Alternative exchange rate regimes for MENA countries Gravity model estimates of the trade effects

Most Middle East and North African (MENA) countries peg their currencies more or less tightly to the US dollar, and have done so for many years. The historical origins of these practices probably lie in the relative underdevelopment at that time of fi nancial institutions and markets in MENA countries and the dominance of the dollar as the main numéraire in the post-Bretton Woods era, indeed the lack of any real alternative numéraire, and possibly also in the debatable argument that it was better to peg to the dollar since the dollar was the currency of the oil market.