.0000) is completely below the imposed significance level of 0.05, and therefore the alternative hypothesis 𝐻 1 is accepted, which states that the fixed effects model is appropriate. On the other hand, based on the results of the Hausman test, which distinguishes between the random effects model and the fixed effects model, it can be observed that the probability value of the test statistic is completely less than 5%, which therefore means that the null hypothesis is rejected, and the alternative hypothesis is accepted. Therefore, the fixed effects model is the appropriate model for the study. Nevertheless, it seems clear from the table accompanied by the Hausman test that the differences between the variances of the two models are statistically significant and therefore the estimation of the random effects model is inefficient, and that the alternative hypothesis suggests that the fixed effects model is appropriate, but there is an endogeneity problem for all variables except the AD, POPG, XD variables.

Table 2-2: Haussmann test results

Variables

The fixed effects model

The random effects model

Differences in variance

The probability value of the test statistic On the other hand, in addition to the endogeneity problem, we note from Table (2-2) that the fixed-effects model is not free of econometric problems, notably the problem of crosssections and heterogeneity of unobserved variables (the estimation residuals) as indicated in the table. Therefore, we choose one of the dynamic panel methods, namely the LSDVC method to remove the static effects associated with the random error bounds. Once it has been found that the optimal model of this study suffers from several econometric problems, the dynamic panel analysis method will be used, more precisely we estimate the study models using the (LSDVC) method, which allows us to solve many problems, especially the endogeneity problem, the non-observed variable heterogeneity problem using a dynamic variable, and in panel in particular, eliminate the individual biased effects problem as mentioned above.

Corrected least squares dummy variable model

In this study, we employ corrected least squares dummy variable (LSDVC) method.

The LSDVC estimator was first developed by [START_REF] Kiviet | On bias, inconsistency, and efficiency of various estimators in dynamic panel data models[END_REF], [START_REF] Judson | Estimating dynamic panel data models: a guide for macroeconomists[END_REF] and Boone and Kiviet (2003), and later extended by Bruno (2005). To ascertain robustness, the LSDVC (AH), LSDVC (AB) and LSDVC (BB) estimates, which are dynamic error-corrected estimates developed by Anderson and Hsiao (1982), [START_REF] Arellano | Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations[END_REF] and Blundell and Bond (1998) respectively, are commonly applied.

The preliminary results presented in column (1-1) of table (4-2) show that the first general model suffers from a cross-sectional correlation problem, so we divide the general sample into subsamples according to each of the study models in order to avoid this problem. Given that the problem of cross-sectional correlation does not arise in the subsamples because of the random distribution of missing data. Thus, the samples in the first, second and third models are defined by exchange rate regimes, while in the fourth model the subsamples are defined by the geographic area of countries included in the study. It should be noted that the models are estimated using the method of corrected least squares dummy variables (LSDVC) according to Arrelano and Bond (1991).

Empirical results

In this part of the second chapter of the study, we present the results of an empirical analysis of the relationship between the current account and its main determinants in oil- For the first model represented by Equation (2-2), we distinguish between countries using a fixed, intermediate, or flexible exchange rate regime. We create three subsamples -depending on the exchange rate regime -using the unbalanced panel method. In this regard, we note that instead of including a dummy variable representing the exchange rate system in this model, we include only countries using the same exchange rate regime in three separate subsamples, each representing a fixed, intermediate, and floating exchange rate regime, respectively; this is based on the years in which a country has a particular exchange rate regime. On the other hand, for the second model mentioned in equation (2-3) and the third one mentioned in equation (2-4),

we follow the same pattern used in the first model in terms of the distinction between the samples according to the exchange rate regime. In addition, we include a dummy variable representing the relevant exchange rate regime in each subsample. In the same context and with respect to the fourth model mentioned in equation (2-4) regarding current account persistence by geographic area, we do not consider a split by exchange rate regime in this model. Instead, we include the real effective exchange rate among the explanatory variables of the model. Thus, we estimate regression models for the current account persistence by exchange rate regime and by geographic area, in oil-exporting countries. We implement the LSDVC (AB). Table 234)

shows the first model that shows the empirical results of the autoregressive current account persistence model, in columns (1-2), (1-3) and (1-4). While table (2-5) examines the effect of exchange rate regimes on the current account surplus in columns (2-1), (2-2) and (2-3). In addition, the third table (2-6) shows the effect of exchange rate regimes on the current account deficit in columns (3-1), (3-2) and (3-3). Finally, Table 234567) shows the fourth model, which presents the empirical results of the current account sustainability model by geographic area in columns (4-1), (4-2), (4-3), (4-4) and (4-5).

Overall current account persistence

Below we show the results of the analysis of the overall current account balance model to reveal the role of each of the exchange rate regimes included in the analysis in shaping current account persistence, and then the ability of each of the three regimes to achieve a higher level of persistence, indicating a higher rate of adjustment to current account imbalances. On the other hand, we also present the results of a fourth model that examines the determinants of the current account balance by geographic area to identify the determinants that constitute the current account in each region separately. We also attempt to identify the extent to which the persistence of current account balances varies by geographic area of oil-exporting countries.

4.2.1

Fixed exchange rate regime case It can be seen from the value of the autoregressive coefficient presented in table (2)(3)(4) that the fixed exchange rate regime achieves consistency of 0.480 in the current account balance of the sample countries at a significance level of 1%. On the other hand, the results reveal that the net foreign assets variable (LNFA) is inversely related to the current account balance, according to the fixed exchange rate system sample. Thus, an increase in net foreign assets by one unit leads to a corresponding decrease in the current account balance by 0.017 units. In addition, the age dependency ratio (AD) variable has a negative relationship with the current account balance. Given that the coefficient of estimation for the age dependency ratio variable indicates that an increase of one unit leads to a decrease in the current account balance by 0.525 units at a significance level of 1%. As for the variable of the domestic credit to the private sector, it is also associated with a negative relationship with the current account balance.

The results show that a one unit increase in the domestic credit ratio (DCPS) results in a 0.545 unit increase in the current account balance at the 1% significance level. It is also found that the oil wealth variable has a negative relationship with the current account balance. Where the value of the coefficient indicates that a one unit increase in oil wealth (OW) leads to a 0.135 unit decrease in the current account balance, at a significance level of 10%.

From the above empirical results related to the fixed exchange rate model, the relationship between the variables of the current account persistence model can be inferred by substituting in equation (2-2-1). the following results have been obtained:

Intermediate (managed) exchange rate regime case

The results of the linear regression model analysis presented in table (2-4) column (1-

3) indicate that according to the value of the coefficient of the lagged current account balance (LCAB), the persistence of the current account according to the sample of the intermediate exchange regime amounted to 0.685 at the significance level of 1%. On the other hand, it can be noted that the current account balance has a negative relationship with the private sector domestic credit ratio variable, therefore, an increase of one unit of domestic credit leads to a decrease of 0.179 units of the current account balance, at a significance level of 10%. Similarly, the oil wealth (OW) variable has a negative relationship with the current account balance.

Where the value of the coefficient of oil wealth variable indicates that an increase of one unit leads to a decrease of 0.249 units in the current account balance at the 1 percent significance level.

From variable at the 10% level of significance. Thus, an increase of one unit leads to a decrease of 0.740 unit in the current account. In the similar fashion, the results presented in columns (1-3)

show that the Age Dependency Ratio (AD) variable has a negative relationship with the (CAB)

in the case of the flexible exchange tare regime, as a one-unit increase leads to a 0. The second model describes countries and periods that have adopted a fixed exchange rate regime, the third model includes countries and periods that have adopted a managed (intermediate) exchange rate regime, and the fourth model includes countries and periods that have adopted a flexible exchange rate regime. The symbol (L-) refers to lagged one period.

Current account surplus persistence

We perform a current account persistence analysis according to the exchange rate regime to which the oil exporting countries of the sample under study are subject during the study period. For this purpose, we introduce a dummy variable that takes the value (1) in the case of a fixed, intermediate or flexible exchange rate regime and takes the value (0) otherwise.

Furthermore, we separate the main sample of the current account surplus into three subsamples according to the exchange rate regimes, using the unbalanced panel method. Based on the arrangement of the exchange rate regimes used in the study, we observe that many countries in the sample move among the exchange rate regimes during the study period. Thus, the separation method mentioned above helps in examining the impact of exchange rate regimes on the current account persistence of the studied sample countries. Moreover, we include a set of explanatory variables that could potentially affect the current account balance behavior of the countries under study.

Through the results presented in columns (2-1, 2-2, 2-3) of table (2-5), we can see the results of the estimation of the current account surplus model, where we analyzed the relationship between the current account surplus of the countries in the sample and the selected explanatory variables. On the other hand, this model also includes dummy variables representing the exchange rate system in each subsample. Thus, we review the estimated coefficient of the lagged current account ratio, which indicates the stability of the current account surplus, as well as the estimated coefficient of the dummy variable, which refers to the exchange rate regime. In addition, our results include the estimated coefficients of other explanatory variables that can serve as channels that convey the potential impact of the exchange rate regime on current account persistence.

Fixed exchange rate regime case

The column (2-1) represents the results of the sample of the fixed exchange rate regime. Therefore, the value of the autoregression coefficient indicates that the persistence rate of the current account surplus is 0.418 at all significance levels. On the other hand, the value of the trade openness coefficient shows a weak positive association with the current account surplus at a significance level of 1%. An increase in trade openness by one unit leads to an increase in the current account surplus by 0.073 units. On the other hand, the results show that countries using a fixed exchange regime experience an increase in the surplus, as the value of the dummy variable coefficient (DURX) shows a weak positive correlation with the current account surplus. Thus, managing a fixed exchange regime per unit of time leads to an increase in the current account surplus by 0.043 units at a confidence level of 5%. This result is consistent with studies [START_REF] Gnimassoun | The importance of the exchange rate regime in limiting current account imbalances in sub-Saharan African countries[END_REF][START_REF] Lee | Exchange rate assessments: CGER methodologies[END_REF][START_REF] Martin | Exchange rate regimes and current account adjustment: An empirical investigation[END_REF].

On the other hand, the results reveal a negative relationship between the age dependency variable and the current account surplus. Where the coefficient value of the (AD)

variable indicates that an increase of one unit leads to a decrease of 0.230 units in the current account surplus, at a significance level of 1%. The results also show that the domestic credit to private sector (DCPS) is also negatively associated with the current account surplus. This means that a one unit increase in (DCPS) leads to a decrease in the current account surplus of 0.355 units, at a significance level of 1%.

From the above empirical results related to the fixed exchange rate model, the relationship between the variables of the current account surplus persistence model can be inferred by substituting in equation (2-3-1). the following results have been obtained: show that an increase by one unit in the trade openness leads to an increase in the current account balance by 0.092 units, at a significance level of 1%.

Moreover, the results reveal that the age dependency ratio (AD) variable is significant in determining the current account surplus, since we indicate a negative association with the current account surplus. Thus, the estimated coefficient value shows that a one unit increase in the (AD) leads to a 0.208 unit decrease in the current account surplus at the 10 percent significance level. With respect to the variable of domestic credit to the private sector (DCPS), the estimation results also indicate the existence of a negative association between this variable and the current account balance. While when it is increased by one unit, the current account surplus decreases by 0.328 units at the 1 percent significance level.

Flexible exchange rate regime case

Column (2-3) shows the results of estimating the current account stability model for the countries under the flexible exchange rate regime in the case of a current account surplus.

The results indicate that the persistence of the current account is about 0.435, at a significance level of 1%. With regard to the trade openness variable (TOP), the results show that an increase in the trade openness ratio of one unit leads to an increase in the current account surplus of 0.084 units, at the 5% significance level. On the other hand, the age dependency ratio (AD) is negatively related to the current account surplus, meaning that a one-unit increase in the (AD) leads to a 0.226 unit increase in the current account surplus, at the ten percent significance level. The estimation results also reveal that the domestic credit to private sector (DCPS)

variable is negatively related to the current account surplus. While an increase in the (DCPS)

of one unit can lead to a decrease in the current account surplus of 0.344 units, at a significance level of 1 percent. On the other hand, we can observe that the dummy variable representing the flexible exchange rate regime has a negative sign, although it does not have a statistically significant effect on the current account surplus either.

From the above empirical results related to the float exchange rate model, the relationship between the variables of the current account surplus persistence model can be inferred by substituting in equation (2-3-3). the following results have been obtained:

The three exchange rate regimes (fixed, intermediate, and flexible) cases

The estimation results presented in table (6-2), column (3-1, 2-3, 3-3), show that the persistence of the current account deficit is about 0.216 at a significance level of 5%. This is for all exchange rate regimes included in the analysis. On the other hand, the results of the analysis show that only the trade openness variable affects the current account deficit. And this is across all groups of exchange rate regimes. Given that the results show that increasing the trade openness variable by one unit would reduce the current account deficit by about 0.210 units at the 1% indication level. Thus, it can be noted that the degree of current account persistence in deficits is less than in surpluses, given all the cases of exchange rate regimes. In the sense that oil exporting countries tend to maintain current account surpluses more than deficits. The results also show that the trade openness variable is the only channel that can convey the effect of the exchange rate regime on determining the level of current account persistence in the case of current account deficits for the countries in the study sample.

From the above empirical results related to the (fixed, intermediate, and flexible) exchange rate models, the relationship between the variables of the current account surplus persistence model can be inferred by substituting in the equations (2-4-1, 2-4-2 and 2-4-3) respectively, the following results have been obtained:

Current account persistence by geographical area

In this model, we study the current account persistence of oil-exporting countries by geographic area. Where the countries in the study sample are grouped into five sub-samples according to the geographic area of each country group. Thus, we introduce each of; Sub-Saharan Africa, Asia and Russia, North Africa, Latin America, Gulf Cooperation Countries (GCC) and Iran, in five separate samples. To do this we use a balanced panel data method, as opposed to the method used in the previous three models, which considered the distribution of countries and periods across exchange rate regimes in separate samples. Both real effective exchange rate and oil price are in natural logarithm. L-denotes the lagged one period. * p < 0.1, ** p < 0.05, *** p < 0.01 are significance levels, in which the null hypothesis is rejected. In addition, bootstrapped standard errors are in parentheses. The first model is for Sub-Saharan Africa, the second model is for the Asian oil countries selected (including Russia) and the third model is for the North African countries, the fourth model is for the Latin American countries in the sample, the fifth model is for the Gulf Cooperation Council countries.

4.5.1

Sub-Saharan Africa case This subsample includes the five oil-producing countries; sub-Saharan Africa; Equatorial Guinea, Gabon, Nigeria, Congo Rep, and Angola. The results in table (2-7), column (4-1), show that the coefficient of the lagged current account variable, indicating the persistence of the current account balance, is 0.170 at a significance level of 1 %.

On the other hand, the results show that the variable Population Growth Rate (POPG) has a strong negative relationship with the current account balance, as the results indicate that a one unit increase in (POPG) leads to a 9,254 unit decrease in the current account balance, at a significant level of 10%. As for the trade openness variable, the results show that it has a negative relationship with the current account balance. Where the value of the (TOP) suggests that a one unit increase leads to a 0.200 unit decrease in the current account balance, at the 1% level. Similarly, the variable domestic credit ratio to private sector (DCPS) is also negatively associated with the current account balance. The ratio of (DCPS), however, indicates that a one unit increase leads to a 1.635 unit decrease in the current account balance at a significant level of 1%.

From the above empirical results related to the Sub-Saharan countries model, the relationship between the variables of the current account persistence model can be inferred by substituting in equation (2-5-1). the following results have been obtained:

Asian countries and Russia case

This sample includes Malaysia and Indonesia, Azerbaijan, Kazakhstan, and Russia.

Where we present the estimation results in table (2-7), column (4-2). Thus, the result indicates that the coefficient of the variable lagged current account balance is positive and significant.

Where the value of this coefficient indicates that the current account balance is persistent by 0.814 at a significance level of 1%.

On the other hand, the results show that the trade openness variable has a positive relationship with the current account balance. Where the coefficient value of (TOP) indicates that an increase of one unit could lead to an increase of 0.086 units in the current account balance, at a significance level of 10%. On the other hand, the results show that the net foreign assets variable has a negative relationship with the current account balance. Where the value of the estimated coefficient indicates that an increase in (LNFA) by one unit leads to a decrease in the current account balance by 0.053 units, at the 5% significance level.

As for the real effective exchange rate (REER) variable, the results show that a 1% increase would lead to a 0.172 unit decrease in the current account balance at the 1% significance level. Similarly, the oil wealth variable has a negative relationship with the current account balance, as results show that a one-unit increase in (OW) can lead to a 0.261 decrease in the current account balance at the 1% significance level.

From the above empirical results related to the Asia countries and Russia model, the relationship between the variables of the current account persistence model can be inferred by substituting in equation (2-5-2). the following results have been obtained:

North African countries case

This sample includes five oil-producing countries: Algeria, Libya, Egypt, Chad, and Sudan. The results in table (2-7) in Column (4-3) show that the coefficient of the lagged current account balance (LCAB), indicating current account persistence, is around 0.476 at a significance level of 1%. On the other hand, the results show that the population growth variable (POPG) has a negative and strong relationship with the current account balance at the 1% significance level. Where the value of the coefficient shows that an increase of one unit in (POPG) leads to a decrease of 14,743 units in the current account balance. In addition, the coefficient of trade openness variable has a negative relationship with the North African current account balance. The results confirm that an increase by one unit in (TOP) leads to a decrease in the (CAB) by 0.365 units at a significance level of 1%. Similarly, the results show that the oil wealth variable has a negative relationship with the current account balance, where the coefficient value indicates that a one unit increase in (OW) leads to a 0.352 unit decrease in the (CAB) at a significance level of 1%. In addition, the real effective exchange rate variable has a negative relationship with the current account balance, where the coefficient value indicates that a 1% increase in (REER) leads to a 0.196 decrease in the (CAB), at a significance level of 1%.

From the above empirical results related to the North Africa model, the relationship between the variables of the current account persistence model can be inferred by substituting in equation (2-5-3). the following results have been obtained:

Latin American countries case

This sample includes oil-producing countries in Latin America. We select among our sample six countries: Trinidad and Tobacco, Brazil, Colombia, Ecuador, Mexico, and Venezuela. The results are shown in table (2-7) in column (4-4). Notably, the value of the autoregressive coefficient expressing current account persistence reaches 0.462 at a significance level of 1%. In addition, the value of the coefficient of the export diversification index (XD) indicates that an increase by one unit leads to an increase in the current account balance by 0.503 units at a significance level of 5%. On the other hand, the results show that the net foreign assets variable (LNFA) has a negative relationship with the current account balance of Latin American countries. Whereas an increase of one unit leads to an increase of 0.062 units in the current account balance at a significance level of 10%. As for the age dependency ratio variable (AD), it is also associated with a negative relationship with the current account balance. Where the coefficient value indicates that a one unit increase leads to a 0.423 unit decrease in the (CAB), at a significance level of 5%. On the other hand, a one unit increase in the domestic credit to private sector variable (DCPS) leads to a 0.324 unit decrease in the current account balance at a significance level of 1%.

From the above empirical results related to the Latin America model, the relationship between the variables of the current account persistence model can be inferred by substituting in equation (2-5-4). the following results have been obtained:

Gulf Cooperation Council countries and Iran case

This sub-sample includes six major oil producing countries: Kuwait, Oman, Qatar, Saudi Arabia, UAE, and Iran. The results are presented in table (2-7) in column (4-5). We estimate the persistence of the current account over the period 1996-2016. We use the balanced dynamic panel data technique. From the results presented, we can confirm that the value of current account persistence coefficient, represented by the lagged of current account balance (LCAB), is positive and significant and is about 0.254 at a significance level of 1%.

On the other hand, the trade openness coefficient variable has a positive relationship with the current account balance. Where the coefficient value indicates that an increase by one unit in (TOP) leads to an increase in the current account balance by 0.144 units, at a significance level of 1%. On the other hand, the net foreign assets variable is negatively related to the current account balance. The estimation results show that an increase by one unit in (LNFA) leads to a decrease in the current account balance by 0.024 units at a significance level of 1%. Similarly, the population growth rate variable has a negative relationship with the current account balance of the Gulf Cooperation Council countries and Iran. Where the coefficient value indicates that a one unit increase in (POPG) leads to a 0.435 unit decrease in the current account balance, at a significance level of 5%. Furthermore, the results show that the oil wealth variable is also associated with a negative relationship with the current account balance. In this case, an increase in Oil Wealth (OW) by one unit leads to an increase in the current account balance by 0.112 units at a significance level of 1%. In addition, the value of the export diversification index (XD) coefficient indicates that an increase by one unit leads to an increase in the current account balance by 0.711 units at a significance level of 1%.

From the above empirical results related to the Gulf council countries and Iran model, the relationship between the variables of the current account persistence model can be inferred by substituting in equation (2-5-5). the following results have been obtained:

Interpreting the effects of current account determinants

Based on the previous work performed in recent empirical studies (described above in the Introduction section), the following main drivers of the current account are common to all sub-groups of our study. Hence, in this part of the study we report the results of the study in preparation for their interpretation in the light of previous empirical research. In this regard, the estimated coefficients of the current account balance determinants are generally considered to be statistically and economically significant, indicating their expected signs with a few exceptions.

Thus, in the context of presenting the results of the explanatory variables, it can be noted that, except for the variables of trade openness and oil wealth, whose sign of their effect differs in some models and agrees in others, the rest of the explanatory variables exhibit the same sign. Thus, this indicates that most of the variables showed the same expected effect in all estimation models. Despite this, there are some differences in terms of effect magnitude between the parameters of the estimated variables. Therefore, for organizational reasons, and to avoid repetition in interpreting the results of the study models, we provide in the following the economic and statistical interpretation of the outcome of the explanatory variables according to the empirical literature. It should be noted here that these variables -which have a significant impact -can act as transmission channels, whereby they can transfer the effect of exchange rate regimes on the persistence of current account balances, in the case of the first, second and third models. On the other hand, specifically in the case of the fourth model, these variables play the role of determinants of the current account position of oil exporting countries.

In summary, these economic relationships and interpretations are consistent with most of the results of the empirical studies that have dealt with current account persistence and the effect of exchange rate regimes on external adjustment.

Effects of lagged current account balance factor

The dynamic current account variable expresses the persistence of the current account.

Thus, persistence means that the current account balance is sustainable from year to year. In this regard, greater flexibility of the autoregressive coefficient implies greater current account persistent [START_REF] Gnimassoun | Current account sustainability in Sub-Saharan Africa: Does the exchange rate regime matter?[END_REF][START_REF] Gervais | Current account dynamics, real exchange rate adjustment, and the exchange rate regime in emerging-market economies[END_REF][START_REF] Harkmann | Current account drivers and exchange rate regimes in Central and Eastern Europe[END_REF][START_REF] Gnimassoun | The importance of the exchange rate regime in limiting current account imbalances in sub-Saharan African countries[END_REF]. On the other hand, current account persistence (measured by the lagged current account ratio) indicates the speed of current account adjustment [START_REF] Beidas-Strom | Are Middle Eastern Current Account Imbalances Excessive?[END_REF]. In the case of our study, the results show that the lagged dependent variable is positive and statistically significant in all study models. Thus, this indicates that the current account in oil exporting countries is mostly persistence, despite varying levels of persistence in some cases. The results show a low level of persistence in some cases, indicating large fluctuations in the current account, especially in the cases of the current account deficit model and some cases of the geographical areas model.

4.6.2

Effects of trade openness factor In general, the literature indicates that there is a negative association between trade openness and the current account position. In this respect, trade openness refers to characteristics such as trade liberalization, responsiveness to technology transfer and the ability to service external debt through export earnings [START_REF] Aristovnik | Short-term determinants of current account deficits: evidence from Eastern Europe and the former Soviet Union[END_REF][START_REF] Chinn | Medium-term determinants of current accounts in industrial and developing countries: an empirical exploration[END_REF]. Thus, countries with greater commercial exposure to international trade tend to be more attractive to foreign capital. On the other hand, a study conducted by (UNCTAD, 2016) found that in the case of countries with a high degree of trade openness, the current account deficit widens (expand-broaden) considerably due to the growth of external debt.

For our study, we found that trade openness is negatively associated with current account status and at a statistically significant level, in the case of the current account deficit model with its three subsamples of exchange rate regimes (3-1), (3-2), (3-3). Similarly, the results revealed that the trade openness variable has a negative and significant relationship with the current account balance, in the case of the sub-Saharan Africa sample (4-1), as well as the North Africa country sample (4-3) in the geographical areas model. Thus, our results in this regard are consistent with the literature (Arezki et al., 2009;[START_REF] Sadiku | The persistence and determinants of current account deficit of FYROM: an empirical analysis[END_REF][START_REF] Gnimassoun | The importance of the exchange rate regime in limiting current account imbalances in sub-Saharan African countries[END_REF]Chinn and Prassad, 2003;Allegret et al., 2013).

On the other hand, and in the context of explaining the impact of trade openness, major developments can contribute to the trade openness variable positively affecting the current account balance. This may occur because of a fall in imports, following adjustment policies aimed at reducing domestic demand. On the other hand, the current account balance could record large surpluses due to a strong increase in exports because of the surge in oil prices for the major oil exporting countries. Thus, it can be said that trade openness can affect the current account through external shocks that lead to an increase in precautionary savings. In this respect, [START_REF] Leung | Structural Determinants of Hong Kong[END_REF] explained the positive effect of trade openness on the current account by the fact that large fluctuations in output require the accumulation of large net foreign assets to facilitate income and diversify risk. This can only be done if there is a current account surplus. In this context, the study [START_REF] Ketenci | Major determinants of current account in Russia[END_REF] indicates that trade openness positively affects the current account balance in Russia in the long run.

We find that the trade openness variable is positively associated at a statistically significant level with the current account balance in the case of the current account surplus model along with its three subsamples for exchange rate regimes (2-1), (2-2), (2-3). On the other hand, the results show that the trade openness variable has a significant and positive relationship with current account balance in the case of Gulf Cooperation Council countries and Iran (4-5) as well as in the sample of Asian countries and Russia (4-2) for the geographic area model. Therefore, our results in this respect are consistent with studies [START_REF] Ibhagui | External debt and current account adjustments: The Role of Trade Openness[END_REF][START_REF] Romelli | Current account and real exchange rate changes: The impact of trade openness[END_REF][START_REF] Gnimassoun | Current account sustainability in Sub-Saharan Africa: Does the exchange rate regime matter?[END_REF][START_REF] Steiner | Current account balance and dollar standard: Exploring the linkages[END_REF].

Effects of domestic credit to private sector factor

The literature indicates that financial deepening can lead to higher returns to investment and lower credit costs. Thus, it can positively affect both saving and investment, but this often depends on the flexibility of credit constraints [START_REF] Bandiera | Does financial reform raise or reduce saving?[END_REF]Chin and Prasad, 2003). Thus, we define financial deepening through domestic credit to the private sector. In this context, the literature mostly indicates that credit expansion is closely related to the current account deficit [START_REF] Phillips | The external balance assessment (EBA) methodology[END_REF]IMF, 2018).

Our results indicate that the domestic credit to private sector is significantly and negatively associated with the current account balance in the case of the overall current account persistence model with its three subsamples (1-1), (1-2), (1-3). The same is true in the case of the current surplus persistence model with its three subsamples for the exchange rate regimes

(2-1), (2-2), (2-3). Our results also reveal that the domestic credit to private sector variable is significantly and negatively associated with the current account balance in the case of the sub-Saharan Africa sample (4-1), as well as in the Latin America sample (4-4) and also in the Gulf

Cooperation Council countries and Iran sample (4-5). In accordance with the geographical areas model. Therefore, our results are consistent with studies conducted by (Cheung et al., 2010;[START_REF] Steiner | Current account balance and dollar standard: Exploring the linkages[END_REF]Allegret et al., 2013).

Effects of population growth factor

The literature indicates that the impact of savings on the current account varies depending on the different demographic structure of society [START_REF] Lee | Exchange rate assessments: CGER methodologies[END_REF][START_REF] Morsy | Current account determinants for oil-exporting countries[END_REF].

