Inflation Differentials in the GCC: Does the Oil Cycle Matter?
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Summary:
This paper uses a pairwise approach to investigate the main factors that have been driving inflation differentials in the Gulf Cooperation Council (GCC) region for the past two decades. The results suggest that inflation differentials in the GCC are largely influenced by the oil cycle, mainly through the credit and fiscal channels. This implies that closer coordination of fiscal policies will be key for facilitating the closer integration of the GCC economies and ahead of the move to a monetary union. The results also indicate that after controlling for cyclical factors, convergence increased even during the recent oil boom.
Series:
Working Paper No. 2011/294
Subject:
Consumer price indexes Credit Fiscal policy Fiscal stance Foreign exchange Inflation Money Nominal effective exchange rate Prices
English
Publication Date:
December 1, 2011
ISBN/ISSN:
9781463927288/1018-5941
Stock No:
WPIEA2011294
Pages:
30
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