Kuwait: Selected Issues
IMF Staff Country Reports, September 18, 2023
Source details
- Canonical URL
- Kuwait: Selected Issues
Other formats
Bibliographic details
- Published: September 18, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400255434.002
Summary and Scope
- This Selected Issues paper empirically investigates the banking sector and macroeconomic spillovers to Kuwait from US monetary policy tightening.
- It focuses on pass-through from the US policy rate to lending and deposit rates in Kuwait, the dependence of spillovers on oil prices relative to their fiscal breakeven, and implications for non-oil gross domestic product growth.
Key Findings
- Pass-through from the US policy rate to lending and deposit rates in Kuwait is high in the short run, and complete in the long run.
- The impact of US monetary policy tightening on the Kuwaiti economy depends on the level of oil prices relative to their fiscal breakeven.
- The estimation results suggest that the negative impact of US monetary policy tightening on non-oil gross domestic product growth depends on the level of oil prices.
- The overall growth impact of US monetary policy tightening is found to be larger and more persistent when oil prices are below their fiscal breakeven level.
- Spillovers from US monetary policy tightening to the Kuwaiti economy depend on oil prices.
- Market interest rates in Kuwait comove strongly with the US policy rate.
Subjects and Keywords
- Subject: Expenditure, Fiscal governance, Fiscal policy, International organization, Monetary policy, Monetary tightening, Oil prices, Prices
- Keywords: bank interest interest rate, Fiscal governance, Global, monetary policy spillover, Monetary tightening, oil GDP growth, Oil prices, projection regressions--impact, tightening cycle
Content in this bundle
- Kuwait: Selected Issues; IMF Country Report No. 23/332; July 20, 2023