For example, an increase in fertility may lead to an increase in the age dependency ratio for the population under 14 and thus this is associated with a reduction in the savings rate, leading to an increase in the current account deficit. On the other hand, the literature indicates that an increase in the working-age population may have ambiguous effects, implying an increase in savings and investment. In another context, an increase in the old-age dependency ratio may also imply a smaller reduction in savings. Also, a higher ageing rate may be associated with higher savings and a smaller current account deficit (IMF, 2017;[START_REF] Cheung | Structural and cyclical factors behind current account balances[END_REF].

We find that the population growth variable is negatively associated with the current account balance in each of the sub-Saharan (4-5), North African (4-2) and Gulf Cooperation

Council and Iran (4-5) samples, at significance levels of 10%, 1%, 5% respectively. According to the geographical model. Therefore, our results in this respect are consistent with the studies conducted by [START_REF] Lee | Exchange rate assessments: CGER methodologies[END_REF]Hasanov, Senhadji, 2008;[START_REF] Rahman | Current account developments in new member states of the European Union: Equilibrium, excess, and EU-phoria[END_REF][START_REF] Morsy | Current account determinants for oil-exporting countries[END_REF][START_REF] Cashin | The differential effects of oil demand and supply shocks on the global economy[END_REF].

Effects of net foreign assets factor

A country's net foreign assets position reflects the amount of the current account balance for the previous period, as well as changes in the evaluation of foreign assets and liabilities. Thus, a country with a high level of net foreign assets may have a higher trade deficit and remain (solvency) able to meet its obligations. In other words, a high level of foreign assets may cause a country to reduce its incentive to acquire an increased amount of precautionary savings. Thus, it weakens the current account constraint. Thus, there is arguably an inverse relationship between the level of foreign assets and the current account. On the other hand, an improvement in the net foreign asset position could lead to an increase in foreign income flows and hence this could lead to an improvement in the current account situation. Conversely, a large negative net foreign asset position would require higher interest payments and hence a larger current account deficit, but this may encourage the country to reduce imports [START_REF] Morsy | Current account determinants for oil-exporting countries[END_REF][START_REF] Phillips | The external balance assessment (EBA) methodology[END_REF].

Our results show that net foreign assets are significantly and negatively associated with the current account balance according to the fixed exchange rate regime sample (2-2-1) and the flexible exchange rate regime sample (2-2-3), in the case of the current account persistence model (2-2). On the other hand, we find that net foreign assets are negatively associated with the current account balance in each of the Asian and Russian (2-5-2), Latin American (2-5-4)

and Gulf Cooperation Council and Iran (2-5-5) sample, at levels of statistical significance of 5%, 10% and 1%, respectively. According to the geographical area model (2-5). Thus, our results in this respect are consistent with her studies [START_REF] Morsy | Current account determinants for oil-exporting countries[END_REF]Bems and Filho, 2009;[START_REF] Das | Determinants of current account imbalance in the global economy: a dynamic panel analysis[END_REF].

Effects of real effective exchange rate factor

There are some mentions in the literature of justifications which might explain the insignificance of the real effective exchange rate in the current account adjustment for oil exporting countries. Perhaps the most important of these explanations is that the oil production of the exporting country in relation to the total market size is very small and therefore it can be said that no single oil producer has the ability to influence the level of the market price. On the other hand, most of the net exporters of crude oil tend to have an inelastic import demand curve because most of their imports are for basic commodities such as food, fuel, and capital goods.

Consequently, and based on the idea that the impact of exchange rate depreciation on the trade balance, and subsequently on the current account, depends mainly on the overall value of the elasticities of exports and imports (according to the Marshall-Lerner condition).

Considering that a lower real effective exchange rate may make a country's exports more attractive to foreigners because their price will be cheaper. Conversely, a lower exchange rate may also make imports less attractive to citizens because they become more expensive. In summary, the lack of a real effective exchange rate effect can be explained by the fact that exchange rate policy is ineffective as an instrument of external adjustment. This is because it violates the Marshall-Lerner condition, which states that when exports and imports are flexible, exchange rate changes can lead to significant changes in the current account. (Arezki et al. 2009;Calderon et al. 2002;Beidas-Strom and Cashin,2011).

Moreover, given that the exchange rate policy may affect the competitiveness and price of the economy. Thus, the real effective exchange rate is usually used to test the competitiveness channel mentioned above. Since an appreciation of the exchange rate corresponds to a loss of price competitiveness, it is expected that there is a negative relationship between the real effective exchange rate and the current account position in the case of oilexporting countries. [START_REF] Arezki | Global imbalances and petrodollars[END_REF]Beidas-Strom and Cashin,2011;[START_REF] Rasasi | Oil prices and GCC exchange rates[END_REF].

In our study, we also include the real effective exchange rate variable in the geographic areas model. Thus, our study shows that the real effective exchange rate is negatively correlated with the current account balance in each sample of Asia and Russia (2-5-2), and North Africa (2-5-3), at a significance level of 1% for both. This is in accordance with the geographic areas model (5-2). Thus, our results in this respect are consistent with the studies conducted by [START_REF] Gervais | Current account dynamics, real exchange rate adjustment, and the exchange rate regime in emerging-market economies[END_REF]Arghyour and Chortareas, 2008;[START_REF] Das | Determinants of current account imbalance in the global economy: a dynamic panel analysis[END_REF]Arezki et al., 2009).

Effects of oil wealth factor

The empirical literature suggests that variable oil wealth in the subsoil can be negatively associated with the current account position of the oil exporting country. This means that more oil wealth can lead to larger current account deficits or smaller surpluses, and the country is still able to meet its obligations. This can be explained in two ways, first: there can be a negative relationship between oil wealth and net foreign assets in the case of countries whose oil wealth exceeds their net foreign assets. Considering that when a country is in a state of oil infrastructure expansion or in the early stages of oil production, this will require more imports and investment in oil infrastructure for the oil producer who needs to increase his production capacity, which makes the net foreign assets negative. Second: The higher depletion rate of proven oil wealth, the more negative impact on the current account would be expected.

As this may push countries to intensify efforts to provide a part of current income for future generations, as well as develop basic infrastructure to promote economic diversification and development of the non-oil sector. [START_REF] Bayoumi | Today versus Tomorrow-The Sensitivity of the Non-Oil Current Account Balance to Permanent and Current Income[END_REF]Morsi 2009).

Our results show that oil wealth is significantly and negatively associated with the current account balance, according to the sample of fixed exchange rate regime (2-2-1) and the sample of intermediate exchange rate regime (2-2-2), in the case of the current account persistence model (2-2). In addition, our study finds that oil wealth is negatively associated at the level of statistical significance with the current account balance in the sample of Asia and Russia (2-5-2), North Africa (2-5-3), and the sample of Latin America (2-5-4) according to the geographic model (2-5). Thus, our results in this regard are consistent with the studies mentioned above.

On the other hand, for the model of the Gulf Cooperation Council countries and Iran (2-5-5). The result reveals that the coefficient of oil wealth has a positive relationship with the status of the current account and at the statistical significance level. Therefore, the explanation for this is probably due to the characteristics of the countries in this region, as they contain the largest oil reserves in the world, in addition to the specifications of the unique costs of oil production that the countries in this region possess. Thus, the size of the huge oil reserves and the low cost of oil production compared to other regions or other producers may play an important role in explaining the positive impact of the oil wealth variable on the current account balance for the group of GCC countries and Iran. In addition, an increase in the share of foreign assets may also play an important role in the current account surplus due to the expected increase in foreign income inflows. Consequently, given that more oil wealth is expected to correlate positively with net foreign assets. Oil wealth could then have a positive effect on the current account balance. Thus, this result is consistent with the study (Cashin, 2011).

Effects of export diversification factor

The empirical literature shows that export diversification can be associated with a positive relationship to the current account position of the oil exporting country. For example, a study (IMF, 2017) indicates that export diversification can help maintain current account sustainability and provide sources of more stable accumulation of foreign exchange reserves.

Moreover, a study [START_REF] Giri | Understanding export diversification: Key drivers and policy implications[END_REF] suggests that increased export diversification can mitigate the negative effects of external economic shocks. However, several studies have shown that there are many factors that determine the role of diversification in improving the current account situation. In this context, a study (Naude and Rossouw, 2011) found that the amount of export diversification in a country is influenced by the level of economic development.

Therefore, according to their study, in the early stages of development a country may find that export diversification is more appropriate until a so-called turning point is reached, after which the country begins to specialize according to its emerging comparative advantage.

On the other hand, the volume of domestic demand can play a role in export diversification, which means that changes in GDP per capita can affect a country's level of export diversification. And also, other factors such as the level of human development, political stability and the ratio of domestic credit to the private sector (Behmani-Oskooee and Jamilov, 2014). In this context, our study found that the export diversification index is significantly and negatively associated with the current account balance in a sample of Latin American countries (2-5-4), Gulf Cooperation Council and Iran (2-5-5), according to the geographic areas model (2-5). Thus, our results in this regard are consistent with the studies mentioned above.

Conclusion

We investigate the impact of nominal exchange rate regimes on current account stability in oil exporting countries using the corrected least squares dummy variable (LSDVC) as a method of analysis. We also examine the current account stability of oil exporting countries by geographic area the results presented in tables (2-4, 2-5, 2-6) show that the lagged dependent variable is positive and statistically significant at various significance levels ranging from 1% to 5%, indicating that the current account in oil exporting countries is described as persistent.

Moreover, the results presented in table (2-7) show that the autoregressive coefficient is positive and statistically significant at different levels ranging from 1% to 5%, indicating that the current account in oil exporting countriesby geographically region -was found as persistent. In this regard, it should be noted that persistent means that the current account balance -surplus or deficit -is sustainable from year to year.

For the current account balance persistence model, the results show that net foreign assets have a negative and significant effect on the current account balance in both the fixed exchange rate and flexible exchange rate samples, while it has no statistically significant effect in the case of the intermediate exchange rate regime. This indicates that net foreign assets decrease the current account balance in the case of oil producing countries with fixed or flexible exchange rate regimes. Similarly, the age dependency ratio variable reduces the current account balance in both the fixed exchange rate and flexible exchange rate regime samples, while it has no statistically significant effect in the case of an intermediate exchange rate regime.

Furthermore, we find that the impact of the ratio of domestic credit to private sector has a negative association with the current account balance in the cases of all three-exchange rate regimes; Fixed, Intermediate and Floating. On the other hand, the results showed that oil underground wealth has a significant and negative effect in both samples with a fixed and an intermediate exchange rate regime, while it has no statistically significant effect in the case of a flexible exchange rate regime. indicating that oil wealth reduces the current account balance in the case of oil producing countries that are subject to a fixed and an intermediate exchange rate regime. Regarding the persistence of the current account surplus model, the results show that the trade openness ratio has a significant and positive effect on the current account balance in the cases of three exchange rate regimes: Fixed, Intermediate and Floating. This indicates that trade openness increases the current account surplus in the case of oil exporting countries, regardless of the exchange rate regime adopted by the country. On the other hand, the results revealed that the coefficient of age dependency has a significant and negative effect in all cases of exchange regime included in the analysis. Thus, this indicates that the age dependency ratio reduces the current account surplus regardless of the exchange rate regime to which the country is subject.

Similarly, the domestic credit to private sector reduces the current account surplus in the case of all exchange rate regimes; Fixed, Intermediate and Floating. Therefore, an increase in the current account surplus in oil-exporting countries depends on an increase in trade openness, while a decrease in the current account surplus is associated with an increase in both, Percentage of age dependency and domestic credit to private sector. On the other hand, for dummy variables that represent exchange rate regimes in the current account surplus model, the results showed that the dummy variable in the case of a fixed exchange rate regime has a significant and positive effect. However, the results showed that both dummy variable for the two cases of intermediate exchange rate regime and dummy variable of flexible exchange rate regime have no statistically significant effect, although the sign of the coefficient is negative in both cases.

Regarding the current account deficit persistence model, the results reveal an important and negative effect of the trade openness ratio on the current account deficit in the cases of three exchange rate regimes: Fixed, Intermediate and Floating. This suggests that trade openness reduces the current account deficit in the case of oil-producing countries, regardless of the exchange rate regime to which the country is subject. On the other hand, the rest of the variables, including dummy variables that represent exchange rate regimes, have no statistically significant effect in the case of current account deficits during the period under study for oil-exporting countries.

Regarding the current account persistence pattern by geographic region, the results

show that the percentage of trade openness has an important and positive effect on the current account balance in the GCC region and Iran, as well as in the Asia region and Russia. On the other hand, the results indicate a significant negative impact of trade openness on current account deficits in North Africa and sub-Saharan Africa. For the Latin American region, the trade openness variable had no statistically significant impact. As for the net foreign assets variable, the results show a significant and negative impact on the current account balance in the Asian and Russian areas, Latin America, the GCC and Iran. By contrast, the net foreign assets variable has no significant effect on the current account balance in the North African and sub-Saharan African areas.

Furthermore, the results show that the real effective exchange rate variable has a significant and negative impact on the current account balance of both Asian countries and Russia, and North African countries. In contrast, the real effective exchange rate has no significant impact and has a negative sign in the Gulf countries group and Iran in addition to the Latin American group. The results also show that the real effective exchange rate does not have a significant effect and has a positive sign in the sub-Saharan Africa group. Regarding the population growth variable, the results show an important and negative effect on the current account balance in the sub-Saharan Africa and North Africa areas, as well as the Gulf Cooperation Council and Iran area. The results also show that this variable is not statistically significant in the Asian and Russian areas and Latin American area.

On the other hand, the results showed a negative and significant impact of the ratio of domestic credit to private sector on the current account balance in the sub-Saharan and Latin American areas, as well as the Gulf Cooperation Council and Iran. For the Asian and Russia area and the North African area, the results showed that this variable was insignificant and positive in the first one, and insignificant and negative in the latter. In addition, the results revealed an important and negative effect of the variable of age dependency on the current account in the Latin American area, and the results showed that this variable is not significant in the Asia and Russia area. On the other hand, this variable was ignored for the Sub-Saharan Africa, North Africa, Gulf Cooperation Council, and Iran areas because of the wrong sign of this estimator.

In addition, the results revealed significant and negative effect of the oil wealth variable on the current account balance in the areas: Asia and Russia, North African and Latin American. On the other hand, the results showed significant and positive impact of oil wealth variable on current account in Gulf Cooperation Council and Iran. In addition, the results showed a significant and positive effect of export diversification ratio variable on current account balance in areas of Latin American countries, Gulf Cooperation Council countries and Iran. On the other hand, the results showed that the export diversification variable does not have a significant impact, although it has a positive sign, in both the area of Asian countries and Russia and the area of North African countries. In addition, in respect of the sub-Saharan model, this variable was ignored due to the presence of a false signal.

In summary, our results suggest that policy makers should pay close attention to the inconsistent effects between exchange rate regimes and current account determinants in the selected oil exporting countries. In this respect, the results show that, except for oil wealth, the effect of current account determinants is very similar in the cases of the fixed and flexible exchange rate regimes. However, in the case of the managed exchange rate regime, the results show a difference between the effect of the explanatory variables. Furthermore, this study contributes to the existing literature. We find that the effect of current account determinants in the case of a surplus differs from that in the case of a deficit. In the sense that the channels of interaction in the case of a surplus are multiple and include the degree of trade openness, population growth and the percentage of domestic credit to the private sector. Otherwise, the only channel that influences the current account adjustment in case of deficit is trade openness.

Thus, this indicates that the effect of current account determinants in the case of a surplus is different from that in the case of a deficit. Therefore, the economic policy of the countries in our sample tends to promote the current account surplus. Furthermore, we reveal that the domestic credit to the private sector is the most important determinant in the adjustment of the current account in case of a surplus.

Nevertheless, we point to the advantage of an intermediate exchange rate regime in facilitating greater persistence, allowing for smoother adjustment of current account imbalances, this result is also consistent with the study by [START_REF] Chinn | A faith-based initiative meets the evidence: does a flexible exchange rate regime really facilitate current account adjustment?[END_REF], where their finding is that if a country operates an intermediate exchange regime and its current account runs a surplus, the persistence of current account surpluses is higher than for another country with a floating exchange regime.

Furthermore, our results in this respect contradict a study by (Guimassoun and Coulibaly, 2014), whose results showed that current account adjustment is faster under a flexible exchange rate regime. However, they assumed that there is no significant difference between a fixed exchange rate and an intermediate exchange rate regime. In this context, our results also contrast with a study by [START_REF] Ghosh | Is the exchange rate regime really irrelevant for external adjustment?[END_REF], which found that more flexible exchange rate regimes are indeed associated with a faster current account adjustment. Thus, our results show that flexible exchange rate regimes do not lead to faster adjustment of current account imbalances. Thus, we can conclude that our results contradict Friedman's wisdom (1953) that a flexible exchange rate regime leads to a more efficient adjustment of current account imbalances. Or that flexible exchange rate regimes can resist external shocks and thus help to absorb current account imbalances.

Based on our analysis of the surplus and deficit models separately, our results show that there is no difference between the exchange rate regimes with respect to the current account persistence indicator. Although current account persistence is higher for surplus than for deficits, for all cases of exchange regimes. Thus, a higher value of the current account persistence parameter indicates that a surplus persists for a longer period than a deficit. Thus, it may indicate a policy bias towards the surplus. Furthermore, the parameter values of the dummy variables, which represent exchange rate regimes, indicate that a fixed exchange rate regime leads to a larger current account surplus. However, the values of these parameters indicate that the managed and flexible exchange rate regimes are inversely associated with the magnitude of the current account surplus, although they have no significant effect on the current account balance. On the other hand, it should be noted that in the case of a sample of current account deficits, the results show that the dummy variables of fixed and flexible exchange rate regimes have a negative sign, while the dummy of an intermediate exchange rate regime has a positive sign. Despite this, exchange rate regimes have no statistically significant effect in the case of current account deficits.

Finally, we contribute to the empirical literature by using the LSDVC model, which provides a comprehensive analysis of the relationship between exchange rate regimes and current account persistence. We use panel data for a group of 27 oil producing countries over the period 1996-2016. We aim to examine the role of exchange rate regimes in current account adjustments for the countries in the study sample. In addition, we examine the current account persistence of oil-exporting countries considering the geographical distribution of the sample countries. Thus, our study shows that the managed exchange rate regime improves current account sustainability in oil exporting countries compared to both fixed and flexible exchange regimes. Thus, we can argue that an intermediate exchange regime reduces current account imbalances compared to both fixed and flexible exchange systems. On the other hand, our results show that there is no difference between the effects of exchange rate regimes on either current account surplus or deficit. Furthermore, our results show that, according to the current account persistence model by geographic area, regions of Asia and Russia achieve a higher level of current account persistence, while sub-Saharan Africa has the lowest level of current account persistence, this compares with the other geographical areas over the study period.

Policy discussion

The current account dynamic variable expresses the persistence or fluctuating of the current account depending on the value of the autoregressive coefficient. On the other hand, current account determinants, including the dynamic variable, are expected to drive the current account path according to the exchange rate regimes to which the countries are subject. Thus, the current account position is determined by a set of variables with a level of significance. On the other hand, these variables may also act as channels for current account adjustment, as they may play a role in the magnitude of the current account surplus or deficit. However, the role of exchange rate regimes in adjusting current account imbalances is expected to depend on a set of internal and external factors. It is therefore important, in addition to examining the role of exchange rate regimes in current account adjustment, to consider those factors that could play a role in reducing current account imbalances, whether in the case of surpluses or deficits.

Consequently, a positive sign of the coefficients of these determinants would indicate an improvement in the current account or a reduction in the deficit, while a negative sign of the explanatory variables would indicate a decrease in the surplus or a deterioration in the current account.

The results presented in table (2-4); column (1-2) show that the managed exchange rate system is described by smaller current account fluctuations with a significance level of 1%. On the other hand, the results provided in table (2-4), column (1-3) indicate that the fixed exchange rate regime ranks second in terms of current account persistence after the managed exchange rate regime. The results show that the fixed exchange rate regime maintains a lower level of current account volatility compared to the flexible exchange rate regime, in other words, this allows countries subject to such regime to stabilize their current accounts with relative efficiency, given the value of the autoregressive coefficient, which was around 0.48 at a significant level of 1%. Furthermore, the results presented in column (1-4) of show that the flexible exchange rate system ranks last in terms of current account persistence after both the managed and fixed exchange rate regimes. However, the results show that countries subject to a flexible exchange rate regime may experience a higher level of current account volatility than the other exchange rate regimes considered in this study. In other words, this regime leads to less current account persistence, given the value of the autoregression coefficient, which was around 0.30, with a significant level of 1%.

To summarize, for the current account determinants, besides the dynamic variable, the fixed exchange rate regime is described by the presence of four channels, represented by the variables (LNFA, AD, DCPS, OW). As for the intermediate exchange rate regime, which we considered the most persistence, on the one hand, we found that it is affected by two channels (DCPS, OW), which means that the exchange rate management feature in the sample countries is guided by the state of these variables, which aims to reduce current account fluctuations, whether in case of deficit or surplus. Regarding the flexible exchange rate regime, which was described by less relative persistence than the fixed and intermediate exchange rate regimes, the current account adjustment in the countries in this sample is channeled through (LNFA, AD, DCPS). Consequently, as indicated by these parameters, these variables serve to reduce the current account surplus or deficit for oil-exporting countries. Thus, the results of the overall current account persistence model show that all signs of the statistically significant parameters have negative signs. On the other hand, it can be seen that a floating exchange rate regime leads to less current account persistence between exchange system choices. This may imply that more flexible exchange rate regimes do not lead to greater efficiency in terms of external imbalance correction.

Regarding the current account surplus model, the results presented in table (2)(3)(4)(5) indicate that there are no differences in current account persistence in all cases of exchange rate regimes. Where the results show that the current account persistence was around 0.41, 0.43, 0.43 with a significance level of 1% in the cases of fixed, intermediate, and floating exchange rate regimes respectively. On the other hand, the results showed that for the determinants of current account surplus, in addition to the dynamic variable, the samples of the three exchange systems show the same response to the set of channels represented by the variables (TOP, AD, DCPS). Consequently, as indicated by these parameters, these determinants serve to decrease or increase the current account surplus for oil exporting countries. Thus, the results show that the sign of the trade openness parameter is positive as well it is statistically significant. Whereas the parameters of the age dependency ratio and the domestic credit to private sector were negative at the 10% and 1% significance level, respectively. Thus, it can be said that trade openness increases the current account surplus in all cases of exchange rate regimes. On the other hand, the age dependency ratio and the domestic credit ratio to private sector reduce the current account surplus in all cases of exchange regimes.

Furthermore, the results revealed a positive association between the dummy variable of the fixed exchange rate regime and the current account surplus at the statistical significance level of 5%. Thus, the management of a fixed nominal exchange rate in countries subject to this regime will lead to an increase in current account imbalances in the periods when the country registers a current account surplus. Since, according to the sign of the dummy variable coefficient, there would be no adjustment through the nominal exchange rate channel to imbalance of current account in case of a surplus. On the other hand, the results showed that both the dummy variable of the intermediate exchange system and the flexible exchange system had the correct sign. The results showed that these two variables have a negative association with the current account surplus, although they have no statistically significant impact on the current account.

For the current account deficit model, the results presented in Table (6-2) show that current account persistence is low in all cases of exchange rate regimes. Where the degree of adjustment was around 0.22 at the 5% significance level. Moreover, the results showed that there were no differences in current account persistence, regardless of the exchange rate regime to which the sample countries were subject. On the other hand, the results showed that in addition to the dynamic variable, current account deficit responds only to the trade openness variable at 1% significance level. Hence, according to the positive sign of the coefficient of this variable, trade openness lowers the current account deficit.

On the other hand, the results show that dummy variables representing the three exchange rate regimes have no statistically significant effect on the current account deficit pattern, despite the presence of the correct sign of the coefficient of the flexible exchange rate regime.

The fourth model examines current account persistence in oil-exporting countries by geographical area. The results show that the autoregression coefficients in all geographic area models are positive and significant at the 1% significance level. Thus, the value of the estimated parameters indicates the efficiency of the groups of areas on current account persistence. On the other hand, a positive sign may indicate a dominance of surpluses in the period under study. The results also show that the area with the best current account persistence is Asia and Russia. As this result may indicate that there are no significant fluctuations in their current account. On the other hand, the results show that the sub-Saharan Africa area has the lowest level of current account persistence. Consequently, this result may indicate the presence of relatively large fluctuations in the current account balance in this area.

As for the current account determinants, most of the explanatory variables had a significant impact in most cases. Thus, we are dealing with variables with a statistically significant impact as representing the main channels of improvement or deterioration in the current account balance of the countries in the sample, given that there are differences in influence from one region to another. In this regard, for sub-Saharan Africa, the results point to a dominance of the negative impact of the main determinants of current-account positions.

Therefore, when trying to implement policies aimed at controlling current account depreciation, special attention should be paid to the main significant and negative variables, namely trade openness, population growth and the domestic credit to private sector. This is of particular importance for the population growth variable, an increase of one unit leads to a deterioration of the current account by 9,254 units at a significance level of 10%. On the other hand, for the Asian area, the results show that it can implement policies designed to limit current account deterioration through fundamental, significant and negative variables, namely, the real effective exchange rate and net foreign assets, in addition to oil wealth. With the advantage for the latter, as its increase by one unit reduces the current account balance by 0.26 units. On the other hand, countries in this region can implement policies aimed at improving the current account by influencing the trade openness variable, which has a positive relationship with the current account balance, as a one-unit increase can increase the current account balance by 0.086 units, at a significant level of 1%.

In the same context as for the North African region, the results show that the reduction in the current account deficit depends on the main significant and negative variables, such as the degree of trade openness, the real effective exchange rate, population growth and oil wealth. This is relevant for the population growth variable, an increase of one unit leads to a decrease in the current account balance by 14,743 units at a significance level of 1%. Thus, any policy aimed at limiting current account deterioration in the North African countries requires accounting for the impact of the mentioned variables, in particular the population growth variable. As far as the Latin American region is concerned, the main intangible variables negatively affecting the current account are: Net foreign assets, age dependency ratio, oil wealth in addition to the domestic credit ratio to private sector. Consequently, economic policies aimed at limiting current account deterioration in these countries should take these determinants into account. On the other hand, the results show that the current account balance in Latin American countries is positively affected by the level of export diversification.

For the Gulf Cooperation Council and Iran area, the results show that the decline in current account depends on the main significant and negative variables, namely net foreign assets, population growth and domestic credit to private sector. On the other hand, the countries in this region can implement policies to maintain current account surplus through trade openness and export diversification variables, which has a positive association with current account balance, as an increase of one unit can increase current account balance by 0.144 and 0.112 units, with significance level of 5% and 1% for each of them respectively.

In sum, oil-exporting countries face many challenges, such as macroeconomic vulnerability due to changes in world oil prices, depletion of oil resources, and fluctuations in the exchange rate of the U.S. dollar against other major currencies. Consequently, these challenges pose a threat to the economic and social stability of these countries. Considering that economic stability requires the achievement of an external balance for the country.

Therefore, the issue of the exchange rate regime and its relationship with external adjustment comes to the forefront of issues of paramount importance for the oil exporting economies. On the other hand, many factors and challenges would affect the external imbalances of oil exporting countries. However, the difference in the characteristics and circumstances of each country may influence the priorities and policies that each country pursues to address these challenges. Even though, the choice of an appropriate exchange rate regime, increased trade openness, financial deepening and export diversification, and prudent management of oil revenues are undoubtedly crucial for the sustainability of the country's external balances. This in turn leads to macroeconomic stability.

Introduction

This study extensively discusses the structure of Libya's trade balance according to the stages of trade balance development and analyses the factors affecting Libya's trade balance.

In particular, the study examines the impact of world crude oil prices on the trade balance and its oil and non-oil components. The study examines the response of the components of the trade balance to changes in oil prices in light of important macroeconomic variables for the Libyan economy. In addition, the study also examines the impact of the effective real exchange rate, GDP growth and the output gap on Libya's trade balance.

