Determinants of Inflation in GCC
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
Inflationary pressures have heightened in the oil-rich Gulf Cooperation Council (GCC) since 2003. This paper studies determinants of inflation in GCC, using an empirical model that includes domestic and external factors. Inflation in major trading partners appears to be the most relevant foreign factor. In addition, oil revenues have reinforced inflationary pressures through growth of credit and aggregate spending. In the short-run, binding capacity constraints also explain higher inflation given increased government spending. Nonetheless, by targeting supply-side bottlenecks, the increase in government spending is easing capacity constraints and will ultimately help to moderate price inflation.
Series:
Working Paper No. 2009/082
Subject:
Capacity utilization Exchange rate adjustments Exchange rates Expenditure Foreign exchange Inflation Prices Production
English
Publication Date:
April 1, 2009
ISBN/ISSN:
9781451872293/1018-5941
Stock No:
WPIEA2009082
Pages:
34
Please address any questions about this title to publications@imf.org