A Coincident Indicator of the Gulf Cooperation Council (GCC) Business Cycle
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Summary:
This paper constructs a coincident indicator for the Gulf Cooperation Council (GCC) area business cycle. The resulting coincident indicator provides a reliable measure of the GCC business cycle; over the last decade, the GCC coincident index and the real GDP growth have moved closely together. Since the indicator is constructed using a small number of common factors, the strong correlation between the indicator and real GDP growth points to a high degree of commonality across GCC economies. The timing and direction of movements in macroeconomic variables are characterized with respect to the coincident indicator. Finally, to obtain a meaningful economic interpretation of the latent factors, their behavior is compared to the observed economic variables.
Series:
Working Paper No. 2009/073
Subject:
Business cycles Consumer prices Cyclical indicators Factor models Nominal effective exchange rate
English
Publication Date:
April 1, 2009
ISBN/ISSN:
9781451872200/1018-5941
Stock No:
WPIEA2009073
Pages:
34
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