Background information

Since the beginning of oil exports in 1961, the oil sector has been indirectly linked to all economic sectors of the Libyan economy [START_REF] Smits | Revolution and its discontents: state, factions and violence in the new Libya[END_REF]Bruce, 2008). However, despite some attempts to diversify the economy, Libya's specialization in the production and export of oil and gas has led to the hydrocarbon sector controlling the production and export structures in the state. Thus, this has led to Libya's integration into the international trading system in a way that has made its national economy dependent on, and affected to a large extent by, what happens in global markets. According to a report by the Central Bank of Libya, the Libyan economy is among the least diversified among oil-producing countries. All economic sectors are closely and directly linked to the oil sector. Thus, a significant part of the country's economic growth is linked to the hydrocarbon sector and related activities. Nevertheless, government economic reports such as the annual economic bulletin and the Central Bank report, indicate a relative contribution of some non-oil sectors to economic growth. For example, the construction sector, the electricity and water supply sector, the financial intermediation sector, the transport and communications sector, and the manufacturing sector.

Oil revenues encouraged the government to implement economic plans to diversify the economy from the mid-1970s to the mid-1980s. Where these plans aimed to develop and expand both the agricultural and industrial sectors in order to reduce imports, particularly of food and consumer products and some other intermediate products. In this respect, priority was given to investments in the petrochemical industry, as well as in the petroleum products industry. Despite the rapid expansion of these economic sectors at the time and the implementation of development plans financed by oil revenues, since the mid-1980s the economy has experienced a slowdown in economic growth (Othman and Kalberg, 2007). The Libyan economy has witnessed significant events and shocks that have had a major impact on the formation of the characteristics of the Libyan economy. The fall in international oil prices during the 1980s, as well as the economic embargo imposed by the United States of America since the early 1980s of the last century, had negative repercussions on the path of the country's economic and social development. On the other hand, the Libyan oil sector was one of the sectors most affected by the economic blockade, as it also had to face difficult conditions and circumstances, represented by the lack of technology and skilled labor, which led to a decline in oil production during this period. Consequently, all these events led to a decrease in the volume of oil export revenues at the time, which resulted in a decline in most economic activities in the country (Central Bank of Libya report).

The unfavorable conditions for the Libyan economy also continued during the 1990s.

Additional sanctions were imposed by the United Nations on Libya as part of the Lockerbie case in the early 1990s, and this had further negative effects on the economy. As a result, economic activity declined almost in limited areas, which were restricted to the production and export of crude oil. As mentioned, the oil sector was strongly affected by the economic blockade, which also included the import sector needed to supply spare parts and capital goods for the development of production. Thus, it can be summarized that the Libyan economy was going through difficult conditions at that time due to the restrictions and economic isolation resulting from the blockade (World Bank Report, 2006).

On the other hand, the subsequent period between 1999 and 2008 witnessed important events that had a tangible positive impact on the Libyan economy, as the United Nations sanctions were suspended and finally lifted in 2003. In addition, US sanctions against the Libyan economy were lifted in 2004. On the other hand, global oil prices have experienced an unprecedented rise due to the high demand for oil, which has led to a significant increase in export revenues. As a result, it can be said that the Libyan economy at that time entered a new phase, as the government embarked on the implementation of an economic reform plan and expanding the economic ownership base, with the aim of enabling the private sector to participate more in economic activity. For example, the privatization project included the sale and ownership of many state-owned factories and enterprises in several sectors, including banking and insurance, as well as the aviation sector [START_REF] Smits | Revolution and its discontents: state, factions and violence in the new Libya[END_REF]Othman and Karlberg , 2007). In addition, the economy has opened up to foreign investment and, in this context, laws have been enacted to encourage domestic and foreign private investment, these reforms also include removing customs exemptions for government institutions and reducing tariffs on imported goods [START_REF] Smits | Revolution and its discontents: state, factions and violence in the new Libya[END_REF]. In addition, the government has worked to enact a free trade law and has also sought to join international trade organizations in order to engage in the global economy (Othman and Karkberg, 2007).

Despite this, the manifestations of imbalance and distortion continued to be a prominent feature of the Libyan economy. While employment rates outside the public sector have continued to decline and the contribution of the private sector to economic growth has continued to fall, in addition to high inflation rates [START_REF] Chouikhi | The role of oil price in an exporting country: an empirical study of the Libyan economy[END_REF]. In this regard, some studies indicate that one of the reasons for this is the government's continued control over economic activity in light of the heavy dependence on the oil sector on the one hand, and the poor infrastructure such as roads, ports and communications on the other. In addition to the lack of an effective and clear legal structure to regulate economic activity, not to mention the restrictions and barriers to foreign investment [START_REF] Etelawi | Crude oil and the Libyan economy[END_REF].

Recently, the economic situation has been characterized by weak exports and growing imports of various goods and services. It should be noted that the decline in oil production rates and the fall in oil prices may affect the country's trade balance and the economy in general. In this regard, it is important to mentioned that the oil industry has been facing many problems since 2013, for many reasons, some of which are related to the suspension and disruption of oil refineries and some oil fields and ports due to the political and security conditions, since the beginning of the second decade of this century. In addition, other reasons that led to this situation were the delay of necessary maintenance and development.

These problems have led to an increase in the volume of imports of hydrocarbons and oil products in large quantities, the value of which has reached about 50% of the volume of oil revenues. On the other hand, the above-mentioned conditions led to fluctuations in oil production, which in some years reached one third of the volume of natural or potential production, resulting in a decrease in Libyan oil exports (Libyan Audit Bureau, 2020).

On the other hand, the external sector plays an important and fundamental role in the structure of the Libyan economy. As all the state's needs for food, medicine, the capital and raw materials, including fuel and petroleum products. All these commodities are supplied from abroad (Libyan Audit Bureau, 2017). However, the most important Libyan imports are machinery and transport equipment, accounting for almost 50% of total imports, in addition to food and live animals, which account for about 15% of imports (Central Bank of Libya). The Libyan economy is a rentier economy par excellence, where oil revenues are the main source of foreign exchange and crude oil is the main export product. Therefore, the quantities of crude oil exported and the prices of oil on the international markets have the greatest impact on the volume of foreign trade in Libya. On the other hand, the Libyan trade structure indicates the predominance of the oil sector, where crude oil exports represent about 96% of total exports, while the rest of the exports are spread over petrochemicals, some agricultural products, and fish (Central Bank of Libya).

Recently, the problem of trade imbalance has emerged, which has manifested itself in the form of a trade deficit that has lasted for more than six years. This is a dangerous indicator, especially in light of the circumstances the country is going through, as well as the rentier nature of the Libyan economy and the dependence of the production structure on a single commodity, oil. On this basis, the Libyan economy may be subject to significant fluctuations as it can be easily affected by external shocks through international trade. Despite this, many studies (Chuku et al.,2012, Özlale andPekkurnaz,2010) have indicated that the trade balance is not only affected by oil prices, but that there is a set of determinants and factors that can have significant impacts on the evolution of the country's trade balance, such as real exchange rates, trade openness and growth.

Problem Statement

The trade balance is the difference between a country's total exports and total imports. Given the important role of trade in a country's economic growth, this indicator is an important part of economic activity in general and an important part of the country's balance of payments components [START_REF] Foster | The impact of trade liberalisation on economic growth: Evidence from a quantile regression analysis[END_REF]Chang et al., 2009). This indicator can reflect the economic situation of the country. It is also an indicator by which to identify the country's position in the world economic map and its degree of trade integration in the world market, both in terms of its exports and imports of goods and services (Ambe, 2019;[START_REF] Nguyen | The relationship between oil prices and exchange rates: evidences from Norway, Canada and Mexico[END_REF].

The movement of exports and imports is the main component of the trade balance, so the change in the trade balance is mainly related to the prices and quantities of exports and imports.

Therefore, changes in the trade balance are very important in understanding the adjustment of the economy to changes in factors that govern the development of the trade balance such as terms of trade, exchange rates, economic growth and the country's production potential [START_REF] Nusair | The effects of oil price shocks on the economies of the Gulf Co-operation Council countries: Nonlinear analysis[END_REF]Aydin and acar, 2011).

Over nearly four decades, Libya's trade balance has recorded periods of high surpluses and other periods in which the trade balance has been in large deficit. With the exception of 1980, during which the trade balance recorded a surplus of 24% of gross domestic product, the decades of the eighties and nineties of the last century were characterized by the presence of a small surplus in the trade balance that did not exceed 10% of gross domestic product, despite some years during which the trade balance recorded a small deficit that did not exceed 6% of gross domestic product during this period. However, in the first decade of this century, the trade balance witnessed a large surplus, averaging about 24% as a percentage of gross domestic product between 2003 and 2010. On the other hand, the trade balance has experienced periods characterized by a large and alarming deficit, with the deficit amounting to more than 50% of gross domestic product in 2014 and 2015. This negative picture continued until 2020, when the trade balance deficit reached about 62% of gross domestic product; see figure (3.1) below. This is despite the improvement in international oil prices and the volume of oil production in Libya in 2018 and 2019. Nevertheless, the trade balance situation in Libya can be attributed mainly to two main factors that are directly related to the oil industry. The first factor is related to changes in international oil prices, while the second factor is attributed to fluctuations in the volume of oil production, especially after 2011, when the country experienced the onset of political and security conditions whose results have been clearly

reflected on the oil industry in Libya until now. Libya's economic situation depends to a large extent on international oil prices, as it is expected that the increase in export revenues caused by higher oil prices will lead to a significant improvement in the country's trade and financial balance. On the other hand, during periods of low oil prices caused by global economic conditions or international oil market conditions, the country is expected to experience an unfavorable trade balance. In addition, lower international oil prices can have undesirable consequences on the economy, such as a decrease in foreign exchange inflows, which can lead to a deficit in public finances and a slowdown in economic growth [START_REF] Nusair | The effects of oil price shocks on the economies of the Gulf Co-operation Council countries: Nonlinear analysis[END_REF]. Thus, it should be noted that the current literature on the subject does not provide much information on the economies of oil exporting countries, in particular Libya, and more specifically in the context of the relationship between the trade balance and oil price changes.

Changes in world oil prices can have different effects on the economies of oil exporting countries. For example, changes in oil prices can lead to changes in wealth or income transfers between oil importing and exporting countries [START_REF] Kilian | Oil shocks and external balances[END_REF], Bondstein et al.,2011). In addition, large increases in oil revenues can lead to so-called Dutch disease in resource-rich economies, a phenomenon related to government spending and the redistribution of oil revenues to economic sectors [START_REF] Majumder | Oil curse, economic growth and trade openness[END_REF]. On the other hand, the collapse of oil prices could lead to a significant deterioration of the macroeconomic outlook in oilexporting countries. This may manifest itself in the form of gross domestic product deviations during the period of low oil prices (IMF, WEO, 2017). Figure (3.2) shows the fluctuations in gross domestic product in Libya during periods of high and low world oil prices. Therefore, an increase or decrease in oil prices could have significant impacts on the revenues of an oil exporting country like Libya, which in turn could lead to a decrease or increase in the value of the national currency and consequently the trade balance will either improve or deteriorate (Özlale and Pekkurnaz,2010;Chouikhi et al.,2009). On the other hand, the rate of economic growth can generate an imbalance in a country's trade balance. For example, (Obstfeld and Rogoff,1996;Chinn and Pasard,2003(have documented that during periods of high growth, developing countries may experience an increase in the import of capital goods, capital machinery and intermediate goods, and thus higher economic growth may generate a trade balance deficit. Their study also confirmed that the permanent increase in income will lead to higher consumption and investment, and therefore the trade deficit will increase. Moreover, high economic growth can lead to an increase in domestic consumption, thus leading to an increase in imports or an increase in domestic consumption of all goods produced in the economy, including those destined for export, indicates that the response of the trade balance to changes in domestic income depends on whether a country is a net importer of most capital and consumer goods [START_REF] Malik | Oil prices and economic activity in Pakistan[END_REF][START_REF] Doojav | The effect of real exchange rate on trade balance in a resource-rich economy: the case of Mongolia[END_REF].

In the context of the relationship between foreign trade and gross domestic product growth, both the volume of exports and the volume of imports are affected by the local production process, whether this production is export-oriented or import-replacing. Moreover, the question of long-term sustainability of economic development may not only be related to the volume and structure of the country's exports, but it may also be related to the structure of imports, that is the ratio of capital goods imports to consumer goods imports (Yildirim and Arifli,2021). Therefore, an increase in gross domestic product may lead to an increase in import demand, especially because of the low flexibility of the production system to meet the growing domestic demand or because of the low competitiveness of local production of imported goods.

On the other hand, the expansion of production operations may require the import of more capital goods and raw materials needed to achieve the desired level of production.

Nevertheless, the impact of the production sector on the trade balance may depend on whether the production sector is oriented towards export industries or towards import substitution. On the other hand, the degree of economic diversification may play an important role in the question of the impact of the productive sector on the country's trade balance [START_REF] Tran | FDI inflows and trade imbalances: evidence from developing Asia[END_REF]Dinh,2014, Singh, 2004).

In addition, oil price fluctuations can distort the production process in an oil-exporting country like Libya, as the production sector is heavily dependent on imports of machinery and capital goods, not to mention the raw materials and intermediate goods needed for the production process, which are mostly imported from abroad. Thus, the oil shock can lead to parallel production shocks for the oil exporting economy. In the sense that negative oil shocks can result in a negative output shock in the economy, by a decrease in actual output compared to the natural or expected level of output [START_REF] Nakov | Oil and the great moderation[END_REF]. For the case of Libya, figure (3.3) shows the evolution of international oil prices and the trend of the industrial production index, which represents the output gap in Libya during the period of this study. The graph shows that the output gap in Libya has a trend that is consistent with changes in international oil prices.

Figure 3.3: The Industrial Production Index and Global Oil Price, 1980-2020

The negative output gap may mean that an increase in domestic production will lead to an increase in the demand for imports and, consequently, a decrease in the ratio of exports to imports, which may reflect the inefficient diversification of the country's economic resources and thus most domestic economic activities do not contribute efficiently to the production process (Bao,2016). On the other hand, a positive output gap refers to the inefficient use of resources, which leads to inefficient production, which may mean that the optimal level of production and consumption cannot be achieved. This insufficiency will therefore affect gross domestic product, which is supposed to absorb the bulk of production and consumption. An output gap means a large difference in potential productivity as it can negatively affect the export rate. Thus, this decrease in the production of export goods could lead to a deterioration of the country's trade balance (Hassan and Zaman,2012). Exchange rate fluctuations of the domestic currency can lead to changes in the trade balance over time by affecting the volume and prices of exports and imports [START_REF] Doojav | The effect of real exchange rate on trade balance in a resource-rich economy: the case of Mongolia[END_REF].

Therefore, it should be noted that the magnitude of this effect depends on both the elasticity of exports and imports in the country, as well as the elasticity of external demand for domestic exports (Altayligil and Cetrez,2020). Furthermore, due to the effects of oil price changes on macroeconomic variables, many studies have examined the relationship between oil prices, exchange rates and the trade balance [START_REF] Olayungbo | Effects of global oil price on exchange rate, trade balance, and reserves in Nigeria: A frequency domain causality approach[END_REF]. The figure (3.4) indicates that during periods when the exchange rate of the Libyan dinar increases with the US dollar, the real effective exchange rate falls sharply. Fluctuations in the value of the national currency against foreign currencies can reflect changes in external and internal demand for domestic products and goods. On the other hand, the exchange rate is an important macroeconomic management tool, along with fiscal and monetary policy tools, to manage the economy efficiently and at the lowest possible cost [START_REF] Al-Khater | The Challenges of Oil Price Crises and Economic Diversification in the GCC States[END_REF]. In this regard, the exchange rate can be used to stimulate exports, support the competitiveness of the economy, control inflation and encourage economic growth (Al-Abdali, 2009;Mokhtari and blhadj , 2018). each variable. Therefore, it is important to determine the negative and positive outcomes, as well as the significance of the contribution of each of them. It may seem clear at first sight that both international oil prices and the volume of the country's crude oil production are among the most important factors affecting economic activity in Libya. Indeed, the economy is almost entirely dependent on the export of oil and gas which account for the majority of exports.

Excessive dependence on oil export revenues for income and foreign exchange generation makes the country vulnerable to external shocks. On the other hand, the dominance of the oil sector and the link between the country's production activity and the oil sector to a large extent could have disastrous effects through the contraction of other non-oil productive sectors.

Thus, this situation may lead to a misalignment in the production structure and the continuation of a biased economic growth of the export industry -the single commodity -at the expense of import substitution industries. Thus, this situation could have considerable effects on economic growth, price levels and economic competitiveness, which will affect the economic and social welfare of the country. On the other hand, if the economic situation deteriorates, it may make it more difficult for policy makers and obstruct economic reform efforts, which may plunge the country into a spiral of external indebtedness. The trade imbalance in an oil-rich country like Libya may be a different case, especially as the country faces a lack of diversification of its economies, which makes the economy vulnerable in the first place to the sharp fluctuation of crude oil prices on the world markets. On the other hand, the trade balance is one of the most important sources of foreign exchange earnings and accumulation in the economy. Thus, in an economy that depends on exports as a main source of income, the deterioration of this balance can be considered as a cause and a sign of economic crises and the deterioration of living standards in the country.

In addition, the Libyan economy is facing a complex set of economic conditions and contradictions, which would seriously affect the country's external balances, such as the trade balance. Some of these challenges are represented by the almost total dependence on the outside world to meet all the country's needs for consumer and producer goods, given the severe weakness of the productive base of the local economy. On the other hand, the country is faced with widespread subsidies on commodities in addition to weak government institutions for monitoring markets and distributing commodities across the country. Consequently, all these challenges make the country's trade balance vulnerable to changes in the country's internal or external economic conditions.

Deteriorating trade balances raise a range of concerns, which translate into serious financial, trade and currency consequences that may result from the trade imbalance for a given country. One such concern is that the country may have to borrow domestically and abroad, which may exacerbate public debt. Thus, this may lower the financial capacity of the state and lead to a deterioration in the level of living in the country. It may also delay investment projects and disrupt economic and social development. On the other hand, the trade deficit can lead to the depletion of the country's foreign exchange reserve, which means a reduced capacity of a country to finance facilitate consumption, and it also leads to the difficulty of holding the exchange rate of the national currency at the desired level. Therefore, in this situation, the country may be forced, if the situation worsens, to resort to international aid and subsidies, often linked to conditions dictated by the funders. The trade deficit is a dangerous phenomenon, especially in an economy that depends for its exports on a single product whose price on the world market is determined on the basis of complex economic and political considerations.

The importance of the trade balance stems from the fact that it is an indicator that largely reflects the effectiveness or failure of economic policies such as the country's exchange rate policy, public expenditure policy and monetary policy. Furthermore, whether these policies are in the interest of the national economy or not. Reducing the balance of trade deficit requires an investigation of the causes that led to this problem and thus an awareness of its dimensions and limitations, which allows for an effective working method to develop economic policies and plans that can avoid this situation. The improvement of the balance of trade can be considered as one of the most important objectives of any policy aiming at economic reform, especially in the aspect of foreign trade for a country like Libya. It is therefore necessary to study the factors guiding the evolution of the trade balance and its determinants in the short and long term. We seek to study Libya's trade balance by focusing on the factors that would affect the volume of Libyan exports and imports, thus drawing a clear picture of the extent to which the trade balance has responded to the economic developments witnessed by the Libyan economy during the study period that spans from 1980 to 2020.

Therefore, the study of the drivers of the trade balance is a very important and fundamental issue in an open macroeconomy such as Libya. This study can further illuminate and widen the circle of knowledge on the response of the trade balance to the factors that determine its movement, and how they affect the components of the trade balance, especially in the light of fluctuations in international oil prices over a period of time that has seen significant changes in the structure of the macroeconomic structure in Libya. Understanding the effects of oil prices, the real exchange rate, gross domestic product growth and the output gap on the trade balance and its oil and non-oil components can lead to the design of effective economic policies and plans that can pave the way for important measures in favor of factors critical to overall economic activity in Libya, such as the competitiveness of the economy and economic diversification. On the other hand, the analysis of the trade balance into an oil and non-oil component can also lead to a broader understanding of the importance of various economic policy tools to avoid the negative effects of international oil price fluctuations on the Libyan economy. In this regard, we separate the trade balance into three sections (total -oilnonoil) to determine which factors control the trade balance and the mechanism of their impact.

We also investigate whether these sections react differently to the determinants of the trade balance. Thus, how important is each component in determining the development of the Libyan trade balance?

Study Questions

To achieve the objectives of the study, the research must answer the following questions:

Research Aims and Objectives

The issue of trade imbalances has been widely discussed in the economic literature, especially since the beginning of the 21st century, which witnessed historic increases in world oil prices, which coincided with the emergence of major imbalances in the external balances of many oil countries. However, the successive oil shocks from 1973 to 2014 have highlighted that oil-exporting countries are also vulnerable to external imbalances due to the high dependence of their economies on oil and gas exports, which makes them vulnerable to fluctuations in international oil prices. It should be mentioned that most of the research presented in the literature that has studied the issue of the impact of oil prices and exchange rates on trade balances contains an analysis of groups of countries with similar characteristics such as economic size, income, and geographical area. Moreover, most of this research has focused on the cases of oil-importing countries, and except for limited cases, the situation of oil-exporting countries has only been investigated in studies that combine both oil-importing and oil-exporting countries in one study. To our knowledge, few studies have addressed this issue in oil exporting countries in a single case, especially the case of Libya. Thus, our objective is to build an empirical model for the Libyan case based on the literature of previous studies.

In addition, we aim to investigate whether some of the effects of previous research can help shed light on how the selected variables affect the trade balance in Libya. The increase in trade balance fluctuations in Libya motivated us to conduct an empirical study to investigate the behavior of the trade balance, monitor its determinants and also determine its impact on the trade balance dynamics. Thus, the main objectives of the study are:

-To study the role that changes in world oil prices play on the trade balance in Libya.

-To determine the role that the real exchange rate plays on the trade balance in Libya.

-Estimating the impact of the output gap on the Libyan trade balance.

-Estimate the impact of gross domestic product growth on the trade balance.

-Estimate the total trade balance, the oil trade balance, and the non-oil trade balance.

Significance of Study

Most economic indicators in Libya indicate that the economy is highly dependent on the production and export of crude oil. Therefore, there may be a large agreement between the evolution of international oil prices and the performance of the economy in a country like Libya. As a result, it is likely that fluctuations in oil prices can affect the Libyan economy to a large extent. External shocks can be caused by fluctuations in international oil prices, and they can also be produced by fluctuations in the US dollar exchange rate. -the pricing currency for crude oil on the world market -against other currencies [START_REF] Al-Khater | The Challenges of Oil Price Crises and Economic Diversification in the GCC States[END_REF]. Thereby, external shocks can directly affect the volume of oil revenues in local currency against the US dollar.

Thus, this issue can affect public finances and expenditures and consequently overall economic activity, not to mention the impact of these shocks on the size of the country's foreign reserves.

Monitoring the path of the trade balance and studying its determinants, as well as identifying the causes that may lead to its imbalance and deterioration, is of paramount importance, as it has a direct impact on the economic and social stability of the country. On the other hand, the trade balance can be an important indicator of the country's economic situation, and therefore the study of its determinants can help determine the priorities and tools of the economic policies to be carried out in the country. In Libya, it is clear that the deterioration of the trade balance has been worsening year on year since 2014. This is coupled with other problems such as the political and security unrest in the country in addition to financial and monetary problems and the deterioration of the exchange rate of the national currency on the parallel market. The continued deterioration of Libya's trade balance could have serious consequences for the Libyan economy, including the depletion of foreign exchange reserves, the worsening of public debt, the disruption of economic development, the collapse of the exchange rate of the national currency, and thus the possibility of resorting to foreign borrowing. Hence the deterioration in the standard of living of the population.

Hence, these concerns have drawn attention to the need to study the long-and shortterm effects of the trade balance and investigate its determinants in Libya. This study attempts to contribute to the literature by revealing the relationship between the trade balance and its determinants, and by determining the role that the world oil price, the real exchange rate, the output gap and gross domestic product growth play on the components of the trade balance in Libya. Therefore, the results of this research will address all the fundamental issues explained in this research. In addition, economic policy makers will have a better understanding of the problems related to the research, which will help them to solve the problems of imbalance and deterioration of the trade balance. The relationships that govern the direction of the trade balance are directly related to the economic and social stability of the country. Therefore, clarifying how these determinants can negatively or positively affect the state of the trade balance in Libya, would help to identify the extent of the severity of this problem and therefore the importance of this work is to avoid the potential damage which could be resulting from worsening trade balance.

Contribution of the Study

Briefly, this study attempts to contribute to the literature by investigating the determinants of the trade balance in Libya. This study focuses on the impact of international oil prices, the real effective exchange rate and the output gap, in addition to the impact of real gross domestic product growth in Libya. This issue has not been studied in detail in the past.

We distinguish the trade balance into three components which are the total trade balance, the oil balance, and the non-oil balance. To the best of our knowledge, this is the first study that attempts to estimate the impact of the above variables on the oil and non-oil components of the trade balance in Libya. Therefore, this study attempts to provide an in-depth analysis of the trade balance in order to obtain results that would formulate a detailed representation of the long-term status of the trade balance. Therefore, this study seeks to fill some of the gaps and intends to provide additional empirical evidence on the effects of international oil prices, real exchange rate, output gap and gross domestic product growth on the evolution of Libya's trade balance. Furthermore, the additional contribution of the study is to use the cointegration method (ARDL) to investigate the effect of real exchange rate, output gap and gross domestic product growth as well as international oil prices in determining the trade response. In addition, separating the oil and non-oil components of the trade balance can make the analysis more effective in understanding the effects of each of the variables used in the analysis on the components of the trade balance, thus leading to the determination of the importance and role of each of them in shaping the status of the trade balance in Libya.

2

Literature review

In this part we review the literature on the topic of the study. Where we address the most important empirical literature on the impact of global crude oil prices on trade balances.

In addition, we consider the literature on the main determinants of the trade balance path, such as the real exchange rate, GDP growth and the output gap, Finally, this part considers an assessment of the existing empirical studies on the subject.

Impact of oil price shocks on trade

Since oil will remain a strategic commodity in international trade, countries that rely heavily on it to manage and run their economies will remain vulnerable to the effects of global fluctuations in its price. The economic literature has witnessed a wide debate on the local impact of global oil price shocks on oil exporting and importing countries. In this context, the study by [START_REF] Backus | Oil prices and the terms of trade[END_REF] showed that oil prices represent a large variation in the terms of trade over the period (1972)(1973)(1974)(1975)(1976)(1977)(1978)(1979)(1980)(1981)(1982)(1983)(1984)(1985)(1986)(1987) in oil importing and exporting countries. In the same context, (Mehrara and Oskoui, 2007) confirmed the same result through their study sample, which focused on oil exporting countries. [START_REF] Kilian | Oil shocks and external balances[END_REF]) also confirmed that fluctuations in oil prices are equivalent to the effect of fluctuations in trade terms in the same direction in the case of oil exporting countries. Oil sales account for a very high percentage of export earnings, given the structure of the trade balance of oil exporting countries (Andrew and Veka, 2020). Therefore, changes in oil prices can have significant effects on external balances, which include the trade balance [START_REF] Kilian | Oil shocks and external balances[END_REF]. The impact of world oil prices on countries' external balances has received much attention from authors and policy makers, both for oil importing and exporting countries. In this context, reference can be made to studies [START_REF] Rafiq | Asymmetric oil shocks and external balances of major oil exporting and importing countries[END_REF][START_REF] Jibril | Asymmetric oil prices and trade imbalances: does the source of the oil shock matter?[END_REF][START_REF] Kilian | Oil shocks and external balances[END_REF] that have documented that oil price is one of the most important factors in determining the trade balance. They also concluded that the impact of the oil price shock depends on whether the country is a net oil importer or exporter, as well as the source of the oil price shock.

Given the high dependence on oil trade, there is a more urgent need to study the impact of oil prices on the trade balance of oil exporting countries. In this context, it was found by [START_REF] Huntington | Crude oil trade and current account deficits[END_REF] that there is a positive correlation between oil trade and the trade balance component -commodities -in oil exporting countries, while there is no correlation between oil trade and the non-trade balance component -service-. This result therefore indicates that the dominance of the trade balance over the current account in oil exporting countries. On the other hand, some studies have confirmed that the impact of an increase or decrease in oil prices on the trade balance may lead to different effects due to the overlap and interaction between many influences and factors of the macroeconomic structure [START_REF] Rafiq | Asymmetric oil shocks and external balances of major oil exporting and importing countries[END_REF]Le and Youngho, 2013;[START_REF] Korhonen | Trade linkages and macroeconomic effects of the price of oil[END_REF]. In this regard, one can note the difference between the effect of rising and falling oil prices on the trade balance of the oil exporting country, as follows.

