Understanding the Inflationary Process in the GCC Region: The Case of Saudi Arabia and Kuwait

Author/Editor:

Hesham Alogeel ; Maher Hasan

Publication Date:

August 1, 2008

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper investigates the factors that affect inflation in the GCC region by examining the inflationary processes in Saudi Arabia and Kuwait. The paper utilizes a model that accounts for foreign factors affecting inflation, such as trading partners' inflation and exchange rate pass-through effect, as well as domestic influences. The analysis concludes that, in the long run, higher inflation in trading partners' countries is the main driving force for inflation in the two countries, with significant but lower contributions from the exchange rate pass-through effect and oil prices. Demand and money supply shocks affect inflation in the short run.

Series:

Working Paper No. 2008/193

Subject:

Demand for money Exchange rate pass-through Inflation Monetary base Oil prices

English

Publication Date:

August 1, 2008

ISBN/ISSN:

9781451870510/1018-5941

Stock No:

WPIEA2008193

Pages:

37

Please address any questions about this title to publications@imf.org