2.1.1

Effects of higher oil price on trade balance Given the impact of returns, higher oil prices may be desirable for oil exporters, but according to (Le and Youngho, 2013), positive oil prices may have two different and indirect effects. The first effect is what he called the demand effect, as higher oil prices can lead to higher inflation rates in world markets, which ultimately leads to higher import prices in oil exporting and importing countries. As a result, the authorities may be forced to follow restrictive monetary policies, which may have an impact on consumption and investment levels, and thus lower growth rates in trading partner countries. As a result, all of this can lead to a decline in global demand for oil and, ultimately, a decline in exports from crude exporting countries, which means that the trade balance will be affected. The second indirect effect is what he called the supply effect, as the rise in oil prices can constitute a negative supply shock on the production operations of oil-importing countries, which can lead to a slowdown in their economies, resulting in a reduction in oil imports from these countries, which can eventually have a negative impact on the trade balance of the oil-exporting country. Despite this, (Kilian, 2010) doubts the transmission of the negative impact of higher oil prices by assuming that the production cost shock for the importing country may not be large enough and reinforces his argument that the share of oil in production costs may be small given the production costs in some countries. He also adds that oil importers can reduce the negative effects of higher oil prices by increasing their non-oil exports to their net oil exporting trading partners.

2.1.2

Effects of lower oil price on trade balance Unlike rising prices, lower oil prices do not seem to be favourable to exporting countries given the volume of revenues, but according to (Le and Youngho, 2013) it can have a direct impact on increasing global oil demand by importing countries. This is because, according to [START_REF] Rafiq | Asymmetric oil shocks and external balances of major oil exporting and importing countries[END_REF], increasing flexibility in fuel type allocation for oil-importing countries can in turn help allocate imports in favour of oil when its prices fall. This eventually has a positive impact on the trade balance of oil exporting countries. It can therefore be concluded that countries with large oil reserves can remain profitable as long as oil remains the preferred energy source. However, even if the overall impact is positive, there are other concerns that may threaten the trade balance and the economy in general for oil exporting countries. For example, according to [START_REF] Korhonen | Trade linkages and macroeconomic effects of the price of oil[END_REF], although higher oil prices may lead to an improvement in the terms of trade for the oil-exporting country and therefore an increase in oil revenues and an improvement in the oil trade balance, it will also result in an increase in both consumption and investment, which means an increase in imports from abroad, not to mention the phenomenon of Dutch disease and the effects of income and revenue fluctuations, in addition to the problem of resource depletion due to price impact. In another context, ) Le and Youngho, 2013) stressed that the decomposition of overall trade balances into oil and non-oil balances is essential to study the impact of international oil price changes on countries' trade balances. [START_REF] Shan | A study of the trade performance of Malaysia and its major trading partners[END_REF][START_REF] Bahmani-Oskooee | Nonlinear ARDL approach and the J-curve phenomenon[END_REF] have also argued that it is important to examine the components of the oil and non-oil trade balance when trying to establish financial and economic policies in the case of oil exporting countries, rather than focusing on the overall trade balance. On the other hand, (Gosse and Serranito,2014) have indicated that the direction and magnitude of the relationship between oil prices and total trade balances depend on whether the oil shock is modified by the non-oil trade balance.

In this respect, [START_REF] Kilian | Oil shocks and external balances[END_REF] shows that negative and positive oil shocks can affect the components of the trade balance differently in the case of oil exporting countries.

The results of their study showed that supply shocks do not have a significant impact on both the oil trade balance and the total trade balance, while they have a small impact on the non-oil trade balance. On the other hand, their study found that specific demand shocks, or so-called speculative demand, have a positive and significant impact on both the total trade balance and the oil balance, while their impact is negative and significant on the non-oil balance. As for the demand shock caused by global economic activity, their study showed that the total trade balance and the oil balance react positively and significantly, while the non-oil trade balance showed a partially negative response. Moreover, their results also showed that the trade channel can play an important role in the adjustment of trade balances when the oil shock occurs, as they indicated that the deficit (or surplus) in the oil trade balance can be adjusted by the surplus (or deficit) in the non-oil trade balance. They also pointed out that the surplus in oil exporting countries will be offset by a deficit in the rest of the world and vice versa. They therefore highlight the importance of the valuation channel or the degree of international financial integration in adjusting trade imbalances between countries.

The impact of oil price changes on the economies of oil-exporting countries may differ from country to country, depending on the difference in the production structure of each country. Furthermore, research on the situation of oil exporting countries indicates that the effects of oil price changes vary depending on whether these changes are negative or positive.

In this regard, the results of the study (Aimer,2016) indicate that the Libyan economy is positively affected by the rise in oil prices. His study also documented that the Libyan economy is affected by oil price shocks mainly during the period in which the shock occurs. Furthermore, the results of the study (Mehrara and Oskoui,2007) indicated that positive oil price changes have a much larger impact on the real gross domestic product of oil exporting countries than negative changes. In addition, the study [START_REF] Baek | Crude oil prices and the balance of trade: Asymmetric evidence from selected OPEC member countries[END_REF] documented that rising oil prices have a positive and statistically significant impact on production in oil exporting countries in the Middle East and North Africa, including Libya.

In the case of Libya, at first glance, it appears that the economic situation is highly dependent on international oil prices, as the increase in export revenues driven by higher oil prices leads to a significant improvement in the country's trade and financial balance. While during periods of low oil prices caused by global economic and international oil market conditions, the country usually experiences an inadequate trade balance. On the other hand, lower world oil prices can have undesirable consequences on the economy such as lower foreign exchange inflows, which can lead to a deficit in public finances and a slowdown in economic growth (Ahad and Anwer,2020).

Effects of the exchange rates on trade balances

The relationship between exchange rates and the trade balance has been widely examined in the economic literature [START_REF] Dogru | The balance of trade and exchange rates: Theory and contemporary evidence from tourism[END_REF][START_REF] Kennedy | Kenya's foreign trade balance: An empirical investigation[END_REF][START_REF] Falk | Determinants of the trade balance in industrialized countries[END_REF]. Arguably, the main topic on which researchers have focused is the relationship between exchange rates and the trade balance in the context of the Marshall-Lerner case and the J-curve theory (as introduced by Alfred Marshall and Abba P. Lerner (1944). The Marshall-Lerner condition states that a depreciation of the exchange rate will eventually lead to a net improvement in the trade balance provided that the sum of the price elasticities of demand for exports and imports is greater than unity. Therefore, if the Marshall-Lerner condition is fulfilled, the depreciation of the local currency positively affects the trade balance. Therefore, it is expected that there is a negative relationship between the real effective exchange rate and the trade balance (Altayligil and Cetrez, 2020). Researchers have investigated the relationship between the exchange rate and the trade balance using a wide range of empirical techniques in different country contexts, but some of these studies have reported mixed results [START_REF] Dogru | The balance of trade and exchange rates: Theory and contemporary evidence from tourism[END_REF][START_REF] Bahmani-Oskooee | Nonlinear ARDL approach and the J-curve phenomenon[END_REF][START_REF] Bahmani-Oskooee | Bilateral J-curve between US and her trading partners[END_REF]. Although some studies have shown that this requirement applies in several developed countries, the situation may look different for a small, resource-rich economy, since most commodity export prices are denominated in US dollars and prices are set in world markets. In addition, these countries rely on imports to meet most of their domestic demand for intermediate and final goods, due to underdeveloped production capacity and low flexibility of the production apparatus to meet domestic demand. As a result, these conditions can mean reduced price elasticities for exports and imports [START_REF] Nakatani | Adjustment to negative price shocks by a commodity exporting economy: Does exchange rate flexibility resolve a balance of payments crisis?[END_REF].

Libya has a fixed exchange rate regime where the Libyan dinar was pegged to the US dollar in 1973 at a fixed exchange rate of $1 = 0.296 Libyan dinars. Because of this peg, the value of the Libyan dinar against other currencies changes according to the change in the value of the dollar against these currencies. However, in 1986, the Libyan dinar was de-pegged to the US dollar and linked to the Special Drawing Rights. The Libyan currency was pegged to the US dollar at an exchange rate equivalent to 2.8 Special Drawing Rights per Libyan dinar.

Then, in 2002, the exchange rate of the Libyan dinar was reduced to (0.6080) SDR per Libyan dinar, followed in 2003 by another reduction of the exchange rate of the Libyan dinar by 15 percent to (0.5175) SDR per Libyan dinar, and this rate is still in existence until today (Central Bank of Libya, Libyan Audit Office). On the other hand, given that oil accounts for the majority of exports and that Libya relies on a single commodity to generate income and revenue, it is well established that small open economy countries -such as Libya -are vulnerable to many income fluctuations as they are easily affected by external shocks through international trade (Altayligil and Cetrez,2020). Therefore, given this fact, it can be concluded that the objective of the fixed exchange rate system is on the one hand to achieve stability of the general price level in the economy and on the other hand to ensure stability of revenues from the sale of oil on the other hand (Central Bank of Libya).

Despite this, some studies argue that the fixed exchange rate regime can exacerbate the impact of external shocks on the economy. In this context, the study [START_REF] Nakatani | Adjustment to negative price shocks by a commodity exporting economy: Does exchange rate flexibility resolve a balance of payments crisis?[END_REF] indicates that countries with a fixed exchange rate regime experience a significant and meaningful decline in real gross domestic product in response to negative trade rate shocks as the real exchange rate declines slowly. On the other hand, Alkhater (2015) argues that when the exchange rate is fixed against the US dollar, the effect of external shocks -whether caused is due to the policies of the Central Bank in this regard, which has led to the presence of more than one exchange rate working in the state. In addition to the official exchange rate, there is the parallel exchange rate, the value of which varies between 4 to 6 times the official rate, there is also the so-called price of banking instruments, the value of which exceeds the parallel price by 30 to 50 percent.

Relationship between economic growth and trade balance

There is a divergence in the economic literature on the relationship between economic growth and the external sector, where economic growth -among various factors -is sometimes attributed to increased exports (Al-Abdali, 2009). The dispute over the importance of the export sector in activating economic growth is the subject of many studies in this regard.

The field, which has shown different results ranging from the fact that exports lead to economic growth and that economic growth strengthens the exporting sector. Where [START_REF] Watkins | Patterns of Trade and Development, by Ragnar Nurkse (Wicksell Lectures[END_REF][START_REF] Keesing | Income distribution from outward-looking development policies[END_REF]Krueger, 1980) argues that export expansion has a positive impact on economic growth, while [START_REF] Kravis | External demand and internal supply factors in LDC export performance[END_REF][START_REF] Salvatore | A simultaneous equations model of trade and development with dynamic policy simulations[END_REF] sees that growth is affected more by internal than external factors. Therefore, they believe that the impact of exports on economic growth is secondary and cannot be primary.

On the other hand, the literature has treated the relationship between economic growth and countries' external balances -the current account and the trade balance -from various other perspectives, depending on whether the country is an advanced, emerging or developing economy, and we can refer to the research in this respect [START_REF] Rahman | Current account developments in new member states of the European Union: Equilibrium, excess, and EU-phoria[END_REF][START_REF] Faruqee | What determines the current account? A cross-sectional and panel approach[END_REF]Obstfeld and Rogoff, 1996;[START_REF] Morsy | Current account determinants for oil-exporting countries[END_REF]. In the case of emerging countries, faster growth will lead to higher imports of intermediate and capital goods (investment machinery), which will lead to a higher trade deficit. Here, a high deficit may mean an inverse relationship between growth and the trade balance. For developed countries, the reverse may be true since with higher growth rates they may export more high-tech goods, which will have a positive impact on their trade balances [START_REF] Lee | Exchange rate assessments: CGER methodologies[END_REF]Chinn and Pasard, 2003).

Some other views in this context revolve around the income effect, as in periods of high GDP growth there are likely to be factors that facilitate both consumption and investment.

On the contrary, these factors should disappear if the economy suffers a negative shock or a fall in income. On the other hand, the study by [START_REF] Soares Esteves | Is there a role for domestic demand pressure on export performance?[END_REF], indicates that the impact of economic growth as a potential determinant of the current account is related to the household sector's expectations of future income. Since if they expect to increase their future income, they will increase their current consumption at the expense of saving, so the effect in this case may be negative with respect to the current account.

In addition, the extent to which external balances are affected by changes in the country's income depends on whether the change in income is permanent or temporary. A temporary increase in income can often lead to an increase in savings, while a permanent increase in income is likely to increase both consumption and investment; however, this also depends on decisions and preferences regarding both savings and investment in the country (Obstfeld and Rogoff, 1996;[START_REF] Morsy | Current account determinants for oil-exporting countries[END_REF]. On the other hand, the impact of economic growth on the trade balance may depend on the extent to which economic growth itself depends on an increase in consumption expenditure rates, which therefore means a decrease in savings rates.

Consequently, economic growth in this case will lead to a faster increase in imports than an increase in exports. But if savings and investment rates are stable, it is likely that economic growth will be balanced, and then the large imbalance in the balance of payments deficit or surplus can be avoided. These arguments are consistent with consumption and savings theories such as the life-cycle hypothesis [START_REF] Ando | The" life cycle" hypothesis of saving: Aggregate implications and tests[END_REF], which assumes a positive relationship between income and savings, and the random walk hypothesis [START_REF] Hall | Stochastic implications of the life cycle-permanent income hypothesis: theory and evidence[END_REF], which predicts that countries with a higher gross domestic product growth rate should have higher savings than countries with a low gross domestic product growth rate [START_REF] Nagawa | Determinants of gross domestic savings in Uganda: an autoregressive distributed lag (ARDL) approach to cointegration[END_REF].

On the other hand, (Calderon et al., 2002) found that higher gross domestic product growth generates a larger trade deficit in the case of developing countries. In the same context, it was found by [START_REF] Chiloane | Modelling the relationship between the exchange rate and the trade balance in South Africa[END_REF] that the effect of real domestic income on the trade balance is significant and negative in the case of South Africa. In their study of trade balance in Nigeria [START_REF] Onafowora | An empirical investigation of budget and trade deficits: the case of Nigeria[END_REF], they found that increase in domestic income leads to increase in demand for foreign imported goods and services as their study showed a negative relationship between gross domestic product and trade balance. On the contrary, studies by [START_REF] Kakar | The Determinants of Pakistan's Trade Balance: An ARDL Cointegration Approach[END_REF] and [START_REF] Singh | On the optimizing model of the balance of trade in India[END_REF] showed that the impact of gross domestic product is significant and positive in the case of Pakistan and India, respectively. Among its findings, a study by [START_REF] Duasa | Determinants of Malaysian trade balance: An ARDL bound testing approach[END_REF] showed that the level of income plays an important role in determining the long-term behaviour of trade balance in Malaysia, where they found that income has a positive effect on trade balance. [START_REF] Nienga | The Determinants of Trade Balance in Kenya. An Empirical Analysis[END_REF]) also contributed to the discussion by studying the determinants of the trade balance in Kenya, where he found a positive relationship between domestic income (gross domestic product) and the trade balance over the study period.

In the case of Libya, Libyan economic reports and publications indicate that a major part of the economic growth that was achieved from 2001 to 2008 was caused by the improvement in international oil prices, and the decline in GDP in 2009 was due to the reduction in Libyan oil production based on the decision of the OPEC organization in this regard. In the same context, the increased volatility of the gross domestic product since 2011 due to the revolution and the subsequent political and security unrest has at times caused the suspension of oil production, in addition to the Libyan economy being affected by the oil price declines that started since the beginning of 2015. In this regard, a study of (Al-Hawij et al., 2021) documents that economic growth in Libya is mainly due to the growth achieved in oil production, and that this dependence on oil is taking an increasing and continuous trend.

Furthermore, they point out that the behaviour of foreign trade in Libya is related to the behaviour of exports, which are excessively dependent on the oil sector, due to the country's dependence on a major export product, which is oil. Therefore, it can be concluded that economic growth has led to an increase in the production of the main export product by a higher percentage than the increase in the import product -import substitution goods. Consequently, this may mean that the economic growth pattern in Libya is trade biased, and it may indicate, according to (Al-Hawij et al., 2021) that the rates of outward trade openness are increasing over time in parallel with the evolution of economic growth. Furthermore, it has been documented by (Al-Balazi, 2012) that there is a two-way influence relationship between exports and GDP in Libya, which means that these two variables influence each other. It can therefore be expected that Libya's trade balance will be dominated by oil exports. On the other hand, there are those who argue that due to the heavy reliance on imports to supply all the country's consumption and capital goods needs, the import side can explain the other behaviour of the Libyan trade balance. In this regard, it has been documented by [START_REF] Ali | Oil and economic development: Libya in the post-Gaddafi era[END_REF] that the deterioration of the trade balance is related to the increase in imports driven by the increase in real income.

Trade imbalances and the output gap: what is the relationship?

The absorption approach developed by the economist (Alexander Sidney,1952) presents the basic relationship between the trade balance and some basic aggregates, and it assumes that an improvement in the trade balance results in an improvement in the balance of payments. According to this approach, absorption is defined as the sum of consumption and investment, and the balance of payments is defined as the difference between total income and total expenditure of a country's residents. On this basis, a deficit in the balance of trade necessarily means that expenditure exceeds income and vice versa in the case of a surplus.

Thus, balance of payments problems arises because of the misalignment between domestic income and expenditure, and therefore the current account imbalance can be seen as a difference between domestic product and domestic expenditure, known as the absorption volume (Al-Abedly, 2009;Mokhtari,2015).

On the other hand, it should be noted that the absorption capacity of the economy (potential production) and the absorbent capacity of the local economy (potential consumption)

can have important effects on the country's external balances [START_REF] Tran | FDI inflows and trade imbalances: evidence from developing Asia[END_REF][START_REF] Farzanegan | The effects of oil price shocks on the Iranian economy[END_REF]. Some studies have also included the output gap factor as one of the determinants of the trade balance [START_REF] Özlale | Oil prices and current account: A structural analysis for the Turkish economy[END_REF]Chuku et al., 2012). Among the arguments for including this factor in the analysis as a determinant of the trade balance is the fact that high economic growth can represent a positive output gap, and thus this can lead to an increase in imports, especially in an oil country, where the marginal propensity to import is relatively high (Libyan Central Bank). It is also expected that during periods of boom or high economic growth, the demand for imported consumer goods will increase, especially those characterized by high quality and luxurious appearance (Chuku et al., 2012;[START_REF] Ali | Oil and economic development: Libya in the post-Gaddafi era[END_REF]. Given the dependence of the productive and industrial sector in developing countries on imports of machinery and capital goods, as well as on the import of many raw materials to run and operate production lines, it is necessary to take into account the magnitude or factor of the output gap when analyzing the relationship between the trade balance and its main determinants (Calderon et al., 2002;Chuku et al., 2012).

In the literature, the industrial production index which measures the magnitude of the change in industrial production is used as a measure of the output gap (Ozlal and Pekkurnaz, 2010;Chuku et al., 2012). This indicator covers all economic activities such as manufacturing industry, energy sector and mining sector, except for the construction and building sector (Ministry of Planning, Statistics and Census Centre). On the other hand, considering that a significant percentage of economic growth in Libya is achieved by sectors such as building and construction and some service sectors such as the transport and communications sector, as well as the financial intermediation sector, which are not included in the industrial production index, therefore the inclusion of the latter aims at measuring the impact of net productive capacities on the Libyan trade balance.

In general, oil-rich countries are arguably vulnerable to multiple economic impacts due to the abundance of oil wealth. In this regard, (Majmder,2020;Onafowora and Owoye,2006) argues that oil and gas wealth can distort the structure of the economy, inflate domestic prices and crowd out non-oil exports. On the other hand, much research indicates that oil prices lead to a transfer of wealth between exporting and importing countries, and can also produce significant changes in trade balances, gross domestic product, inflation, and exchange rates (Le and Youngho,2013;Rafiq et al.,2015;[START_REF] Kilian | Oil shocks and external balances[END_REF]Bondestien et al.,2011).

However, the recent literature on the subject does not provide much information on the economies of oil exporting countries, in particular Libya. Specifically in the context of macroeconomic activity and its vulnerability to the effects of external and internal shocks. The limited evidence that has acknowledged the importance of oil prices for the real economy in Libya or in oil countries, mainly focused on the impact of oil prices on economic growth, gross domestic product, and inflation, while few studies have addressed the impact of oil prices on trade balances. At the same time, and to the best of our knowledge, studies that have dealt with the impact of exchange rates, economic growth, and the output gap on the trade balance of oil exporting countries are almost very limited. Thus, to fill the gap in the current literature, a study on the Libyan economy is needed that considers all aspects that may affect the trade balance and thus fills the gap in the existing body of knowledge on the subject. Thus, our study aims at investigating the determinants of the Libyan trade balance by including a set of important factors that can determine the behavior of the trade balance from several angles. Moreover, our study spans a long period from 1980 to 2020. We therefore consider the period during which oil imports have increased considerably in recent years compared to their previous levels.

Research methodology

This section discusses the empirical framework of the study's analysis to address the research questions stated at the beginning. To achieve the purposes of the study, annual time series data is used in these empirical analyses for the period between 1980 and 2020 in Libya. The Auto-Regressive Distributed Lag (ARDL) model will be used in this study as it aims to examine the long-term relationships between variables. This approach was introduced by [START_REF] Pesaran | An autoregressive distributed lag modelling approach to cointegration analysis[END_REF] and [START_REF] Pesaran | Bounds testing approaches to the analysis of level relationships[END_REF] and is also known as the bounds testing procedure. The (ARDL) method can avoid the endogeneity problems encountered by the Engle-Granger method, as well as the problems stemming from the failure of the hypothesis test on the estimated coefficients in the long run [START_REF] Jalil | Tourism-growth nexus in Pakistan: Evidence from ARDL bounds tests[END_REF]. Another advantage is that ARDL models can operate with the ordinary least squares (OLS) technique; therefore, relationships between variables can be estimated by OLS when the order of the ARDL is known. The OLS technique is commonly used and well accepted for building a reliable and robust model. The following section describes the specification of the empirical model, and the estimation procedure.

Specification of the Empirical Model

After reviewing the literature on the economics of international trade and external balances, it is possible to visualize the study of the relationship between the components of the trade balance, oil prices, exchange rates, output gap and gross domestic product growth, with the aim of testing the long-run relationship between the components of the trade balance and its determinants in Libya. Based on the objectives of the study, the general model that links the relationship between the variables of the study can be described as follows:

TTB = OTB + NTB
Where (TTB), (OTB) and (NTB) denote the total trade balance, the oil balance, and the non-oil balance respectively. Assuming that, the changes in each of (TTB), (OTB) and

(NTB) are determined by the same independent variables, as follows:

(TTB, OTB, NTB)= f(REER, OP, IPI, GDP)

Where (REER) refers to the real effective exchange rate, and (𝑂𝑃) refers to the world oil price, while (IPI) refers to the industrial production index, which is used as a proxy for the output gap, and (GDP) represents real gross domestic product growth. By applying the variables in this study, the general model can be described through three equations as follows: All variables are converted to logarithms to eliminate strong inconsistencies in the series of variables used in the analysis. In addition, [START_REF] Mubarik | Inflation and growth: An estimate of the threshold level of inflation in pakistan[END_REF] mentions that the log transformation helps to homogenize the time trend in the time series data. In addition, the log transformation can avoid problems caused by the sample size and prevent the occurrence of collinearity (Gujarati,2003).

lnTTB t =

Estimation Procedure

Unit Root Tests of Stationarity

Unit root analysis is the first step to take in cointegration analysis, allowing us to understand the order of integration of each variable. To run the ARDL model, we need to fulfill the normality assumption of the ARDL bounds testing approach to cointegration. Therefore, each variable needs to be either integrated of order zero or order one. Accordingly, to [START_REF] Pesaran | Bounds testing approaches to the analysis of level relationships[END_REF]Kripfganz and Schneider,2018] the Bounds Tests (ARDL) framework, offers flexibility in such a way it can be run on the I (1) or I (0) or mixed from I (1) / I (0) variables.

Thus, objective is to ensure that the variables are not I (2) to avoid spurious results. In the presence of variables integrated of order two, we cannot interpret the values of F statistics provided by [START_REF] Pesaran | Bounds testing approaches to the analysis of level relationships[END_REF]

The Augmented Dickey-Fuller (ADF) Unit Root Test

The ADF test is the improved form of the Dickey-Fuller (DF) test. When the DF test believes that the error terms are distributed independently and identically, the ADF test corrects the DF test by adding lagged regression and different terms and taking care of the error term's probable serial correlation. As the ADF test is sensitive to test results, the lag length is crucial in conducting ADF test. Too many lags will reduce the test's power to reject a unit root's null, while the true error process will not be able to be captured appropriately if there are too few lags. It is advisable to begin with a lag length that is relatively higher and then pares (cut backminimize) the model down using the normal t-test and/or F-test, AIC and SBC criteria when selecting suitable lags [START_REF] Enders | Applied Econometric Time Series, New York: Jhon Wiley & Sons. Eviews 4 User's Guide[END_REF][START_REF] Gujarati | Basic Econometrics[END_REF].

3.2.1.2

The Phillips-Perron (PP) Unit Root Test [START_REF] Phillips | Testing for a unit root in time series regression[END_REF] developed a unit root test generalizing the DF test, and nonparametric statistical methods are used to take care of the error term's serial correlation without lagged difference terms added as an ADF test. [START_REF] Said | Testing for unit roots in autoregressive-moving average models of unknown order[END_REF] mentioned that when the error process is a moving average, the ADF test is usable as PP test's favoured feature allows for a weaker set of assumptions concerning the error process. However, it is safer to use both the ADF and PP tests, as when they reinforce each other, we can rely on the test's outcome when determining the variables order of integration in the mode [START_REF] Enders | Applied Econometric Time Series, New York: Jhon Wiley & Sons. Eviews 4 User's Guide[END_REF][START_REF] Nicholson | Microeconomic theory: Basic principles and extensions[END_REF]. The unit root test's power depends on the data's time span rather than the sample size [START_REF] Gujarati | Basic Econometrics[END_REF]. The Phillips-Perron (PP) unit root tests differ from the ADF tests mainly in terms of the assumptions on serial correlation and heteroscedasticity in the errors. In ADF test, the serial correlation is corrected parametrically by incorporating augmented terms into the model. The number of augmented terms is determined by the optimum lag length. Phillips-Perron test statistic is the modified Dickey-Fuller statistics that have been made robust to serial correlation by using heteroscedasticity and autocorrelation consistent covariance matrix estimator [START_REF] Newey | Hypothesis testing with efficient method of moments estimation[END_REF]. The PP test corrects for serial correlation and heteroscedasticity in the errors 𝜀 𝑡 of the regression by modifying the ADF test statistic.

Definition and Sources of Data

This study is based on an annual data set of 40 annual observations spanning from 1980 to 2020. The study focuses on the determinants of the trade balance in Libya. The variables used in the study are the trade balance, which is expressed through three measures, which include the total trade balance, the oil balance, and the non-oil balance, which are symbolized by (TTB, OTB, NTB), respectively. The real effective exchange rate is used, the world oil price, the industrial production index, and the real gross domestic product growth, which are respectively denoted by (REER, OP, IPI, GDP). Below we present a brief detail of the dependent and independent variables used in this study.

Dependent Variables

The dependent variable is Libya's trade balance as a percentage of gross domestic product. Where this variable was represented by three measures as follows:

The Ordinary Least Squares (OLS) technique is commonly used and well-accepted to build a robust dynamic model.

ARDL test of cointegration

The autoregressive distributed optimal lags (ARDL) introduced by [START_REF] Pesaran | Bounds testing approaches to the analysis of level relationships[END_REF], used to estimate the response of trade balances -the oil and non-oil components-to the effects of REER, OP, IPI, and GDP. Thus, the independent distributed lags variables used to predict the dependent distributed lags using the following model estimates: The expression from 𝜑 1 to 𝜑 5 depicts the long-run relationship between the variables, while the expression from 𝛼 1 to 𝛼 5 with the summation sign corresponds to the shortrun dynamics of the variables. On the other hand, 𝛥 is the first difference operator, 𝛼 0 represents drift constant, p is the different variables optimal lags obtained using the (BIC), and 𝜀 𝑡 is white noise. The complete results for short-run and long-run dynamics through ARDL bounds testing are obtained through several steps and procedure. In the first step, Eq, (2) will be estimated through ordinary least square (OLS) method and F-test will be conducted to test the existence of long run relationship among the variables of Eq, (1). The null hypothesis in Eq, ( 2) is 𝐻 0 : 𝜑 1 =𝜑 2 = 𝜑 3 = 𝜑 4 = 𝜑 5 = 0. This means the nonexistence of long run relationship.

𝑌 𝑡 = α 0 + α 1 REER t +
While the alternative is 𝐻 1 : 𝜑 1 ≠ 0, 𝜑 2 ≠ 0, 𝜑 3 ≠ 0, 𝜑 4 ≠ 0, 𝜑 5 ≠ 0.

To conclude whether cointegration exists or not, [START_REF] Pesaran | Bounds testing approaches to the analysis of level relationships[END_REF] provided two sets of critical values -the lower bound critical value and the upper bound critical value for each level of significance which is 1 percent, 2.5 percent, 5 percent, 10 percent without intercept and without time trend, with intercept and without time trend, with intercept and with time trend, respectively. However, it should be noted that according to [START_REF] Pesaran | Bounds testing approaches to the analysis of level relationships[END_REF], the ARDL bounds test can be conducted whether the order of co-integration between variables is I (0) or I (1). Hence, If the calculated F-value exceeds the value of the upper critical bounds, the null hypothesis can be rejected at a conventional significance level emphasizing that cointegrating relationships exist between the variables in the model. If the calculated F-value lies below the lower bound critical value, the null hypothesis cannot be rejected, confirming that there is no cointegration between the model variables. In the second step, we will estimate long run relationship using the selected ARDL model through 𝑅 2 ̅̅̅̅ criterion, Hannan Quinn Criterion, Akaike Information Criterion (AIC) and Schwarz Criterion (SIC).

Error correction model

There is a relationship between the error correction concept and cointegration.

If a set of time series variables is cointegrated, there is ECM or a generating mechanism. This model allows the process of adjustment to be detected by the significant error correction term (Pesaran and Pesaran,2009). Thus, the following error correction model is estimated in the third All the coefficients of the equation are related to the short-term dynamics of convergence to equilibrium; ECM t-1 is the lagged series of estimation residues of the ARDL model associated with the ECM model; δ is the speed of adjustment to long-term equilibrium after a short-term shock. The coefficients of the first differences in the variables estimated in the ECM represent short-term elasticities. The statistically significant negative result of 𝐸𝐶𝑀 𝑡-1 reflects the moderate speed of adjustment from short-term imbalance to long-term steady state. The short-term coefficients are represented by variables I (1), that is, they are the variables that have been subject to differentiation and thus have lost their long-term properties.

Long-term coefficients are represented by variables at level, as they maintain their long-term characteristics, and the speed that the system assumes to reach long-term equilibrium is determined by the model's error correction coefficient (ECM) (Baig et al., 2018;Odhiambo, 2009;Pesaran et al., 1999;Pesaran;Shin;[START_REF] Pesaran | Bounds testing approaches to the analysis of level relationships[END_REF]. To prove the results found in the ARDL model, diagnostic and stability tests will be performed. The tests analyze the specification, normality, series correlation, heteroscedasticity and accuracy associated with the model. 𝛿 is the speed of adjustment coefficient which shows the speed at which equilibrium is restored when a disequilibrium occurs.

Diagnostic Tests

Several diagnostic tests are conducted to ensure a consistent fit of the model. These tests examine the serial correlation, functional form, normality, and heteroscedasticity associated with the selected model. In addition, Pesaran and Pesaran (1997) suggested using the stability test of Brown et al. (1975) to check the stability of the regression coefficient. This technique is also referred to as cumulative (CUSUM) and cumulative sum of squares (CUSUMSQ). If the plots of the CUSUM and CUSUMSQ statistics remain within the critical limits of the 5% significance level, the null hypothesis of all coefficients in the given regression being stable cannot be rejected [START_REF] Jalil | Tourism-growth nexus in Pakistan: Evidence from ARDL bounds tests[END_REF].

Normality Test

A normality test is used to determine whether the kurtosis and skewness of the residuals follow a normal distribution. One of the important assumptions of the classical linear regression model is that the residuals should be normally distributed with a constant variant and zero mean [START_REF] Gujarati | Basic Econometrics[END_REF]. According to [START_REF] Asteriou | Applied Econometrics: a modern approach[END_REF], violation of this main condition leads to invalid t and F statistics. Normality tests on residuals are important when they involve small samples. However, a normality test is not a necessity when the sample under consideration is large enough (Pesaran and Pesaran, 2009). The normality test is based on the normality test recommended by [START_REF] Jarque | Efficient tests for normality, homoscedasticity and serial independence of regression residuals[END_REF].

Lagrange Multiplier Test

The linear relationship between the value of items in a time series and those preceding and following it is called serial correlation or autocorrelation. First-order serial correlation refers to each item being related to those immediately before or after it. The LM test is applicable whether or not there are lagged dependent variables. The assumption of nonautocorrelation means that the residuals are independent of each other. When the disturbances are uncorrelated, that is, 𝐸(𝜀 𝑖 , 𝜀 𝑗 ) = 0 ,they are non-autocorrelated. When the residuals are not independent, the problem of autocorrelation arises. This kind of problem typically occurs mostly in time series data.

Autoregressive Conditional Heteroscedasticity Test

The economic problem is how heteroskedasticity is defined when the variance of the error term in a regression equation does not remain constant between observations [START_REF] Pearce | World Product mandate and R&D specialisation[END_REF]. There are two forms of heteroskedasticity: unconditional and conditional.

Conditional heteroscedasticity identifies non-constant volatility when future periods of low and high volatility are not identified. In other words, conditional heteroskedasticity occurs when the error variance changes with the value of the independent variable. In contrast, when future periods of low and high volatility can be identified, unconditional heteroskedasticity occurs when the variance does not systematically decrease or increase with changes in the value of the independent variable. In this study, the autoregressive conditional heteroscedasticity (ARCH) test will be performed to detect the presence of heteroscedasticity in the estimation result.

Homoscedasticity, however, describes a situation where the random disturbances in a regression model vary in a similar fashion throughout the whole sample. Thus, the homoscedasticity assumption means the disturbance term has the same finite variance 𝜎 2 , 𝑡ℎ𝑎𝑡 𝑖𝑠, 𝐸(𝜀 𝑖 2 ) = 𝜎 2 . If this assumption is not satisfied in a specific empirical situation, the problem of heteroscedasticity appears in the data. If the random disturbances vary differently in different parts of the sample, heteroscedasticity will appear.

Stability Test

A stability test is carried out using the cumulative sum of recursive residuals (CUSUM) test and the cumulative sum of squares of recursive residuals (CUSUMQ) test.

These two tests assess the stability of the coefficients and show whether the regression equation is stable over time. The CUSUM and CUSUMQ statistics are plotted against the 5% critical limit of significance. When the CUSUM and CUSUMQ plots remain within this critical limit, the null hypothesis that all coefficients of the ECM are stable cannot be rejected. As mentioned above, these tests were proposed by Brown et al (1975) to test for parameter constancy and are based on the recursive residual of [START_REF] Johnston | Econometric methods[END_REF]. to 2020, as defined in the previous section. The ARDL testing approach was used in this study as the main method of co-integration testing to achieve the main objectives of the study. It should be noted that the main objective is to analyses the model of the total trade balance and its oil and non-oil components, by defining the relationship between Libya's trade balance and its main determinants represented by the real effective exchange rate, the world oil price, the economy's output gap and GDP growth. Therefore, we seek to estimate the trade balance model to examine the role of each of the above-mentioned determinants.

To achieve these objectives, the analysis will start by showing the equations of the model. Each model consists of an equation that contains a relationship to be estimated (dependent and independent variables). Next, a preliminary analysis will be performed, which will serve as a starting point for the primary analysis of the equation of each model in this study. In this regard, the primary analysis begins with descriptive statistics and unit roots tests, the Augmented Dickey-Fuller (ADF) test and the Philips-Perron (PP) test. The advanced analysis in this study uses a methodological approach, the ARDL co-integration modelling approach, and the associated ECM error correction model. The results of the estimation and the long-term parameter estimation and the error correction model of the ARDL estimation will be presented in summary tables. To confirm the validity of the ARDL estimate, several diagnostic tests are applied in this research. As explained earlier, these tests are the LM test for serial correlation of residual values, the normality test and the ARCH test for heterogeneity. The results of these diagnostic tests will be displayed in a summary table for each form. To test the long-term stability of the coefficients as well as the short-term dynamics of each equation, the research uses the cumulative sum of the recursive residuals test (CUSUM) and the cumulative sum of squares of the recursive residuals test (CUSUMSQ). The results will be presented, and a discussion and interpretation of the results will be provided at the end of each analysis of the three models.

Estimating Libya's trade balance

In estimating the Libyan trade balance, our work joins the studies mentioned in the literature review section that have examined the effects of oil prices, exchange rates, output gaps and gross domestic product growth on the trade balance of countries. The objective is to determine the response of the trade balance and its oil and non-oil components, to the effects of the main factors that determine its behaviour. Furthermore, to determine whether the oil and non-oil trade balance responds in a way that is likely to improve or worsen the total trade balance situation in Libya. Empirically, the model seeks to study the interaction between its variables such as the trade balance, the real effective exchange rate (REER), the global oil price (OP), the output gap (IPI) and gross domestic product growth. Then, the main objective of the study will be answered by checking the significant coefficients of the estimated models. Thus, these estimation equations can be used to determine the role of each of the main determinants of the trade balance in Libya. Equations (3.1), (3.2) and (3.3) were used to estimate the Libyan trade balance and its oil and non-oil components over the study period.

Descriptive Statistics

Descriptive statistics are values that describe the characteristics of a sample or study population. They are also used to determine whether a sample is normally distributed.

Table (3.1) presents summary statistics for each of the data series used in the study. This data series is the total trade balance, oil trade balance and non-oil trade balance in terms of gross domestic product, the real effective exchange rate, the world oil price, and the index of industrial production as a proxy for the output gap and gross domestic product growth. The summary statistics contain the mean, median, standard deviation, maximum and minimum values. It can be observed that there are basic changes for all variables. The Trade Balance percentage varies from (-65) percent to (42) percent of gross domestic product with a standard deviation of ( 22) percent and a mean of (5.5) percent. This indicates that the trade balance has been volatile. The percentage of the oil trade balance ranges from (11) percent to (65) percent of gross domestic product with a standard deviation of (15) percent and a mean of (37) percent.

This shows that the oil trade balance was volatile. The non-oil trade Balance percentage fluctuates from (-48) percent to (14) percent of gross domestic product with a standard deviation of (15) percent and a mean of (-21) percent. This implies that the non-oil trade balance has also been volatile. A notable difference is indicated in the standard deviation of the real effective exchange rate (165) unit, with a mean of (312) unit and a median of (338)

unit. The world oil price data series also shows a significant difference in the standard deviation, which was 29 unit, with a mean of ( 43) unit and a median of ( 29) unit. This suggests that there have been large fluctuations in the series of real effective exchange rate and oil price variables. During the same period, the gross domestic product growth series exhibited a large difference, with the growth rate ranging from (-68) percent to (124) percent, with a mean of (2.54) percent and the median is (-0.76) percent, with a standard deviation of (30) percent. As for the industrial production index series, it showed a level of standard deviation that is not very different from zero with a value of ( 18) percent. The percentage of the industrial production index varies from (1) an integer which represents (100) percent according to the scale of indicators to (13) percent, with a mean of ( 49) and a median of ( 42). Thus, we can conclude that the series of the index of industrial production, or the output gap, also shows significant differences, which indicates that the appearance of fluctuations in the output gap during the period specified for the study.

Selection the Lag Length Order

The estimation of the lag length of the autoregressive process is important in econometrics for most economic research, in particular for the estimation of the ARDL regression. Economic data are by nature time series and an autoregressive (AR) model is implemented in most economic and financial studies, either indirectly or directly. Thus, the application of the AR model is used to decide on the length of the autoregressive lag. In this respect, several lag length selection criteria are used in economic research to select the autoregressive (AR) lag length of variables. In summary, an autoregressive lag length process indicates a time series for which the current value depends on its first lagged p-values, which is denoted autoregressive. Since the lag length is always unknown, it can be determined by several lag length selection criteria, such as the Schwarz Information Criterion (SIC), the Aikaike Information Criterion (AIC), the Hannan-Quinn Criterion (HQC), the Final Prediction Error (FPE) and the Log Likelihood Equation. These criteria are still commonly applied in economic research, especially those adopting the Schwarz Information Criterion (SIC) and the Aikaike Information Criterion (AIC), for instance the studies by [START_REF] Ng | Real exchange rate and trade balance relationship: An empirical study on Malaysia[END_REF][START_REF] Tang | Singapore's Aggregate Import Demand Function: Southeast Asian Economies Compared[END_REF]Liew,2004;[START_REF] Hacker | Can the LR test be helpful in choosing the optimal lag order in the VAR model when information criteria suggest different lag orders?[END_REF]Staszewski et al., 2017;[START_REF] Ferrer-Pérez | Improving the Performance of a Long-Run Variance Ratio Test for a Unit Root[END_REF][START_REF] Nagawa | Determinants of gross domestic savings in Uganda: an autoregressive distributed lag (ARDL) approach to cointegration[END_REF]. However, [START_REF] Henry | Comparison of Akaike information criterion (AIC) and Bayesian information criterion (BIC) in selection of an asymmetric price relationship[END_REF] stated that the objective of AIC is to find the best model for the unknown data, while the objective of SC is to identify the true model. Moreover, AIC does not directly depend on the sample size due to the absence of some properties of the affinity consistency of AIC (Bozdogan,1987). In this study, we will apply this procedure to the three Libyan trade balance models, the total trade balance, the oil trade balance, and the non-oil trade balance. Thus, for total trade balance model, we will use the lag length suggested by the CS as it is proportional to the sample size of our study. In our model, the lag length can be determined by the lag duration giving the smallest critical value. Thus, the test is performed on four lag lengths to determine the optimal ones. Tables (3.2, 3.3 and 3.4) showed the consistency of the results for the number of lags in the Akaike Information Standard (AIC) and the Schwarz Criterion (SC). AIC and SC proposed two lag lengths. Thus, the number of lags that minimize the Bayesian Schwarz criterion will be used. Based on the results presented in Tables (3.2, 3.3 and 3.4) respectively, the lag length was taken equal to two for the total and oil trade balance models, while the lag length of one was taken for the non-oil trade balance model, to perform the following research steps.

Unit Root Tests of Stationarity

Prior modelling the time series data, it is important to test the properties of the time series to determine the order of integration of these variables. This procedure allows to avoid problems of estimating spurious relationships. In addition, it can also help to determine whether the ARDL approach is a useful method for estimating relationships between index series, as the ARDL linked test has been established on the assumption that the time series are series variables in the estimated trade balance equations. These results demonstrated that there were long-run relationships between the related variables and the dependent variables in the components of trade balance in Libya. The next step was investigating estimates of the ARDL long-run coefficient for the three models.

Total Trade Balance Model

After confirming the stationarity of the time series variables at the first difference and the existence of a long-run relationship between the variables, it was possible to proceed to the second stage of ARDL to determine the values of the long-run coefficients for the total trade balance model by studying equation (3.1). The lag order takes number two as suggested by the Schwarz Bayesian criterion (SBC), and the most common choice was an ARDL (2,2,0,2,1). The purpose of this estimation was to reveal the interaction relationship between the variables TTB (Total trade balance) and REER (Real effective exchange rate), OP (Oil price), IPI (Industrial production index) and GDP (Real gross domestic products growth). Table (3.11) below shows the results of the long-run estimates. For equation 3.1, in the long run, the coefficient of the real effective exchange rate was positive and statistically significant at the five percent significance level, while the coefficients of the oil price, industrial production index and real gross domestic products growth were also statistically and positively significant at the one percent significance level with the movement in the total trade balance. The interpretation was that a one percent increase in the real effective exchange rate (REER) variable was associated with a 0.07 percent increase in the total trade balance (TTB).

While a one percent increase in the oil price (OP) could lead to a 0.38 percent increase in the total trade balance. In addition, the increase in the total trade balance is about 0.49 and 0.87 percent for each one percent increase in the industrial production index (IPI) and gross domestic product growth (GDP), respectively. The positive sign of the REER is consistent with the Marshall-Lerner case, which states that the TTB responds positively to nominal exchange rate appreciation and vice versa. Therefore, this may imply that depreciation of the domestic currency will lead to an improvement in the total trade balance in the long run. However, this result is consistent with the results of studies by [START_REF] Falk | Determinants of the trade balance in industrialized countries[END_REF]Chuku et al.,2012;[START_REF] Bahmani-Oskooee | Nonlinear ARDL approach and the J-curve phenomenon[END_REF]Ray,2012;Kennedy,2013;Doojav,2018). In addition, the positive coefficients of (OP) and its significance were consistent with a prediction of [START_REF] Allegret | Current accounts and oil price fluctuations in oil-exporting countries: the role of financial development[END_REF]Rafiq et. al, 2015;[START_REF] Le | Oil price shocks and trade imbalances[END_REF]. Furthermore, these results are in contradiction with the studies of (Arouri et. al, 2014;[START_REF] Hassan | RETRACTED: Effect of oil prices on trade balance: New insights into the cointegration relationship from Pakistan[END_REF]. Subsequently, oil prices have positive effects on the total trade balance. This finding indicates that higher oil prices appear to be a major contributor to the total trade surplus of the economy in the long run.

Moreover, the positive coefficient for the IPI and its significance are consistent with the results of (Chuku et al.2012;Tran and Dinh,2014) on the effect of the output gap. This means that the trade balance will increase if the volume of industrial production in Libya increases. The explanation is that the improvement in the industrial production index is due to the increase in the production of oil and its related products, which confirms the dominance of the oil sector in Libya's productive structure. Therefore, this implies that periods of strong growth will lead to an increase in the orientation of production capacity towards the production of the export commodity namely oil, and to an improvement in the total trade balance as consequence. A positive coefficient on gross domestic product growth indicates that economic growth has increased the output of the main export product by more than the increase in the import product-import substitutes-included in Libya's import list. As a result, the overall trade balance improves, especially during periods of high oil prices. Our result is consistent with his studies [START_REF] Kakar | The Determinants of Pakistan's Trade Balance: An ARDL Cointegration Approach[END_REF]Rai, 2012;Doasa, 2007), which found that an increase in gross domestic product growth improves the trade balance. In addition, several studies show that higher oil prices will lead to higher gross domestic product in the case of oil exporting countries [START_REF] Nusair | The effects of oil price shocks on the economies of the Gulf Co-operation Council countries: Nonlinear analysis[END_REF][START_REF] Farzanegan | The effects of oil price shocks on the Iranian economy[END_REF]. In this regard also, reference can be made to the most recent study conducted by [START_REF] Aimer | The effects of fluctuations of oil price on economic growth of Libya[END_REF] which examined the impact of oil prices on gross domestic product in Libya. Thus, while growth in gross domestic product is driven by increased production in the oil sector (Al-Huwij et al., 2021), it is expected that growth in gross domestic product will improve Libya's total trade balance.

From the results given in table 3.11 of equation 3.1, it is evident that there is some difference in the magnitudes of the long-run coefficients for all variables. Where the results show that the gross domestic product variable plays the most important role in influencing Libya's total trade balance, followed by the industrial production index and the oil price, respectively. This also indicates that the coefficient of real exchange rate is significant and positive, however, its effect is the smallest among the variables studied. From the above empirical results, it can be inferred First, we begin with a serial correlation (autocorrelation) diagnostic using the LM test for serial correlation in residuals. This test examines the null hypothesis of no serial correlation against the alternative hypothesis of positive/negative serial correlation. The test showed an F-statistical probability that is at more than five and ten percent significance levels, which means that the null hypothesis cannot be rejected. As a result, we concluded that the equation does not have a serial correlation problem. For heteroscedasticity, we tested the null hypothesis of no heteroscedasticity using the ARCH test. As shown in Table 3.12, the null hypothesis cannot be rejected because the probability of the equation is greater than five significance levels. Thus, there is no evidence of a heteroskedasticity effect in the equation The results confirm that an increase in the real exchange rate leads to a higher oil trade balance. On the other hand, the coefficient on oil price indicates that an increase in oil price leads to an increase in the oil trade balance, and this result is expected because Libya is a net source of oil. Therefore, our study is consistent with the results of studies that an increase in oil prices will lead to an improvement in the oil trade balance in the net oil exporting country [START_REF] Kilian | Oil shocks and external balances[END_REF][START_REF] Rafiq | Asymmetric oil shocks and external balances of major oil exporting and importing countries[END_REF][START_REF] Jibril | Asymmetric oil prices and trade imbalances: does the source of the oil shock matter?[END_REF]. This result shows that changes in oil prices have a strong influence on the oil trade balance, as higher oil prices increase the oil trade balance. On the other hand, the coefficient of the industrial production index, which represents the output gap, shows that an increase in the output gap leads to an increase in the oil trade balance. This result indicates that the output gap in Libya is parallel to the direction of the changes in oil prices, as changes in oil prices can lead to changes in the dynamics of production in the same direction, due to the dominance of the oil sector on the productive structure and moreover, because of the low contribution of other economic sectors in the production process.

Thus, it seems that it is very difficult to achieving the optimum utilization of available production resources. This result indicates that high oil prices lead to a positive output gap in the Libyan economy and vice versa. Our study is consistent with the studies of [START_REF] Chuku | Oil price shocks and the dynamics of current account balances in Nigeria[END_REF]Tran and Dinh,2014;Yildirim and Arifli,2021). As for the impact of gross domestic product growth, this coefficient shows that an increase in the gross domestic product growth rate leads to a change in a similar direction and thus an increase in the oil trade balance of Libya. This result is consistent with the study by (Al-huwij et al. ,2021).

From the results given in table 3.13 of equation 3.2, it is evident that there is some difference in the magnitudes of the long-run coefficients for all variables. Where the results show that the gross domestic product variable plays the most important role in influencing Libya's oil trade balance, followed by the industrial production index and the oil price, respectively. This also indicates that the coefficient of real exchange rate is significant and positive, however, its effect is the smallest among the variables studied. From the above empirical results, it can be inferred

Nonoil Trade Balance Model

After confirmation of the stationarity of the time series variables at the first difference and the existence of a long-run relationship among the variables, it was possible to proceed to the second step of the ARDL to determine the values of the long-run coefficients for the total trade balance model by studying equation (3.3). The lag order taken the number two as suggested by the Schwarz Bayesian criterion (SBC), and the most common choice was an ARDL (1,1,0,1,1). The goal of this estimation was to reveal the interaction relationship between the variables NTB (Nonoil Trade Balance) and REER (Real Effective Exchange Rate), OP (Oil Price), IPI (Industrial Production Index) and GDP (Real Gross Domestic Product Growth). Table (13.5) below presents the results of the long-run estimates.

For equation 3.3, in the long run, the coefficient of the real effective exchange rate was positive and statistically significant at the one percent significance level, while the coefficient of the oil price was positive and statistically significant at the five percent significance level. The industrial production index and real gross domestic products growth were also statistically and positively significant at the one percent significance level with the movement in the non-oil trade balance. The interpretation was that a one percent increase in the (REER) variable was associated with a 0.44 percent increase in the non-oil trade balance (NTB). While a one percent increase in the oil price (OP) could lead to a 0.16 percent increase in the oil trade balance. In addition, the increase in the non-oil trade balance is about 0.54 and 0.51 percent for each one percent increase in the industrial production index (IPI) and real gross domestic product growth (GDP), respectively. The results confirm that the appreciation of the real effective exchange rate leads in the long run to a higher level of the non-oil trade balance, a result consistent with many economic theories such as elasticity and absorption approaches of balance of payments.

However, the empirical economic literature presents an inconclusive discussion of the longrun relationship between the exchange rate and the trade balance. For example, (Falk,2008;Chuku et al.,2012;[START_REF] Bahmani-Oskooee | Nonlinear ARDL approach and the J-curve phenomenon[END_REF]Kennedy,2013;[START_REF] Waliullah | The determinants of Pakistan's trade balance: an ARDL cointegration approach[END_REF]Ray,2012;Doojav,2018) shows a negative relationship between the exchange rate and the trade balance. However, studies by (Tran and Dinh,2014;Nienga,2010;Duasa,2007;Onafowora and Owoye,2006;Mohammad,2010) shows that an appreciation of the exchange rate leads to an increase in the trade balance. However, in the case of Libya, our results agree with first group mentioned above who supports the positive impact of the exchange rate depreciation on the trade balance. On the other hand, these results can be explained by a relative increase in nonoil exports, such as exports of steel products and fertilizers, as well as fish and agricultural products (according to the economic bulletin of the Libyan Central Bank). Therefore, this will be the case while their prices are low in local currency due to the exchange rate depreciation.

As for the oil price coefficient, this indicates a significant positive impact of increase the oil prices on the non-oil trade balance. Our results are consistent with the study of [START_REF] Jibril | Asymmetric oil prices and trade imbalances: does the source of the oil shock matter?[END_REF], while this result contradicts the study of (Al-huwij,2020), which confirmed that high oil prices negatively affect the non-oil trade balance in Libya. The output gap coefficient shows a significant positive impact on the non-oil trade balance. This result can be explained by output growth in export-oriented sectors related to the oil sector, such as the petrochemical and fertilizer industries, as well as construction industries such as steel products and cement. These results are consistent with (Tran and Dinh,2014;Chuku et al.,2012;Yildirim and Arifli,2021).

As for the impact of gross domestic product growth, this coefficient indicates that an increase in the gross domestic product growth rate leads to an improvement in the non-oil trade balance.

This result can be attributed to the fact that the acceleration of gross domestic product growth in Libya leads to an increased propensity to save rather than consume. On the other hand, accelerated economic growth may not only increase imports, but can also increase non-oil exports, since economic growth is biased towards exports. In other words, if savings rates are stable during periods of high gross domestic product growth, or if an increase in gross domestic product growth increases savings. Therefore, the increase in gross domestic product growth is likely to improve the non-oil trade balance. Moreover, the non-oil trade balance could improve because of the improvement in non-oil exports. Hence, this result is consistent with (Al-huwij et al.,2021;Doojav,2018;Kakar and Khan,2010;Nienga,2010;Duasa,2007).

From the results given in table 13.5 of equation 3.3, it is evident that there is some difference in the magnitudes of the long-run coefficients for all variables. Where the results

show that the gross domestic product variable plays the most important role in influencing Libya's nonoil trade balance, followed by the industrial production index and the oil price, respectively. This also indicates that the coefficient of real exchange rate is significant and positive, however, its effect is the smallest among the variables studied. From the above empirical results, it can be inferred that the long-run relationship among the time series variables in the total trade balance model for the equation (3.3) is as follows: First, we start with the serial correlation (autocorrelation) diagnosis, which uses the LM test for serial correlation in the residuals. This test tests the null hypothesis of no serial correlation versus the alternative hypothesis of positive/negative serial correlation. The test showed an F-statistical probability that is at more than five and ten percent of significance levels, meaning that the null hypothesis cannot be rejected. As a result, we conclude that the equation has no serial correlation problem. Regarding heteroscedasticity, we tested the null hypothesis of no heteroscedasticity using the ARCH test. As shown in Table 13.6, the null hypothesis cannot be rejected because the equation probability exceeds the five and ten percent significance levels. Thus, there is no evidence for the existence of heteroscedasticity effect in The error correction model is estimated based on relevant long-run estimates.

Following the estimation of the long-run coefficients, the last step in the ARDL technique is the examination of the error correction and the evaluation of the short-run coefficients.

According to [START_REF] Pesaran | Bounds testing approaches to the analysis of level relationships[END_REF][START_REF] Narayan | Estimating income and price elasticities of imports for Fiji in a cointegration framework[END_REF], error correction will occur in the short run when there is cointegration among the variables. The short-term elasticities are represented by the coefficients of respective first differenced variables. The error correction model outcomes are summarized in Table 13.7. Notes:(i) The dependent variable is (dLnTTB), 40 observations used for estimation from 1980 to 2020. (ii) R-Squared and R-Bar-Squared measures refer to the dependent variable (dLnTTB).

In short run, the coefficients showed that the lagged variables of oil price (OP), output gap indictor (IPI), and real gross domestic product growth (GDP) are statistically significant at a one percent significance level. However, the real effective exchange rate (REER) is significant at a five percent significance level in the model equation. Nevertheless, the estimated coefficients in Equation 3.1 showed some variance in their values. The estimation values indicate that real effective exchange rate and oil prices coefficients are higher in the short run than in the long run. However, the coefficients on the output gap and gross domestic product growth both appeared in larger values in the long run. While the significance level of short-run variables is not various from their long-run level. The REER estimated short-run coefficients in equation 3.1 is found to be at 0.206, implying that in the short term, an increase of one percent in the real exchange rate can result in the increase of total trade balance at approximately 0.20 percent. Furthermore, the short-run OP coefficient in the equation stretched to 0.430, which means that the increase of one percent in the oil price could lead to an increase in the total trade balance of 0.43 percent. The IPI coefficient in equation 3.1 is also found to be estimated at 0.285; therefore, it can be interpreted in the short term as an increase of one percent in the output gap indicator. Hence, this would lead to an increase of approximately 0.285 percent in the total trade balance. The GDP variable estimated short-run coefficient is found to be at 0.479, this implies that the real gross domestic products growth had a positive influence on the total trade balance and the later would be increased by 0.48 percent when the real gross domestic product is increased by one percent.

Moreover, the ECM coefficient provides clear information about the speed of adjustment, as well as points out the disequilibrium's level in the short term would be adjusted in the long term. As expected, the coefficient has been found negative and statistically significant. The coefficients in the equation suggest that there has been an important speed of adjustment to the equilibrium level once the economy is shocked, roughly at 44 percent convergence to the long-term equilibrium and is completed after two years and three months.

The negative error correction terms mean that when TTB t-1 is high to be at equilibrium level, ∆TTB t will be negative to restore the equilibrium. It pulls TTB back towards its long-run relationship with REER, OP, IPI and GDP.

Stability Test

Following the estimation of the error correction model, we tested the stability of the coefficients in the long run as well as the dynamics in the short run using conventional methods, namely the CUSUM and CUSUMSQ stability tests. The cumulative sum of recursive residuals (CUSUM) is mainly useful for assessing the stability of the regression coefficients. It is a pair of parallel lines with a significance of five per cent, plotted around the predicted line. The CUSUM test detects the stability of a parameter if the estimated line lies in the area between the two critical lines. The cumulative sum of squares of recursive residuals (CUSUMSQ) test constructs the CUSUMSQ as a function of time and a pair of five per cent critical lines. Pesaran and Pesaran (2009) stated that the CUSUMSQ test is useful when there is a deviation from a random and sudden regression of coefficient constancy. Similarly, movement within the critical lines suggests stability of the parameters. In general, each graph is represented by two straight lines plotted at the 5 per cent significance level. Figures 3.8 and 3.9 show the CUSUM and CUSUMSQ graphs for equation 3.1. Both tests suggest that this equation has desirable econometric properties and confirm that the parameters are stable over the sample period for this equation.

Oil Trade Balance Model

The ARDL Bound test method depends on conventional Error Correction Models for the presence of a long-term relationship as well as estimation for long-and short-term coefficients. Thus, the dynamic error correction model could be derived from the ARDL approach where ECM integrates the short-run dynamics with the long-run equilibrium, without losing long-run information. At any rate, estimating the short-run relationships is the last step in the estimation for the ARDL approach. In this case, we try to examine the short-run relationships among the included time series in the oil trade balance model equations. Table 13.8 presents short-run coefficient results for all variables used in the oil trade balance model equations, such as the real effective exchange rate (REER), oil price (OP), industrial production index (IPI), and real gross domestic product growth (GDP). With respect to the values of the coefficients, except for the real exchange rate coefficient, it is clear that the coefficients values in the long run are higher than those in the short run. Otherwise, the significance level of the variables in the long run is higher than in the short run. Notes:(i) The dependent variable is (dLnOTB), 40 observations used for estimation from 1980 to 2020.

(ii) R-Squared and R-Bar-Squared measures refer to the dependent variable (dLnOTB).

Table 13.8 gives a summary of the results for the short-run coefficient for all timeseries data included in examination of the oil trade balance model equations. These variables are the total trade balance (OTB), real effective exchange rate (REER), oil price (OP), industrial production index (IPI), and real gross domestic product growth (GDP). In the short run, the estimated coefficients in Equation 3.2 did not show considerable differences in their values.

The real effective exchange rate is positively related to the oil trade balance at a five percent level of significance, with a value of approximately 0.195 indicating that a one per cent increase in the real exchange rate would lead to increase oil trade balance by about 20 percent. In addition, the oil price plays a positive role in oil trade balance, it is statistically significant, and positively affects the oil trade balance at a five percent significant level. This suggests that if the oil price increases by one percent, the oil trade balance, on average, would increase by 41 percent. Meanwhile, the oil trade balance is also positively affected by the output gap at a one percent level of significance. The short-run coefficient of the output gap is roughly 0.313, implying that a one percent increase in the output gap could lead to an increase in the oil trade balance by 31 percent in the short run. However, the real gross domestic product growth, which has a significant and positive effect on the oil trade balance at a five percent significance level, with a value of coefficient of 0.239 this means that in the short run, the oil trade balance would increase by 0.24 percent if the real gross domestic product growth increases by one percent.

The important result of the short-run dynamics is the calculation of the ECM coefficient. The lagged error correction coefficient ECM t-1 is presented in the last row of the top panel of Table 13.8. The lagged error correction coefficients, ECM t-1 are of correct sign and significant in both cases verifying the cointegrating relationships established between the variables. The coefficient of ECM t-1 shows the speed of the adjustment back to the long-run equilibrium after a short-run shock. For example, the ECM t-1 coefficient is 0.5683. This implies that about 57 percent of the imbalances from the previous year's shock adjust to the current year's long-run equilibrium.

Stability Test

Non-oil Trade Balance Model

In this stage of the ARDL technique estimation, the study employed the ARDL based error correction modeling approach to estimate the short-run dynamic. One of the ECM characteristics is integrating the short-run dynamics with the long-run equilibrium without losing long-run information. In this phase, the study tends to identify the short-run relationships amongst variables used in estimation of non-oil trade balance model equation. These variables are the non-oil trade balance (NTB), real effective exchange rate (REER), oil price (OP), industrial production index (IPI), and real gross domestic product growth (GDP). The summary of the results of the short-term analysis and the coefficient of the error correction terms are presented in Table 13.9. Thus, the most notable result in the short-run is the difference in the sign of the real effective exchange rate coefficient compared to the long-run's sign. However, it is consistent with economic theories such as the elasticity and absorption theories of the balance of payments. The other coefficients are of equal sign with respect to the long run and are consistent with previous expectations. However, except for the coefficient on the real gross domestic product growth estimator, the magnitude of the short-run estimates is smaller than that of the long-run estimates. Notes:(i) The dependent variable is (dLnNTB), 40 observations used for estimation from 1980 to 2020.

(ii) R-Squared and R-Bar-Squared measures refer to the dependent variable (dLnNTB).

In the short run, the results of the analysis show that the real effective exchange rate has no significant impact on the non-oil trade balance, despite the presence of a negative sign of the exchange rate coefficient, which may indicate an opposite relationship between the real effective exchange rate and the non-oil trade balance in the short run. Meanwhile, the world oil price has no significant impact on the non-oil trade balance, despite the positive sign of the world oil price coefficient. Thus, the results of the analysis suggest that the world oil price has no significant impact on the non-oil component of the trade balance during the period under study.

At the same time, the non-oil trade balance is also positively affected by the output gap at a significant level of one percent. The coefficient of the output gap in the short run is about 0.346 percent, which means that an increase in the output gap of one percent could lead to an increase in the non-oil trade balance of 0.346 percent in the short run. As for the gross domestic product growth, it also has a significant and positive affect on the non-oil trade balance at a significant level of one percent, with a value of a coefficient of 0.614. This means that in the short run, the non-oil trade balance will increase by 0.61% if the gross domestic product growth increases by one percent.

As can be seen from the results presented in Table 13.9, the results show that the output gap variables and the economic growth rate have a significant and positive impact, while there is no significant impact for either of the oil price and real effective exchange rate variables on the non-oil trade balance in the short run. despite the correct sign of the real effective exchange rate coefficient according to macroeconomic theory (see [START_REF] Dogru | The balance of trade and exchange rates: Theory and contemporary evidence from tourism[END_REF].

On the other hand, the industrial production index coefficient indicates that an increase in the output gap contributes to an increase in the non-oil trade balance in the short term, which is consistent with the studies of (Yildirim and Arifli,2020;Chuku et al.,2012;Tran and Dinh,2014). This result can be attributed to the fact that the output gap leads to an increase in demand for exports by a greater proportion than the demand for imports. In other word, the positive output gap leads to increasing the concentration of production resources towards export industries. Moreover, the production activity is almost confined to the export industries that dependent on oil, such as petrochemical and fertilizer industries, and much lesser extent on some other industries such as iron products industries and construction industries such as the cement production. Indeed, most of these industries do not depend to a large extent on imported raw materials. Therefore, an increase in the output gap may lead to an improvement in exports, which leads to an improvement in the non-oil trade balance. However, due to the existence of a co-movement among the output gap and oil prices, there are concerns about the collapse of oil prices which may lead to a reversal of the non-oil trade balance, hence, this could reflect the fragility of the trade balance in Libya.

As for the coefficient of gross domestic product growth, it shows a strong positive impact on the non-oil trade balance. The interpretation of this is that when the increase in gross domestic product growth is greater than the increase in imports, it may imply that an increase in gross domestic product growth may lead to a higher percentage increase in savings than an increase in consumption and, therefore imports do not increase by a large percentage as well due to the increase in gross domestic product growth. The other explanation is That economic growth may be biased to export-oriented industries at the expense of import-substitution industries, therefore, the increase in exports is likely to be greater than the increase in imports.

Especially if the improvement in the quantities and prices of these exports is in line with the rise in oil prices.

At this stage, the objective of the study is to capture the short-term dynamics. In the short run, there may be differences from the long-run equilibrium because the variables used in the estimation model may experience shocks. In this regard, several studies (Pinshi, 2020;Daette et al., 2016;Thirtle et al., 2002;Banerjee et al., 1998) have emphasized that the stability of the long-run relationships between the variables can be confirmed by a significance error correction term (ECM). In addition, the ECM coefficient provides information on the speed of adjustment and shows how fast the variables move toward equilibrium. As expected, the ECM parameter was found to have a negative sign with a high level of statistical significance, confirming the existence of long-run relationships between the variables used in the estimation of the non-oil trade balance model equation. Hence, when the economy experiences an external shock, this accelerates the adjustment of equilibrium levels to a convergence of about 64 percent to long-run equilibrium, which is completed after one year and six months. In other words, the significant error correction term indicates that at least 63 percent of the previous year's disequilibrium will be corrected after eighteen months.

Stability Test

The CUSUM and CUSUMSQ stability tests have been used in most of the studies, as they are useful to estimate the stability of the regression parameters and can provide information on potential breaks in the structure that can lead to model biases. The idea of these tests is as follows; Parameters of an estimated equation are stable if expected line movements do not cross straight critical lines drawn at 5% significance level. Figures 3.12 and 3.13 show plots from CUSUM and CUSUMSQ showing line movements that do not cross straight critical lines plotted at 5% significance level. This means that the estimated equation has the desired econometric properties, confirming the stability of the parameters over the sample period.

Conclusions

This study examined the behavior of the trade balance and its oil and non-oil components in the Libyan economy and analyzed the impact of international oil prices, the real effective exchange rate and the output gap represented by the industrial production index and gross domestic product growth using annual time series data for the period 1980 to 2020. We applied the autoregressive distributed optimal lags (ARDL) in this study as a method was used to analyse the time series data. This study aimed to determine the research results in a manner consistent with the objectives of this study which were explained in the Introduction section.

Initially, regarding the total trade balance, the results showed that the increase in oil prices leads to an increase in the total trade balance, as the results indicated a strong positive impact of the oil price factor on the total trade balance over the long term. On the other hand, the results showed that oil prices had a positive impact on the total trade balance in the short term, and that the magnitude of its impact was greater in the short term than in the long term.

As for the oil trade balance, which responded strongly to positive changes in global oil prices, the magnitude of its impact was very similar in the long and short run. This result is expected since Libya is a net exporter of crude oil, which is the main export product according to foreign trade statistics and the structure of the Libyan trade balance. On the other hand, for the non-oil component of the trade balance, the estimation results showed no relationship between this sub-balance and changes in global oil prices in the short run, although there is a positive relationship between the global crude oil price and this sub-balance in the long run. This result is consistent with findings [START_REF] Allegret | Current accounts and oil price fluctuations in oil-exporting countries: the role of financial development[END_REF][START_REF] Kilian | Not all oil price shocks are alike: Disentangling demand and supply shocks in the crude oil market[END_REF]Al-hwij, 2020) regarding the impact of oil prices on both the overall trade balance and the oil trade balance. Concerning the non-oil trade balance, global oil prices have a positive impact only in the long run and have no impact on this sub-balance in the short run. Moreover, this result may suggest that the response of trade balances in the long run is largely consistent with the direction of global oil prices.

The results showed that the real effective exchange rate variable exhibited a positive and significant relationship with the overall trade balance, however, in the long-run the impact of this variable on the trade balance was small. On the other hand, in the short-run the results indicated that the influence of this variable was also positive, but larger than in the long-run.

This result can be explained by the rentier nature of the Libyan economy, where the value of local currency increases due to the abundance of oil resources and increased foreign exchange earnings from oil sales. Thus, we can claim that this result is in line with the economic literature on the Dutch disease phenomenon. On the other hand, the results in the case of the oil trade balance show that the impact of the real effective exchange rate is not very different from that observed in the case of the overall trade balance in the long and short run. Moreover, the results of the estimation of the non-oil trade balance model show that the real effective exchange rate variable has a significant and positive relationship with this balance in the long run. However, this variable does not affect the non-oil trade balance in the short run.

With respect to the industrial production index variable, which represents the output gap of the economy, the results showed a strong impact of the output gap factor on the total trade balance in the long run. This result indicates that the output gap is in line with the evolution of oil prices, which means that higher international oil prices result in a positive output gap that leads to an increase in the total trade balance. In the short term, the results showed a positive but smaller effect of the output gap on the overall trade balances. On the other hand, in the case of the oil trade balance, the effect of the output gap was also positive and stronger than it was in the case of the total trade balance. Thus, this indicates that the output gap is related to the productive activity of the oil sector, which reflects the dominance of the oil and gas sector in the Libyan economy. On the other hand, the results indicated that the effect of the output gap variable on the non-oil trade balance is not significantly different from its effect on both the total trade balance and the oil trade balance, both in terms of magnitude and direction, in the long and short run. Therefore, this result can be explained by the important contribution of oil-related sectors, such as petrochemicals and fertilizer exports, in the formation of foreign trade, in addition to some other industries that depend on raw materials imported from abroad, such as iron, steel and cement products.

On the other hand, in this study, we used the gross domestic product growth variable as one of the key determinants of Libya's trade balance during the sample period under study.

Whereas the results showed that gross domestic product growth has a positive effect on the total trade balance in the long run, and the results indicate that the gross domestic product growth factor in relation to the total trade balance is the most important among the transactions estimated in this model. Thus, it can be said that increasing gross domestic product growth improves the total trade balance in the long run. In the short run, the results showed that gross domestic product growth has a positive effect on the total trade balance and that this effect is larger in magnitude in the short run than in the long run. In general, this result suggests that economic growth is biased in support of export industries rather than import substitution industries. Especially during periods when rising global oil prices are accompanied by increases in oil production, or at least at desired production levels, given the dominance of the oil sector over economic activities in Libya.

Regarding the oil trade balance, the impact of gross domestic product growth in the long run is not different in direction and magnitude than in the case of the total trade balance.

Meanwhile, the size of the gross domestic product growth coefficient is smaller in the case of the oil trade balance than in the case of the total trade balance, although the sign of this coefficient is always positive. On the other hand, our results on the impact of gross domestic product growth on the non-oil trade balance indicate a positive relationship between these two variables in the long and short run. Although the size of the gross domestic product growth factor in terms of the non-oil trade balance was larger in the short run than in the long run.

In general, this result can be illustrated from two angles: the first is that the increase in gross domestic product growth is greater than the increase in imports, and the increase in gross domestic product growth stimulates the increase in the production of export goods -other than crude oil production -related to the oil sector, and the second is that the increase in gross domestic product growth is greater than the increase in imports. In addition, the second angle through which the relationship between gross domestic product growth and the non-oil trade balance can be explained is that high gross domestic product growth rates can lead to higher savings rates [START_REF] Ando | The" life cycle" hypothesis of saving: Aggregate implications and tests[END_REF]Modigliani, 1963, Hall, 1978). Therefore, increased gross domestic product growth will not translate into significant increases in the volume of imports, leading to an improvement in the trade balance. Despite this, the trade balance remains dependent on the ratio of exports to imports.

Finally, the trade balance and its oil and non-oil components showed an average speed of adjustment to equilibrium levels, so that the global oil price coefficient had no significant impact, despite its positive sign in the short run in the case of the non-oil balance of trade. This may suggest that the world oil price does not play a significant role in determining the non-oil trade balance in the short run. Thus, this result indicates that the influence of the non-oil trade balance on the adjustment of the overall trade balance through the trade channel is negligible. On the other hand, the real effective exchange rate coefficient also had no significant impact, despite its negative sign in the case of the non-oil trade balance. This result may be consistent with the interpretation supporting the view that the effective real exchange rate does not play an important role in adjustments to the trade balance of oil exporting countries (ِ Arezki and Hasanov,2013). Otherwise, the rest of the coefficients have high magnitudes and positive signs in all cases in the short run estimation.

Policy Discussion

As an explanation of the policy implications of the results obtained and to reveal the relationships derived between the variables in the model under investigation. It can be mentioned that world oil prices, real effective exchange rate, output gap and GDP growth are the main factors that shaped Libya's overall trade balance during the study period. Thus, the results showed that except for the variables of world oil prices and real effective exchange rate -the case of the oil balance -which have a significant and positive impact in the long run while they have no significant impact in the short run, therefore, the other variables used in the analysis are significant and have a positive impact in the long and short run on the overall trade balance and its components. Therefore, the results obtained by the study, both from the shortand long-term perspective, constitute an outcome that can help the country's economic policy makers to develop economic policies that would help to solve the problems facing the foreign trade sector in general and trade balances in particular. Moreover, the results were often consistent with the interpretation of economic theory and previous studies in the case of oil exporting countries.

In summary, it can be said that international oil prices play a major and direct role in shaping the trade balance situation in Libya, through the impact of the rise and fall of global oil prices on the trade balance and its components. Therefore, the importance of oil prices stems from the fact that the Libyan economy is highly dependent on the export of crude oil, which is the main component of the country's exports. Therefore, this situation would represent a source of great concern for the stability of the economy by making the country vulnerable to direct fluctuations in international oil prices.

On the other hand, the positive relationship between the trade balance and the output gap can be explained in light of the economic characteristics of the Libyan economy. These results seem to confirm the hypothesis that oil shocks can lead to corresponding output shocks in the net oil exporting country. In the sense that a positive oil shock leads to a situation in which the actual output volume is higher than the expected output, at the same time, the negative oil shock may lead to a negative output shock in the economy through a decrease in the actual output volume relative to the expected or natural output level (Yildirim and Arifli,2021). On the other hand, since Libya is a net oil exporter, this may reflect the inefficient allocation of economic resources. While the surplus value generated by the domestic product comes from the production of a single commodity, namely crude oil. This indicates that local production does not reflect the contribution of most local economic activities. The dominance of the oil sector over the production sector and the linkage of the country's productive activity to this sector could have undesirable effects and disastrous consequences for the economy.

Firstly, the dominance of the oil sector leads to the concentration of most of the country's physical and human capital in the oil sector and mainly oil-related industries. As a result, this can damage the economy in the long run by weakening the non-oil sectors and distorting the economy, continuing the economy's dependence on oil and lack of diversification.

On the other hand, the results showed that the increase in gross domestic product growth leads to an increase in the trade balance and its oil and non-oil components in both the short and long run. In general, the magnitude of the impact of the gross domestic product growth factor on the trade balance and its oil and non-oil components is the largest among the estimated coefficients of the model in the short and long run, and this effect was positive in all cases. These results can be explained in light of the economic characteristics as well as the rentier nature of the Libyan economy. Consequently, and considering that most economic activities in general and the export sector in particular depend on the oil and gas sector. Thus, our results indicate that economic growth is biased in support of the export sector, as high economic growth may lead to a significant increase in the production of goods for export rather than in the production of import substitution goods. On the other hand, these results also suggest that the increase in national income may exceed the increase in imports especially during oil booms. Therefore, the trade balance with its oil and non-oil components shows a remarkable improvement as the increase in exports is higher than the increase in imports.

Based on the empirical results, it can be concluded that the trade balance situation in Libya may cause some concerns especially with the high dependence of the Libyan economy on oil and low economic diversification. Thus, in periods of low world oil prices, GDP growth may decrease which could necessarily mean a decline in exports with imports remaining unchanged. The position of the trade balance will thus depend on how low export earnings are.

Therefore, assuming the continuing inability of the national production apparatus and the inability of the economy -technologically and humanly -to produce the same goods imported from abroad with reasonable quality at competitive prices and replace them with local products, this could make the economy more vulnerable to fluctuations in global oil prices. On the other hand, an unexpected large increase in revenues due to a surge in oil prices, as well as a large

On the other hand, the results showed that economic policies in oil exporting countries tended to increase the current account surplus, and the results also showed that the intermediate exchange rate regime had a higher level of persistence compared to the flexible exchange rate regime and the fixed exchange rate regime. On the other hand, the results of the study documented that a flexible exchange rate regime is not associated with a higher rate of current account adjustment in oil-exporting countries. In this context, our study is consistent with the results of (Chinn and Wei,2013).

Regarding the third chapter, which examines the impact of oil price changes on Libya's trade balance and its oil and non-oil components. This chapter adds to the limited empirical literature on the relationship between changes in oil prices and the trade balance in oil exporting countries. In addition, this chapter presents a detailed analysis of the response of the trade balance and its oil and non-oil components to changes in oil prices by analyzing this relationship using the autoregressive distributed optimal lags (ِ ARDL) approach for 40 years of data covering the period 1980 to 2020. Thus, this chapter attempts to fill a gap in the literature regarding the situation of the Libyan economy.

The analysis in this chapter is important because any results are derived from the relationship between oil prices and the trade balance on the one hand, and the trade balance and a number of macroeconomic variables, as represented by both the real exchange rate, GDP growth and output gap on the other, will be useful for policy making, in which case an improvement in the trade balance could contribute to the economic growth of the country.

The analysis shows that rising oil prices lead to an increase in the overall trade and oil trade balance in the long run and in the short run. On the other hand, the results show that the real effective exchange rate variable has a positive relationship with the overall trade and oil balance in the long and short run. This result can be explained by the rentier nature of the Libyan economy, where the value of the local currency increases as a result of increased foreign exchange earnings from oil sales. In addition, the results of the analysis showed that both output gap variables and economic growth variables significantly and positively affect both the overall trade balance and the oil balance in the short and long run . Furthermore, the results showed that for the non-oil trade balance, the oil price has no significant impact in the short run, while it has a significant and positive impact on the non-oil trade balance in the long run, which may indicate that this sub-balance does not enhance the response of the overall trade balance to large fluctuations in global oil prices. The results also revealed a significant and positive association between the non-oil balance, the output gap, and the rate of economic growth. In addition, the results showed the dominance of the oil sector over the economic activity which constitutes the trade balance and the skewness of economic growth towards exports. Finally, the trade balance and its oil and non-oil components showed a moderate speed of adjustment to long-term equilibrium levels, suggesting that the economy may be vulnerable to external shocks. These findings have important implications for policy makers, which may inspire them to design policies to control trade balance deterioration and thus improve the country's economic stability.

C

  Yd) is [Y -T] (where T is Tax) implying that [Y=Yd +T]. This means the equation (1.2) could be rewritten as: {(Yd-C)-I} + (T-G) =(X-M) (1.3) It is also right to infer that [Yd -C] equals savings (S). Then equation (1

4. 1

 1 Global crude oil price developments' literature Global oil markets have witnessed regular turmoil to a large extent over the past decades, and among many examples are the oil shocks in the beginning and end of the 1970s, the collapse of OPEC in the 1980s, the rise in oil prices linked to Iraq's invasion of Kuwait in 1991/1992, the 1998 Asian crisis, the global financial crisis 2008/2009 and the Libyan revolution 2011. Later, the sharp decline in oil prices in mid-2014. Each of these disturbances led to great discussions by those interested in public and academic affairs.

Figure 2 . 1 :

 21 Figure 2.1: The Current account balance of oil exporting countries % of GDP, 1996-2016

  into sub-samples according to exchange rate regime, and on this basis we compare estimated results using three cases: fixed, intermediate and floating exchange rate regime. Current account imbalances can be a challenge for the economic development of oil exporting countries. Therefore, this study is of particular interest with regard to the role of countries' exchange rate regimes in adjusting the external imbalances of oil-exporting countries, which depend heavily on the performance and stability of their open external sector due to their high dependence on the export sector.On the other hand, we seek to investigate the determinants of the current account balance of oil exporting countries by trying to compare the influence of factors guiding the current account balance according to the characteristics of the geographical area. Where we divide the study sample according to a geographical perspective into four geographical areas:

  confirmed the existence of a global pattern of global imbalances, which is mainly related to the large deficit of the United States of America and the large surplus of developing Asian countries. In addition, they used a set of variables such as: per capita income, output growth, fiscal balance, net foreign assets, degree of openness and demographic variables. Their main contribution was to include the financial crisis variable in a study model ofChinn and Prasad, 2003. Thus, they succeeded in explaining the current account surplus of Asian countries but failed to explain the current account deficit of the United States of America.

  t = 1, … . , T and i = 1, … . , N CAB it-1 = Lagged current account balance X it =Vector of explanatory variables these are: TOP = Trade openness LREER =Real effective exchange rate in natural log NFA -1 =Net foreign assets POPG =Population growth AD =Age dependency ratio (young plus old) DCPS =Domestic credit to praived sector OW =Oil wealth NOP =Nominal oil price XD = Exports diversification index μ i = are country-specific effects ε it = is an error term β = are the estimates of the equation α = represents the persistence arising from the partial adjustment mechanismWe first analyze the model through a general formula for the current account of oil exporting countries. We analyze the relationship between the current account balance as a percentage of GDP and the selected independent variables. To analyze the model by exchange rate regime, we divide the sample under study into three sub-samples according to the exchange rate regime to which each of the sample countries is subject during the years under study. To do this, we use unbalanced panel data to separate out the years in which the sample countries adopted a particular exchange rate regime, and then we conduct a model analysis for each sub-sample separately. For the current account surplus sub-model -the years in which the current account is in surplus -we follow the same procedure as before, with the inclusion of a dummy variable representing a given exchange rate regime for each sub-sample. Similarly, for the model that analyses the current account deficit, where we attempt in this sub-model to trace the impact of different exchange rate regime on the persistence of the current account deficit, using the explanatory variables chosen in all sub-samples of the current account analysis model. On the other hand, in the sub-model for current account analysis by geographic area of the sample countries, we divide the sample countries into five sub-samples without considering exchange rate regimes. The purpose of this geographic sample is to analyze the persistence of the current account across the geographic areas represented by the countries in the sample under study. As noted above in the research methodology section, we use dynamic unbalanced panel data to analyze the research model and its sub-models.

  exporting countries, considering the exchange rate regimes of the study countries sample, aiming to analyze their role in determining the level of current account persistence for the countries in the study sample. The results presented below were obtained using the dynamic panel data method known as corrected least squares dummy variables (LSDVC). we present the results of a basic regression analysis that examines the linear regression of four models examining current account balances in oil-exporting countries. Where model (2-2) examines the effect of exchange rate regimes on the persistence of current account balances for oil exporting countries according to the exchange rate regimes to which the countries in the study sample are subject. As for the second model (2-3), it investigates the impact of exchange rate regimes on the persistence of the current account surplus of the sample countries. The third model (2-4) examines the impact of exchange rate regimes on the persistence of the current account deficits of the countries in the study sample.On the other hand, the fourth model (2-5) examines the current account persistence of oil exporting countries depending on the geographical area. Therefore, to analyze the relationship between exchange rate regimes and current account adjustment in oil exporting countries, we use a set of explanatory variables that can drive the current account rate along with exchange rate regimes to which the countries in the study sample are exposed. These explanatory variables include the percentage of trade openness, net foreign assets, demographic variables, percentage of domestic credit to the private sector, oil wealth in the subsoil, world oil price and percentage of export diversification.

  714 unit decrease in the (CAB) at the 10% level of significance. As for the value of the Domestic Credit Ratio (DCPS) variable, it indicates a negative relationship with the current account balance (CAB) variable at the 1% significance level. Since this result shows that an increase of one unit can reduce the (CAB) by 0.410 units. From the above empirical results related to the float exchange rate model, the relationship between the variables of the current account persistence model can be inferred by replacing in equation (2-2-3). the following results have been obtained: CAB it float = (0.3026)LCAB -(0.0740)LNFA -(0.7148)AD -(0.4103)DCPS

  describes the estimation results for the intermediate exchange rate sample, where the value of the coefficient of the lagged current account balance shows that the persistence rate of the current account surplus amounts to 0.438, at a significance level of 1 percent. This is the same value in the case of the fixed exchange rate regime. On the other hand, the results show that the trade openness variable (TOP) has a positive relationship with the current account surplus in the case of the intermediate exchange regime. Where the results

  account deficit persistenceThe economic concept of a current account deficit generally indicates that a country has a negative current account balance; in other words, the country is indebted to the rest of the world the value of this deficit. It can also indicate that the value of a country's revenues from exporting goods and services to the outside world is less than the value of its payments for importing goods and services. Therefore, based on the concept of current account imbalance in deficit and surplus, as discussed in the Introduction section. In this part of the econometric analysis, we attempt to examine the role of the exchange rate regime in determining the current account persistence. In addition, we analyze the impact of some of the key determinants through which the nominal exchange rate regime can affect the level of current account persistence. Thus, we use the dynamic regression model of unbalanced plate data (LSDVC) to analyze current account persistence in oil-exporting countries over the period 1996-2016. Therefore, in this part we present the results of the analysis of the current account persistence model, according to the current account deficit sample. In table (2-6), we review the results of the analysis of this model, according to the exchange rate regimes to which the countries in the study sample are subject during to the period study. In this regard, we distinguish between three exchange rate regimes which are; Fixed exchange rate regime, intermediate exchange rate regime and flexible exchange rate regime. For this purpose, we use the unbalanced panel method to distinguish the exchange rate. We also include a dummy variable representing the exchange regime used for each subsample of the model studied, where this dummy variable takes the value of 1 in the case of a fixed, intermediate, or floating exchange rate regime, and takes the value of 0 otherwise.

Figure 3 . 1 :

 31 Figure 3.1: The Total Trade, Oil Trade, and Non-Oil Trade Balances % of GDP and Global Oil Price, 1980-2020

Figure

  Figure 3.2: The Libya Gross Domestic Product (GDP), 1980-2020

Figure 3 . 4 :

 34 Figure 3.4: The Real Effective Exchange Rate and Global Oil Price, 1980-2020

--

  Is the change in the total trade balance offset by the change in the non-oil trade balance? Is the movement in the non-oil trade balance affected by the changes in the real exchange rate? -What role does the world oil price play as a determinant of the trade balance in Libya? -Does the change in the real exchange rate have an impact on Libya's trade balance? -Does gross domestic product growth play an important role in generating the trade balance deficit or surplus? -Does the output gap play an important role in determining the behavior of the trade balance?

  by fluctuations in oil prices or fluctuations in the exchange rate of the US dollar against other major currencies -is fully passed on to local economies, in which case the exchange rate cannot be used as a corrective tool to absorb shocks or mitigate their severity. As mentioned above, oil exports are almost the only source of foreign exchange in Libya due to the low diversification of the production base, and also due to the low participation of the private sector in the foreign exchange inflow. As a result, the economy depends on oil revenues to cover all the country's import needs in foreign currency. Not far from this framework, reports from the Libyan audit office clearly indicate the escalation of speculation on the local currency and the spread of the black-market phenomenon since 2013. According to the mentioned reports, this

  the empirical results of the estimates for the total trade balance model, the oil trade balance model, and the non-oil trade balance model for Libya from 1980

  fit, we performed a number of diagnostic tests for serial correlation, heteroscedasticity and normality. The tests used include the Lagrange multiplier (LM) test, the autoregressive conditional heteroscedasticity (ARCH) test and the skewness and kurtosis test.

  the equation under investigation. Moreover, this equation passed the test of Skewness and Kurtosis in residual. The test probability for the equation exceeds 5% of significance levels, suggesting that the equation has a normal distribution. After confirming the existence of longrun relationship among the variables and checking for model fit, estimation of the error correction model is the last step.

Figure 3

 3 Figure 3.8: CUSUM Test for the Total Trade Balance Model Equation (3.1)

  The stability tests CUSUM and CUSUMSQ are required to confirm the stability of all residuals. This can be shown by constructing cumulative sum of recursive residuals (CUSUM) and cumulative sum of squares of recursive residuals (CUSUMSQ). They provide useful information about potential structure breaks, which can lead to model overestimation. As shown in Fig.3.10 and 3.11, the movements do not cross straight critical lines drawn at the 5% significance level. Consequently, one can say that the CUSUM and CUSUM squared test plots indicate stability of the parameters over the sample period of the oil trade equation.

Figure 3 -

 3 Figure 3-10: CUSUM Test for the Oil Trade Balance Model Equation (3.2)

Figure 3 .

 3 Figure 3.12: CUSUM Test for the Non-Oil Trade Balance Model Equation (3.3)

Table 2 -

 2 1 Tests for distinguishing between pooled regression, fixed effects and random effects …………………...…………………………………………………………………98 Table 2-2: Haussmann test results…………………………...……………………………..98 Table 2-3: Variety of diagnostic tests for panel fixed effect model………………………..99 Table 2-4: Current Account Persistence by Exchange Rate Regimes ……………………104

Table 2 -

 2 5: Current account Surplus Persistence by Exchange Rate Regimes…………….106 Table 2-6: Current account Deficit Persistence by Exchange Rate Regimes…… ……..110 Table 2-7: Current account persistence by geographic area ……………………………...112 Table 3.1: The Descriptive Statistics of Variables for the Total Trade Balance, Oil Trade Balance, and Non-Oil Trade Balance Models………………………………………..……171 Table 3.2: Test Statistics for Selecting the Lag Order of the VAR Model for Trade balance model……………………………………………………………………………..….…….173 Table 3.3: Test Statistics for Selecting the Lag Order of the VAR Model for Oil trade balance model………………………………………………………………………………..……..173 Table 3.4: Test Statistics for Selecting the Lag Order of the VAR Model for Nonoil trade balance model……………………………………………………………………………...173 Table 3.5: Augmented Dickey-Fuller (ADF), Phillips-Perron (PP) Unit Root Test Results for Stationary of the Variables in Total Trade Balance Model………………………………...175 Table 3.6: Augmented Dickey-Fuller (ADF), Phillips-Perron (PP) Unit Root Test Results for Stationary of the Variables in oil Trade Balance Model…………………………………...176 Table 3.7: Augmented Dickey-Fuller (ADF), Phillips-Perron (PP) Unit Root Test Results for Stationary of the Variables in Non-Oil Trade Balance Model…………………….…,……177 Table 3.8: Testing for Existence of a Level Relationship for the Total Trade Balance……178 Table 3.9: Testing for Existence of a Level Relationship for the Oil Trade Balance Model Equation……………………………………………………………………………….……178

Table 3 .

 3 10: Testing for Existence of a Level Relationship for the Non-Oil Trade Balance Model……………………………………………………………………….……………...179 Table 3.11: ARDL Estimation of Long Run Coefficients for the Total Trade Balance Model Equation ……………………………………………………………………………………180

Table 3 .

 3 12: Variety of Diagnostic Tests for the Equation (3.1) ……………………………182

Table 3 .

 3 13: ARDL Estimation of Long Run Coefficients for the Oil Trade Balance Model Equation…………………………………………………………………………….………184Table 3.14: Variety of Diagnostic Tests for the Equation (3.2) …………………..……….185 Table 3.15: ARDL Estimation of Long Run Coefficients for the Non-Oil Trade Balance Model Equation…………………………………………………………………………. …187 Table 3.16: Variety of Diagnostic Tests for the Equation (3.3) ………………………. .…189 Table 3.17: Error Correction Representation for the Total Trade Balance Model Equation.190 Table 3.18: Error Correction Representation for the Oil Trade Balance Model Equation…194 Table 3.19: Error Correction Representation for the Non-Oil Trade Balance Model Equation…………………………………………………………………………………..…197

Table 1 .

 1 1 -Comparison of results in selected empirical studies

	Study	Variable used	Methodology	country	period	Results and Findings
	Garg and	Current account, Real effective	Unit root test,	India	From Q1	Domestic investment increases are partly by
	Prabheesh	exchange rate, Domestic	cointegration		1998 to Q2	increases in saving.
	(2017)	investment, Fiscal balance,	approach, and		2013
		GDP, Oil price.	ARDL approach			Great oil volatility leads to an increase in the
						current account balance.
	Chinn and	NFA, Gov budget surplus,	Pooled OLS,	19 industrial	1971-2004
	Ito (2007)	Relative income,	Fixed effect,	and 70
		Demographics, Terms of trade,	and GLS.	developing
		Trade openness, Growth rate,		countries
		Financial development	.
		deepening, General level of
		legal development, Capital
		account openness.

.2.2 The recent oil price development By

	OPEC's role in determining oil prices. Few OPEC countries maintain spare oil production
	capacity, in this context the Kingdom of Saudi Arabia maintains the largest production capacity
	in reserve where Saudi Arabia can increase or decrease its production in response to global
	market conditions. Most other oil-producing countries and all private oil companies are price-
	taker. It only responds to high or low oil prices by increasing or decreasing planned investments
	in new production capacity. Whether or not these investments are implemented, they have little
	impact on current oil supplies or prices, but they may have a significant impact on future oil
	supplies and prices. It is also worth noting that the new pricing system was able to maintain
	relatively stable oil prices until 1999, except for (1990) due to the Gulf War. However, since
	the beginning of the current century, oil prices began to take a sharp upward trend, which
	reached its peak during the period from January 2007 to June 2008. It slowed down US demand
	for oil, and after a short period of time the failure of financial institutions led to a global banking
	crisis.
	4September 2008, oil prices had fallen sharply, from $ 147 /barrel to around $
	107 /barrel. In October of the same year, global crude oil prices fell below $ 70 / barrel. As this
	is an unprecedented decline in terms of speed and volume. As a result, most of the OPEC
	producing countries reduced their production, but prices continued to decline until the price of
	oil reached about $ 34 / barrel by December 2008. OPEC countries continued to reduce their
	production, as OPEC total production decreased by 3.6 million barrels/day during the period
	from September 2008 to January 2009. Consequently, as supply decreased to meet lower
	demand, prices began to rise steadily and returned to over $ 90 / barrel by 2011. Then the prices
	rose to more than $ 100 / barrel due to the uprising in Libya in February 2011. The period
	between 2011 and mid-2014 witnessed near-stability in the oil market, as crude prices ranged

  suggest that the center of gravity and pull of the world economy has begun to shift from West to East since the end of the last century. Perhaps one of the most striking examples of this is the rise of economies such as China, India and the rest of East Asia. This, in turn, has led to a weakening of the historical relationship between the oil price cycle and economic cycles in the United States, which has been evident since 2002. It has thus made the oil price cycle more linked to the emerging East Asian economies and this has resulted in a decoupling of the economic cycle between the United States and countries dependent on oil exports which peg their currencies to the US dollar. Consequently, this has led to increased financial integration of many oil exporting countries with emerging Asian economies

  Kazakhstan, Russia, Malaysia, Iran, Egypt, Indonesia, Nigeria, Congo Republic, Sudan, and Chad. Our study covers the period from 1996 to 2016. Therefore, in order to explore this issue and achieve the objectives of the study, we use a set of explanatory variables that could potentially affect the dynamics of the current account balance for the countries under investigation in the sample. These variables include trade openness, net foreign assets, real effective exchange rate, domestic credit to private sector, age dependency ratio, population growth, oil wealth, Exports diversification index and global oil price. In addition, in our research model we consider the exchange rate regime of each country during the study period.To this end, we create a dummy variable that, for any given year, indicates whether a country has a floating, intermediate, or fixed exchange rate regime. For the exchange rate arrangements given in the model, we use the recent classification of de facto exchange rate arrangements for(Ilzetzki, Reinhart, and Rogoff, 2016).

Our focus is on the role of exchange rate regimes in adjusting current account imbalances for a sample of 27 oil exporting countries, which includes: Kuwait, Oman, Qatar, Saudi Arabia,

Emirates, Trinidad and Tobago, Algeria, Libya, Equatorial Guinea, Gabon, Brazil, Colombia, Ecuador, Mexico, Venezuela, Azerbaijan,

Table 2 -

 2 1 Tests for distinguishing between pooled regression, fixed effect, and random effect

	Test	Hypothesis	T-statistics	P-value	Decision
		H 0 : Pooled 𝑟𝑒𝑔𝑟𝑒𝑠𝑠𝑖𝑜𝑛 is appropraite			The random effects
	Breusch-Pagan	H 1 : Random effect is appropraite	106.02	0.0000	model is appropriate
		H 0 : Pooled effect is appropraite			The fixed effects
	F-test	H 1 : Fixed effect is appropraite	3.114	0.0000	model is appropriate
		H 0 : Random effect is appropraite			The fixed effects
	Hausman test	H 1 : Fixed effect is appropraite	181.74	0.0000	model is appropriate

Table 2

 2

	-3: Variety of diagnostic tests for panel fixed effect model
	Wooldridge test for autocorrelation in panel data		F (1, 26)	23.05
			Prob > F	0.0001
	Modified Wald test for groupwise heteroskedasticity in fixed	Chi2 (27)	2756.04
	effect regression model
			Prob>chi2	0.0000
	Pesaran's test of cross sectional independence =	13.751 ,	pr= 0.0000
	Average absolute value of the off-diagonal elements =		0.358

Source: Researcher' computations, Stata, 15.

  the above empirical results of the intermediate exchange rate model, the relationship between the variables of the current account persistence model can be inferred by substituting in equation (2-2-2). the following results have been obtained:

	CAB it intermediate = (0.6856)LCAB -(0.1795)DCPS -(0.2492)OW
	4.2.3 Flexible exchange rate regime case
	The results presented in Table (2-4) Column (1-4) show that the coefficient value of
	the lagged current account variable indicating the current account persistence reached 0.480 at
	a statistical significance level of 1%. On the other hand, the results show that the Net Foreign
	Assets (LNFA) variable has a negative relationship with the Current Account Balance (CAB)

Table 2 -

 2 4: Current Account Persistence by Exchange Rate Regimes

		LSDVC (AB) -Current Account/GDP Dependent Variable
	Variables	All regimes	Fixed	Intermediate	Float
		(1-1)	(1-2)	(1-3)	(1-4)
	L-CAB	0.51927***	0.48003***	0.68567***	0.30265***
		(0.03881)	(0.04882)	(0.10752)	(0.06981)
	TOP	-0.05177**	-0.06425	-0.03941	-0.05672
		(0.02332)	(0.04454)	(0.07596)	(0.05056)
	L-NFA	-0.01098	-0.01705*	0.02007	-0.07405***
		(0.00821)	(0.01012)	(0.02231)	(0.02429)
	POPG	0.00852	-0.48797
		(0.36608)	(0.44307)
	AD	-0.24865**	-0.52598***	-0.58916	-0.71489***
		(0.09593)	(0.16389)	(0.42968)	(0.17828)
	DCPS	-0.20907***	-0.54650***	-0.17959*	-0.41036***
		(0.04830)	(0.09969)	(0.09930)	(0.10420)
	OW	-0.06519**	-0.13515*	-0.24924***	-2.73206
		(0.03326)	(0.07387)	(0.06439)	(3.46899)
	XD	-0.08906	-0.01089	-0.16256	0.22382
		(0.08993)	(0.20163)	(0.20442)	(0.23146)
	Observations	540	258	128	154
	No.of countries	27	16	14	15
		Pesaran's test of cross-sectional independence
	Model	1	2	3	4
	Probability	0.0000	-	-	-

Notes: Standard errors are in parentheses; *** p < 0.01, ** p < 0.05, * p < 0.1. CAB is the dependent variable. The regressions are first run (Model 1-1) as a basic regression without any distinctions between exchange rate regimes over the whole sample.

Table 2 -

 2 5: Current Account Surplus Persistence by Exchange Rate Regimes Note: Current account surplus (𝐶𝐴𝐵 𝑖𝑡 ) is the dependent variable. All variables are in percentage, NFA represents net foreign assets; POPG represents population growth; AD represents age dependency ratio; DCPS represents domestic credit to private sector; TOP represents trade openness; OW represents oil wealth and XD represents export diversification index. The symbol (L-) refers to lagged one period. DXR, DFR and DMR are dummy variables which controls for fixed, intermediate and float exchange rate regimes. The dummy is equal to 1 in case of a fixed regime, intermediate regime, or float regime and 0 otherwise.

		LSDVC (AB) -Current Account /GDP Dependent Variable
	Variables	Fixed (2-1)	Intermediate (2-2)	Float (2-3)
	LCAB	0.41860***	0.43815***	0.43566***
		(0.07469)	(0.07444)	(0.07415)
	TOP	0.07386**	0.09208***	0.08471**
		(0.03410)	(0.03295)	(0.03397)
	L-NFA	-0.01053	-0.00892	-0.00924
		(0.00748)	(0.00797)	(0.00725)
	POPG	-0.19435	-0.16551	-0.17577
		(0.23842)	(0.24929)	(0.24350)
	AD	-0.23000*	-0.20816*	-0.22620*
		(0.12131)	(0.12418)	(0.12733)
	OW	0.00143	0.00375	0.00660
		(0.03383)	(0.03556)	(0.03592)
	DCPS	-0.35555***	-0.32828***	-0.34409***
		(0.06250)	(0.06321)	(0.06333)
	XD	-0.02801	0.01932	0.02889
		(0.15002)	(0.15645)	(0.14839)
	DURX	0.04376**
		(0.01965)
	DURM		-0.00403
			(0.02090)
	DURF			-0.02653
				(0.02256)
	Observations		326
	No.of countries		25
	* p < 0.1, ** p < 0.05, *** p < 0.01 are significance levels, in which the null hypothesis is rejected. In addition, bootstrapped
	standard errors are in parentheses.

  Concerning the dummy variable that represents the intermediate exchange rate regime, the results indicate that there is a negative association between this variable and the current account surplus, although it does not have a significant effect on the dependent variable over the study period. From the above empirical results related to the intermediate exchange rate model, the relationship between the variables of the current account surplus persistence model can be inferred by substituting in

	equation (2-3-2). the following results have been obtained:
	d it intermediate (CAB it surplus ) = (0.4381)LCAB + (0.0921)TOP -(0.2081)AD -(0.3282)DCPS

Table 2 -

 2 6: Current Account Deficit Persistence by Exchange Rate Regimes OW represents oil wealth and XD represents export diversification index. The symbol (L-) refers to lagged one period. DXR, DFR and DMR are dummy variables which controls for fixed, intermediate and float exchange rate regimes. The dummy is equal to 1 in case of a fixed regime, intermediate regime, or float regime and 0 otherwise.

		LSDVC (AB) -Current Account/GDP Dependent Variable
	Variables	Fixed (3-1)	Intermediate (3-2)	Float (3-3)
	L-CAB	0.21664**	0.21620**	0.21689**
		(0.10766)	(0.10585)	(0.10333)
	TOP	-0.21009***	-0.20730***	-0.20631***
		(0.07202)	(0.07107)	(0.06824)
	L-NFA	-0.04776	-0.04642	-0.04601
		(0.04047)	(0.04025)	(0.03773)
	POPG	-2.77646	-2.72365	-2.67777
		(12.43776)	(3.128482)	(11.96058)
	AD	-0.20575	-0.21006	-0.22578
		(0.62839)	(0.65159)	(0.64369)
	OW	-0.18628	-0.18824	-0.18919
		(0.11880)	(0.11715)	(0.11237)
	DCPS	-0.01308	-0.01180	-0.02391
		(0.44564)	(0.44969)	(0.43119)
	XD	-0.03138	-0.03374	-0.05246
		(0.70671)	(0.69409)	(0.68103)
	DRX	-0.01220
		(0.10029)
	DRM		0.01028
			(0.05755)
	DRF			-0.00201
				(0.06517)
	Observations		214
	No.of countries		26

Note: Current account deficit (𝐶𝐴𝐵 𝑖𝑡 ) is the dependent variable. All variables are in percentage, NFA represents net foreign assets; POPG represents population growth; AD represents age dependency ratio; DCPS represents domestic credit to private sector; TOP represents trade openness; * p < 0.1, ** p < 0.05, *** p < 0.01 are significance levels, in which the null hypothesis is rejected. In addition, bootstrapped standard errors are in parentheses.

Table 2

 2

		-7: Current account persistence by geographic area
		LSDVC (AB) -Current Account/GDP Dependent Variable
	Variables	SSA	Asia & Russia North Africa Latin America	GCC
		(4 -1)	(4 -2)	(4 -3)	(4 -4)	(4 -5)
	L-CAB	0.17057**	0.814321***	0.47607***	0.46224***	0.25477***
		(0.07213)	(0.083833)	(0.07881)	(0.09766)	(0.07556)
	TOP	-0.20006***	0.08652*	-0.36543***	0.07838	0.14439**
		(0.05149)	(0.04733)	(0.08383)	(0.08268)	(0.06515)
	L-NFA	-0.04971	-0.05369**	0.00192	-0.06228*	-0.02493***
		(0.04486)	(0.02172)	(0.02010)	(0.03292)	(0.00671)
	LnREER	0.06316	-0.17195***	-0.19655***	-0.02065	-0.33623
		(0.07052)	(0.05401)	(0.04069)	(0.03815)	(0.21848)
	POPG	-9.25419*	-1.54066	-14.7435***	-0.04376	-0.43541**
		(4.75805)	(1.25538)	(5.25473)	(0.03605)	(0.21518)
	AD	---	-0.10154	----	-0.42302*	----
			(0.24743)		(0.22710)
	OW	---	-0.26134***	-0.35284***	-0.27049**	0.11279***
			(0.04483)	(0.07759)	(0.11077)	(0.04209)
	DCPS	-1.63504***	0.02193	-0.21572	-0.3254***	-0.46155***
		(0.30455)	(0.06357)	(0.18564)	(0.09070)	(0.06409)
	LnOP	0.13787***	0.02643	0.04754**	-0.00241	0.08339***
		(0.03322)	(0.01806)	(0.02523)	(0.01513)	(0.01963)
	XD	---	0.14254	0.03813	0.50307**	0.71118***
			(0.17754)	(0.41062)	(0.25644)	(0.21011)
	Observations	100	100	100	120	120
	No.of countries	5	5	5	6	6
		Pesaran'

s test of cross-sectional independence Model

		4-1	4-2	4-3	4-4	4-5
	Probability	1.1144	0.5152	0.1937	0.0831	0.9621

Note: Current account balance (𝐶𝐴𝐵 𝑖𝑡 ) is the dependent variable. All variables are in percentage, except for oil price, which is in US dollars.

  α 1 + α 2 lnREER t + α 3 lnOP t + α 4 lnIPI t + α 5 lnGDP t + ε t ……………………(3.1) lnOTB t = α 1 + α 2 lnREER t + α 3 lnOP t + α 4 lnIPI t + α 5 lnGDP t + ε t ……………………(3.2)

	lnNTB t = α 1 + α 2 lnREER t + α 3 lnOP t + α 4 lnIPI t + α 5 lnGDP t + ε t ……………………(3.3)
	(t) and (ε) denote the time and error terms respectively, while (α 1 , α 2 , … , α 5 ) are the regression
	coefficients.

  . However, unit Root Test's used to test for stationarity or non-stationarity has grown in popularity and it can be applied by AugmentedDickey-Fuller

	(ADF) (1981) and Phillips-Perron (PP) (1988) test, which are two other methods extensively
	used.

  α 2 OP t + α 3 IPI t + α 4 GDP t + μ t ………………………………..(3.4) where Y represents the natural log of total trade balance(TTB), oil trade balance(OTB) and non-oil trade balance (NTB) to GDP ratio; respectively, REER is the natural log of real effective exchange rate, OP is the natural log of global oil price, GDP is the natural log of real gross domestic product growth, IPI is the natural log of industrial production index which is a proxy for output gap and 𝜇 is error term. Therefore, the ARDL modeling is adopted in this study. ARDL framework of Eq. (3.1), Eq.

	(3.2) and Eq. (3.3) are as follow:
	∆lnY t = α 0 + φ 1 lnY t-1 + φ 2 lnREER t-1 + φ 3 lnOP t-1 + φ 4 lnIPI t-1 + φ 5 lnGDP t-1 +
	∑ α 1 P i=1	∆lnY t-i + ∑ α 2 P i=1	∆lnREER t-i + ∑ α 3 P i=1	∆LNOP t-i + ∑ α 4 P i=1	∆lnIPI t-i +
	∑ α 5 P i=1	∆lnGDP t-i + ε t …………………………………………………………… (3.5)

  step. The error correction model result indicates the speed of adjustment back to long run equilibrium after a short run shock. Hence, the third step of the estimation only occurs when the long-term relationship in the first stage is classified as cointegrated. The speed of adjustment to long-term equilibrium is estimated, represented by the Error Correction Model (ECM), and the short-term coefficients of the variables are obtained (Boluk ; Mert, 2015). The general model estimated in the form of ECM is specified in Equation (3). ..... .....................................................................(3.6)

	∆lnY t = ∑ α 1 P i=1	∆lnY t-i + ∑ α 2 P i=1	∆lnREER t-i + ∑ α 3 P i=1	∆LNOP t-i + ∑ α 4 P i=1	∆lnIPI t-i +
	∑ α 5 P i=1	∆lnGDP t-i + δECM t-1 + ε t

Table 3 .

 3 1: The Descriptive Statistics of Variables for the Total Trade Balance, Oil Trade Balance, and

			Non-Oil Trade Balance Models
	Variables	Mean	Median	Std. Dev	Min	Max
	TTB	0.0529	0.0558	0.2299	-0.6226	0.4262
	OTB	0.37513	0.32177	0.15394	0.11311	0.64945
	NTB	-0.21705	-0.20925	0.154956	-0.48453	0.1449
	REER	312.644	338.925	165.053	99.6287	627.765
	OP	43.2847	29.5500	29.7023	12.7156	111.669
	IPI	0.49266	0.42547	0.18282	0.13387	1.00000
	GDP	0.02546	-0.00762	0.30742	-0.68055	1.24709

Notes: TTB represents the total trade balance OTB represents the Oil trade balance; NTB represents the non-Oil trade balance; REER represents the real effective exchange; OP represents the oil price; IPI donates the industrial production index; GDP represents the real gross domestic product growth. All variables are current US dollars.

Table 3 .

 3 2: Test Statistics for Selecting the Lag Order of the VAR Model for Trade balance model

	Number of Lag	AIC	SC	LL
	Lag 1	-0.349894	1.930558	36.47304
	Lag 2	-2.640966*	0.956256*	153.8579
	Lag 3	-1.334076	2.148989	104.6804
	Lag 4	-1.037667	1.356941	74.19683
	Notes: Akaike Information Criterion (AIC), Schwarz Criterion (SC), and Log Likelihood equation (LL).

Table 3 .

 3 3: Test Statistics for Selecting the Lag Order of the VAR Model for Oil trade balance model

	Number of Lag	AIC	SC	LL
	Lag 1	-0.24989	0.91435	65.4730
	Lag 2	-1.64096*	0.55625*	176.865
	Lag 3	-1.33407	2.33898	110.665
	Lag 4	-1.03766	1.52694	84.1564

Notes: Akaike Information Criterion (AIC), Schwarz Criterion (SC), and Log Likelihood equation (LL).

Table 3 .

 3 4: Test Statistics for Selecting the Lag Order of the VAR Model for Nonoil trade balance model

	Number of Lag	AIC	SC	LL
	Lag 1	-2.272290*	0.810322*	39.17281
	Lag 2	-0.495827	0.907142	147.0374
	Lag 3	-1.487466	1.293420	120.5084
	Lag 4	-2.189645	2.299234	82.51812
	Notes: Akaike Information Criterion (AIC), Schwarz Criterion (SC), and Log Likelihood equation (LL)

Table 3

 3

	.8: Testing for Existence of a Level Relationship for the Total Trade Balance Model
		Equation
			ARDL Model
	F-Statistic
			Lower Bound	Upper Bound
	Finite Sample: n = 40	90%	2.427	3.395
		95%	2.893	4
	Finite Sample: n = 35	90%	2.46	3.46
		95%	2.947	4.088
	Computed F-Statistic		F = 6.261**

Notes: (i) ,** and *** indicate significance at 0.05 and 0.10 level respectively.

Table 3 .

 3 9: Testing for Existence of a Level Relationship for the Oil Trade Balance Model Equation

	F-Statistic		ARDL Model
			Lower Bound	Upper Bound
	Finite Sample: n = 40	90%	2.427	3.395
		95%	2.893	4.00
	Finite Sample: n = 35	90%	2.460	3.460
		95%	2.947	4.088
	Computed F-Statistic		F= 7.261**

Notes: (i) ,** and *** indicate significance at 0.05 and 0.10 level respectively.

Table 3 .

 3 10: Testing for Existence of a Level Relationship for the Non-Oil Trade Balance

		Model Equation
	F-Statistic		ARDL Model
			Lower Bound	Upper Bound
	Finite Sample: n = 1000	90%	3.030	4.060
		95%	3.470	4.570
	Finite Sample: n = 40	90%	3.334	4.438
		95%	3.958	5.226
	Computed F-Statistic		F= 7.191**

Notes: (i) ,** and *** indicate significance at 0.05 and 0.10 level respectively.

Table 3 .

 3 11: ARDL Estimation of Long Run Coefficients for the Total Trade Balance Model

		Equation
		Total Trade Balance Equation
	Variables
		ARDL (2,2,0,2,1)
		Coefficient	Std.Error	P-value
	LnREER	0.0714	0.083859	0.0416
	LnOP	0.376	0.082404	0.0001
	LnIPI	0.4927	0.095209	0.0000
	LnGDP	0.8752	0.191414	0.0001
	C	-0.3968	0.124518	0.1027
	ARDL Equation	LnTTB + (0.0715)*LnREER + (0.3760)*LnOP + (0.4928)*LnIPI +
		(0.8753)*LnGDP -0.3968

Notes: (i) The dependent variable is (TTB), 40observations used for estimation from 1980 to 2020.

  To ensure model fit, we performed several diagnostic tests for serial correlation, heteroscedasticity, and normality. The tests applied are the Lagrange Multiplier (LM) test, the Autoregressive Conditional Heteroskedasticity (ARCH) test and the Skewness and Kurtosis test.

	that the long-run relationship among the time series variables in the total trade balance model
	for the equation (3.1) is as follows:
	LnTTB = -0.3968 + 0.0715 LnREER + 0.3760 LnOP + 0.4928 LnIPI + 0.8753 LnGDP………….
	(3.7)
	After obtaining the above results, the next step is to apply a variety of diagnostic tests used to
	detect any econometric problems such as autocorrelation, heteroscedasticity, or normality.
	4.2.4.2	Diagnostic Tests

Table 3 .

 3 12: Variety of Diagnostic Tests for the Equation (3.1) LM) indicates to Lagrange multiplier test of serial correlation; The normality test is performed based on the test of kurtosis and skewness of residuals; ARCH indicates to Autoregressive Conditional Heteroscedasticity test of residuals. (ii) The order of LM test and the ARCH test are given in parentheses ( ). And the numbers in [ ] represent the Probability-values and CHSQ referee to the X 2 Figure 3.5: Skewness, Kurtosis and Jarque Bera Normality Test for the Equation (3.1)

	Item	Test Applied	Total Trade Balance Model Equation
	Serial Correlation	Lagrange Multiplier Test (LM)Test	CHSQ(2):0. 6897 [0.511]
	Normality	Test of Skewness and Kurtosis	CHSQ(1): 0.7353 [0.692]
	Heteroskedasticity	Autoregressive Conditional	CHSQ (1): 2.9490[0.094]
		Heteroskedasticity test
		(ARCH) Test
	Note: (i)(

Table 3 .

 3 13: ARDL Estimation of Long Run Coefficients for the Oil Trade Balance Model Equation

		Oil Trade Balance Equation
	Variables	ARDL (2,2,0,2,2)
		Coefficient	Std.Error	P-value
	LnREER	0.1435	0.198045	0.0016
	LnOP	0.4435	0.563734	0.0008
	LnIPI	0.5983	0.112654	0.0000
	LnGDP	0.7763	0.211382	0.0009
	C	-0.4468	0.563445	0.0827
	ARDL Equation	LnOTB + (0.1435)*LnREER + (0.4435)*LnOP + (0.5983)*LnIPI + (0.7763)*LnGDP -
		0.4468
	Notes: (i) The dependent variable is (OTB), 40observations used for estimation from 1980 to 2020.

Table 3 .

 3 that the long-run relationship among the time series variables in the oil trade balance model for 14: Variety of Diagnostic Tests for the Equation (3.2) LM) indicates to Lagrange multiplier test of serial correlation; The normality test is performed based on the test of kurtosis and skewness of residuals; ARCH indicates to Autoregressive Conditional Heteroscedasticity test of residuals. (ii) The order of LM test and the ARCH test are given in parentheses ( ). And the numbers in [ ] represent the Probability-values and CHSQ referee to the X 2 Figure 3.6: Skewness, Kurtosis and Jarque Bera Normality Test for the Equation (3.2)First, we begin with a serial correlation (autocorrelation) diagnostic using the LM test for serial correlation in the residuals. This test examines the null hypothesis of no serial correlation against the alternative hypothesis of positive/negative serial correlation. The test showed an F-probability statistic that is at significance levels of more than five and ten percent, which means that the null hypothesis cannot be rejected. As a result, we conclude that the equation does not have a serial correlation problem. For heteroscedasticity, we test the null hypothesis of no heteroscedasticity by employing the ARCH test. As shown in table13.4, the null hypothesis cannot be rejected because the probability of the equation is greater than five and ten percent significance levels. Therefore, there is no evidence to show the existence of the heteroscedasticity effect in the equation under investigation. Furthermore, this equation passed the Skewness and Kurtosis Test in residual. The test probability for the equation is more than five percent of significant levels, suggesting that this equation has a normal distribution. After confirming the existence of the long-run relationship between the variables and ensuring the adequacy of the model, estimation of the error correction model is the final stage.

	the equation (3.2) is as follows:
	LnOTB = -0.3968 + 0.0715 LnREER + 0.3760 LnOP + 0.4928 LnIPI + 0.8753 LnGDP…………….........(3.8)
	4.2.4.4	Diagnostic Tests
	To ensure model fitness, we performed several diagnostic tests for serial correlation,
	heteroscedasticity, and normality. The tests applied are the Lagrange Multiplier (LM) test, the
	Autoregressive Conditional Heteroscedasticity (ARCH) test and the Skewness and Kurtosis
	test.
	Item		Test Applied	Total Trade Balance Model Equation
	Serial Correlation		Lagrange Multiplier Test (LM)Test	CHSQ(2): 0.769743 [0.534]
	Normality		Test of Skewness and Kurtosis	CHSQ(1): 0.7353 [0.692]
			Autoregressive Conditional
	Heteroskedasticity	Heteroskedasticity test	CHSQ (1): 1.9592[0.136]
			(ARCH) Test
	Note: (i)(

Table 3 .

 3 15: ARDL Estimation of Long Run Coefficients for the Non-Oil Trade Balance Model Equation

			Non-Oil Trade Balance Equation
	Variables		ARDL (1,1,0,1,1)
		Coefficient	Std.Error	P-value
	LnREER	0.444129	0.155098	0.0076
	LnOP	0.169450	0.131392	0.0470
	LnIPI	0.543127	0.150748	0.0011
	LnGDP	0.514197	0.318360	0.0000
	C	0.707672	0.645823	0.1129
	ARDL Equation	LnNTB + (0.4441)*LnREER +( 0.1694)*LnOP + ( 0.5431)*LnIPI +
			( 0.5141)*LnGDP + 0.7076

Notes: (i) The dependent variable is (NOTB), 40observations used for estimation from 1980 to 2020.

Table 3 .

 3 16: Variety of Diagnostic Tests for the Equation (3.3) Note: (i)(LM) indicates to Lagrange multiplier test of serial correlation; The normality test is performed based on the test of kurtosis and skewness of residuals; ARCH indicates to Autoregressive Conditional Heteroscedasticity test of residuals. (ii) The order of LM test and the ARCH test are given in parentheses ( ). And the numbers in [ ] represent the Probability-values and CHSQ referee to the X 2 Figure 3.7: Skewness, Kurtosis and Jarque Bera Normality Test for the Equation (3.3)

	Item	Test Applied	Total Trade Balance Model Equation
	Serial Correlation	Lagrange Multiplier Test (LM)Test	CHSQ(2): 1.9883[0.155]
	Normality	Test of Skewness and Kurtosis	CHSQ(1): 0.9231 [0.630]
	Heteroskedasticity	Autoregressive Conditional Heteroskedasticity test	CHSQ (1): 0.0585[0.810]
		(ARCH) Test

Table 3 .

 3 17: Error Correction Representation for the Total Trade Balance Model Equation

			Total Trade Balance Equation
	Variables		ARDL (2,2,0,2,1)
		Coefficient	Std.Error	[P-value]
	dLnREER	0.2068	0.233834	[0.033]
	dLnOP	0.4302	0.099542	[0.000]
	dLnIPI	0.2855	0.07148	[0.000]
	dLnGDP	0.4795	0.072285	[0.000]
	C	-0.7425	0.866565	[0.073]
	ecm(-1)	-0.4442	0.106409	[0.000]
	𝑹 𝟐		0.925018
	𝑹 𝟐 ̅̅̅̅		0.89447
	S.E. of regression		0.137559
	DW-statistic		2.233161
	F-statistic		30.28079
	Prob(F-statistic)		[0.000]

  Figure 3.9: CUSUMQ Test for the Total Trade Balance Model Equation (3.1)

	1.6
	1.2
	0.8
	0.4
	0.0
	-0.4
	06	07	08	09	10	11	12	13	14	15	16	17	18	19	20
				CUSUM of Squares		5% Significance
	16
	12
	8
	4
	0
	-4
	-8
	-12
	-16
	94	96	98	00	02		04	06	08	10	12	14		16	18	20
						CUSUM		5% Significance

Table 3 .

 3 18: Error Correction Representation for the Oil Trade Balance Model Equation

			Oil Trade Balance Equation
	Variables		ARDL (2,2,0,2,1)
		Coefficient	Std.Error	[P-value]
	dLnREER	0.1956	0.425162	[0.033]
	dLnOP	0.4135	0.189673	[0.020]
	dLnIPI	0.3136	0.324172	[0.003]
	dLnGDP	0.2395	0.087035	[0.044]
	C	-0.4423	0.829826	[0.073]
	ecm(-1)	-0.5683	0.119647	[0.000]
	R2		0.888215
	𝑹 𝟐 ̅̅̅̅		0.867255
	S.E. of regression		0.126356
	DW-statistic		2.156431
	F-statistic		26.24562
	Prob(F-statistic)		[0.000]

  Figure 3.11: CUSUMQ Test for the Oil Trade Balance Model Equation (3.2)

	1.6
	1.2
	0.8
	0.4
	0.0
	-0.4
	06	07	08	09	10	11	12	13	14	15	16	17	18	19	20
					CUSUM of Squares		5% Significance
	12
	8
	4
	0
	-4
	-8
	-12
	06	07	08	09	10	11	12	13	14	15	16	17	18	19	20
						CUSUM		5% Significance

Table 3 .

 3 19: Error Correction Representation for the Non-Oil Trade Balance Model Equation

	Variables		Non-Oil Trade Balance Equation
			ARDL (1,1,0,1,1)
		Coefficient	Std.Error	[P-value]
	dLnREER	-0.0092	0.124753	[0.941]
	dLnOP	0.0291	0.084446	[0.732]
	dLnIPI	0.3464	0.09184	[0.000]
	dLnGDP	0.6141	0.079129	[0.000]
	C	0.6423	0.982822	[0.098]
	ecm(-1)	-0.6378	0.099922	[0.000]
	R2		0.709347
	𝑹 𝟐 ̅̅̅̅		0.666604
	S.E. of regression		0.132213
	DW-statistic		2.311272
	F-statistic		16.79565
	Prob(F-statistic)		[0.000]

  Figure 3.13: CUSUMQ Test for the Non-Oil Trade Balance Model Equation (3.3)

	1.6
	1.2
	0.8
	0.4
	0.0
	-0.4
	08	09	10	11	12	13	14	15	16	17	18	19	20
				CUSUM of Squares		5% Significance
	12
	8
	4
	0
	-4
	-8
	-12
	08	09	10	11	12	13	14	15	16	17	18	19	20
					CUSUM		5% Significance

CHAPTER Ⅱ

The role of the exchange rate regime in the adjustment of current account imbalances in oil exporting countries: a panel data analysis

CHAPTER 𝐈𝐈𝐈

Determinants of the Libyan trade balance: an empirical analysis of the trade balance and its oil and non-oil components -The first component is represented in the total trade balance resulting from the subtraction of the value of total imports from the value of total exports of goods and services, denominated in current US dollars. Data on the value of total exports and imports were obtained from the United Nations Conference on Trade and Development (UNCTAD) database.

https://unctadstat.unctad.org/EN/Index.html -The second component is represented in the oil trade balance, which was extracted by subtracting the value of oil imports -represented by the value of oil product imports plus transportation costs -from the value of oil exports. Data on oil product imports and their shipping costs were obtained from an Organization of Arab Petroleum Exporting Countries (AOPEC) database, while the value of oil exports was obtained from the Organization of Petroleum Exporting Countries (OPEC) database.

-The third component, which is expressed as the non-oil trade balance, calculated as the result of subtracting the value of oil exports and imports from the value of total exports and imports.

Independent Variables

The study uses four selected independent variables, which are as follows, the real effective exchange rate, where the real exchange rate data series was extracted from the Bruegel platform database 1 :

The next independent variable is the world crude oil price, expressed as the Brent oil price. The data for this variable was obtained from the British Petroleum Statistics database 2 .

The industrial production index is also used as a proxy for the output gap in the Libyan economy. The data for this indicator was obtained from the industrial time series data published by the Bureau of Statistics and Census of the Libyan Ministry of Planning. In addition, gross domestic product was used as an independent variable and was represented by real gross domestic product growth data. The data series for this variable were obtained from the World Bank database 3 1 https://www.bruegel.org/2021/12/timely-measurement-of-real-effective-exchange-rates/.

2 https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-worldenergy/oil.html 3 .https://databank.worldbank.org/source/world-development-indicators

Cointegration analysis

The concept of cointegration arose in the early 1980s when it was introduced by Granger (1981). Since then, cointegration has been the preferred instrument of time series econometrics. Cointegration is a powerful method for testing trends in a multivariate time series and gives robust methodology in order to model the long-term and short-term dynamics in a system. In the sample case of two time-series ( 𝑋 𝑡 )and (𝑌 𝑡 ), the definition of cointegration is that both variables are integrated of order one I (1) and implies that the process includes a unit root. Moreover, the OLS is readily used to assess the cointegration relationship and a dynamic-error correction model (ECM) could be concluded from the ARDL by a simple linear transition. In addition, the ECM integrates the short-term dynamics with the long-term equilibrium, without miscarrying long-term notions.

Another critical issue with the ARDL approach is selection of the appropriate lag length to use. ARDL model is estimated from a recursive search of the optimal number of lags using either Schwarz Bayesian Information Criterion (SBIC) or Akaike Information Criterion (AIC). On grounds that as per Pesaran and Smith (1998) a model chosen by SBIC is a more parsimonious model which saves degrees of freedom especially in studies with small sample size. In general, equations (3.1), (3.2), and (3.3) will be subjected to the analysis of the ARDL approach in order to address the questions posed in the study and determine the long-and shortrun relationships among the variables. To test for the suitability of the model, diagnostic tests on heteroscedasticity, serial correlation, multicollinearity, parameter stability, normality and model specification were carried out [START_REF] Nagawa | Determinants of gross domestic savings in Uganda: an autoregressive distributed lag (ARDL) approach to cointegration[END_REF].

This section discusses the empirical framework for the study analysis to answer the research questions set out in the beginning. To achieve the study's objectives, annual timeseries data is employed in these empirical analyses for the period between 1980 and 2020 in Libya. Auto-Regressive Distributed Lag Model (ARDL) will be use in this study as it targets to examine the long-run relationships among variables. This approach was introduced by [START_REF] Pesaran | An autoregressive distributed lag modelling approach to cointegration analysis[END_REF] and [START_REF] Pesaran | Bounds testing approaches to the analysis of level relationships[END_REF]; it is also known as the bounds-testing procedure. The (ARDL) method can avoid endogeneity problems experienced by the Engle-Granger method, as well as those problems stemming from failing to test the hypothesis on the long-run estimated coefficients (Ahmed et al., 2013;Ali and Li,2016). Another advantage is that the ARDL models can run with the Ordinary Least Squares (OLS) technique; hence, the relationships among variables can be estimated by OLS when the order of the ARDL is known.

I (1), purely I (0) or mutually cointegrated [START_REF] Pesaran | Bounds testing approaches to the analysis of level relationships[END_REF]. Therefore, the existence of the order of I(2) renders the calculated F-statistic inefficient and invalid [START_REF] Ouattara | Modelling the long run determinants of private investment in senegal[END_REF]). In addition, [START_REF] Fida | Revisiting aggregate import demand function in pakistan using ardl methodology[END_REF] reported that, generally, the stationarity of the dependent variable at first difference is basically required. Thus, two classical unit root tests, namely the Augmented Dickey-Fuller (ADF) test and the Philips-Perron (PP) test are used to identify the order of time series. All tests investigate the null hypothesis of a unit root against the alternative of stationarity.

Before explaining the results, it is worth mentioning that all unit root tests were conducted first at the level and first difference, with a constant and with a constant and time trend. For the Augmented Dickey-Fuller (ADF), the optimal shift was identified using the Schwarz Information Criteria (SIC). However, the optimal offset in the Philip-Perron (PP) test was chosen using the Newey-West Bandwidth method and Bartlett Karnel. In this regard, the unit root tests have attempted to examine the null hypothesis, which states that non-stationary, against its alternative of stationary. If the null hypothesis was not rejected, we concluded that the time series has unit (non-stationary) roots. Tables 3.5 ,3.6 and 3.7 summarizes the results of the unit root tests respectively. Thus, it is important to note that the results of the unit root tests for the three models employed in the study were quite similar. Whereas the abovementioned tables summarize the results of the unit root tests for each model of the total trade balance, oil trade balance and non-oil trade balance. Therefore, the results of the unit root tests for the models used in the study can be reviewed and explained in more detail as follows:

First, we began with the results of the ADF test. The results showed that gross domestic product has a unit root at the integrated level, while the total trade balance (TTB), oil trade balance (OTB), and non-oil trade balance (NTB) to GDP ratio, the real effective exchange rate (REER), the global oil price (OP) and the industrial production index (IPI) were nonstationary, indicating that they have unit roots at their level. Thus, the rejection of the unit root null hypothesis can only be proved in the case of the variable (GDP). With regard to the first difference form, all time series variables were tested for stationarity. The results showed that GDP is stationary at I (0), while the other time series variables are stationary at I (1). Therefore, a firm conclusion can be reached that all time series variables are integrated at an order of one.

The Phillips-Perron (PP) unit root test is the second test to be conducted. This test was a more comprehensive and sophisticated unit root test than the ADF test. Similarly, the PP test provided the same results as the ADF test as reported in Tables (3.5), (3.6), and (3.7).

Thereafter, the null hypothesis of a unit root can be rejected at the level, except for the gross domestic product growth (GDP); on the other hand, we rejected the null hypothesis for all the time series variables, showing that all the variables were included in I (1), which implies that there are less than the order I (2). As a conclusion, the results of the unit root test, namely the Augmented Dickey-Fuller (ADF) test and the Philips-Perron (PP) test have underlined and confirmed that some time series variables are integrated at the level while all are integrated at the level. However, once the existing evidence of stationarity of the time series variables is employed in the model, the ARDL linked test approach can then be applied. Notes: (i) All unit root tests have performed by using Eviews 10. For ADF test, the lag selection has been chosen automatically by the program with maximum number of lag ( 9) and the optimal lag lengths of ADF is obtained by using Schwarz Information Criterion (SIC) and the results of the lag order are given in parentheses. (ii) The Phillips-Perron (PP) test, the numbers within parenthesis followed by (PP) test statistics represent the automatic bandwidth selected based on Newey-West Bandwidth method using Bartlett Karnel. (iii) * and ** indicate significance at 0.01 and 0.05 level respectively. (iv) MacKinnon (1996) critical values are used.

LnREER

4.2.4

Long-run Estimations of ARDL Models Tables (3.8,3.9 and 3.10) reported the computed F-statistic values and the bounds of the critical values of both the Pesaran and Pesaran (2009) and [START_REF] Narayan | Reformulating critical values for the bounds F-statistics approach to cointegration: an application to the tourism demand model for Fiji[END_REF] models for the total, oil, and non-oil trade balance models. After conducting the bound tests, the results were ready for description as presented in Tables (3.8), (3.9) and (3.10). The computed F-statistic for the significance of the lagged levels in the three equations are 5.564, 6.667 and 6.658. These computed F-statistic values exceed the upper critical bound values (4. 000 and 4.08, 4.000 and 4.08, 4.57 and 4.22) for Pesaran, Pesaran (2009) and [START_REF] Narayan | Reformulating critical values for the bounds F-statistics approach to cointegration: an application to the tourism demand model for Fiji[END_REF] with a significance level of at least five percent, For each of the total trade balance equation, the oil trade balance equation, and the non-oil trade balance equation respectively. As a result, the null hypothesis of a non-integration relationship among the variables in the Libyan trade balance models was rejected. This implied that there were long-term cointegration relationships among the time studied. Furthermore, this equation passed the test for skewness and kurtosis in the residual.

The test probability for the equation is above 5% significant levels, suggesting that this equation is normally distributed. Once the long-run relationship between the variables has been confirmed and the model fit has been verified, estimation of the error correction model is the final step.

4.2.3.4

Oil trade Balance Model Once the stationarity of the time series variables at the first difference and the existence of a long-run relationship between the variables had been confirmed, it was possible to proceed to the second step of the ARDL to determine the values of the long-run coefficients for the total trade balance model by studying equation (3.2). The lag order takes the number two as suggested by the Schwarz Bayesian criterion (SBC), and the most common choice was an ARDL (2,2,0,2,2). The purpose of this estimation was to reveal the interaction relationship between the variables OTB (Oil Trade Balance) and REER (Real Effective Exchange Rate), OP (Oil Price), IPI (Industrial Production Index) and GDP (Real Gross Domestic Product Growth). Table (3.13) below shows the results of the long-term estimates.

For equation 3.2, in the long run, the coefficient of the real effective exchange rate was positive and statistically significant at the five percent significance level, while the coefficients of the oil price, industrial production index and real gross domestic products growth were also statistically and positively significant at the one percent significance level with the movement in the oil trade balance. The interpretation was that a one percent increase in the (REER) variable was associated with a 0.14 percent increase in the oil trade balance (OTB). While a one percent increase in the oil price (OP) could lead to a 0.44 percent increase in the oil trade balance. In addition, the increase in the oil trade balance is about 0.60 and 0.77 percent for each one percent increase in the industrial production index (IPI) and gross domestic product (GDP), respectively. inflow of foreign exchange due to the discovery of new oil fields or the expansion of existing production could lead to a significant and exaggerated appreciation of the national currency.

Thus, this problem could have unexpected negative consequences for the economy as a whole and for the non-resource export sector in particular. Hence, the appreciation of the national currency would reduce the country's non-resource exports and make imports from abroad more cheaper which could hurt import-substituting industries. Thus, in the long-term, the combination of these factors could increase unemployment in the non-oil sectors of the economy and could lead to a shift of industry and investment to lower-cost countries which could further distort the economy.

In another context, even though the Central Bank of Libya has reduced the exchange rate of the national currency for relatively distinct periods ranging from 2001 to the last reduction in 2021. However, these measures may lead to weak results and limited impact on trade balances. Therefore, this can be attributed to several factors, including the rentier nature of the Libyan economy, the weakness of economic diversification, as well as the low flexibility of exports and imports to Libya. On the other hand, there are concerns that devaluation will not reduce the volume of imports to the extent that it increases the cost of these imports in local currency, thereby increasing price inflation levels. In addition, the non-oil export sector may also be affected by the high cost of imports, as almost all local industries depend on the import of raw and intermediate materials from abroad. On the other hand, the persistence of a tense political and security situation, which has resulted in the repeated closure and suspension of oil fields and export ports, as well as the suspension of several petroleum product refineries for the same reasons, in addition to the disruption of their maintenance operations. As a result, all this has led to an increase in the country's dependence on imported petroleum products to meet local needs for domestic consumption of these products. Thus, this may place the country in the category of developing economies that export and import oil. In general, some of the policy implications of the analysis of this study have shown that, more efforts are needed to reform the security and political situation of the country, diversify the economy, and increase the importance of private sector participation in the economy.

General conclusion

The current account balances of oil-exporting countries over the study period have exhibited significant fluctuations over the past decades. These balances have also recorded large deficits in many oil-exporting countries, which could threaten economic and financial stability and hinder economic growth, especially if this situation persists for an extended period of time. Accordingly, understanding the underlying drivers of current account developments requires profound and comprehensive research to understand this phenomenon and to identify the factors exacerbating it in order to work to mitigate its potential risks and to develop appropriate policies to avoid the negative consequences which may result from it.

Oil-exporting countries are very vulnerable to fluctuations in their external balances due to their heavy dependence on crude oil exports, which is one of the most volatile commodities in terms of prices, which can create serious problems for their economies. Thus, in-depth research and a comprehensive study of this phenomenon would lead to a better understanding of its magnitude and causes. Thus, it would help economic decision-makers and policy-makers to formulate appropriate decisions and measures that would reduce the risks associated with macroeconomic fluctuations as well as changes of crude oil prices on current account balances in oil-exporting countries. Which helps in achieving economic stability and ensuring the desired growth.

Regarding the results of the second chapter, where we investigated the impact of exchange rate regimes on current account persistence in oil-exporting countries over the period 1996-2016. The results show that the current account is persistent in all sub-samples of the countries under study. On the other hand, with respect to the overall current account balance model, the results showed that the domestic credit to private sector has a negative and significant impact on all subsamples of exchange rate systems. Regarding the current account surplus model, the results showed that the trade openness has a positive and significant effect, while the domestic credit to private sector has a negative and significant effect on all subsamples in the case of current account surplus. On the other hand, the results showed that in the case of current account deficits, the trade openness has a negative and significant effect on all subsamples of exchange rate regimes, indicating that higher trade openness reduces current account deficits, regardless of exchange rate regime. Regarding the analysis of current account persistence by geographic area, the results show that Asia and Russia have the highest level of current account persistence, while the lowest level of current account persistence is found in sub-Saharan Africa.