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Without Oil, How Do Gulf Countries Move? Non-hydrocarbon Business Cycles

Author

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  • Cevik, Serhan

    (Fiscal Affairs Department, International Monetary Fund)

Abstract

This paper investigates the empirical characteristics of business cycles and the extent of cyclical comovement in the Gulf Cooperation Council (GCC) countries, using nonhydrocarbon GDP (excluding crude oil and natural gas sectors) and constituents of aggregate demand during the period 1990~2010. Although hydrocarbons still account for an overwhelming share of export earnings and fiscal revenues in the GCC countries leading to a higher degree of business cycle synchronicity at an aggregate level, this is driven largely by external factors influencing the price of crude oil and natural gas. By applying the Christiano-Fitzgerald asymmetric band-pass filter and a mean corrected concordance index, the results show that low level of synchronization in nonhydrocarbon business cycles across the GCC economies and a decline in the degree of synchronicity in the 2000s if Kuwait is excluded from the sample. It is partly because of divergent fiscal policies. The GCC countries do not appear to efficiently coordinate policies, let alone forming an optimal currency area.

Suggested Citation

  • Cevik, Serhan, 2014. "Without Oil, How Do Gulf Countries Move? Non-hydrocarbon Business Cycles," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 29, pages 244-266.
    • Handle: RePEc:ris:integr:0628
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    Citations

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    Cited by:

    1. Essahbi Essaadi, 2017. "The feasibility of currency union in Gulf Cooperation Council countries: A business cycle synchronisation view," The World Economy, Wiley Blackwell, vol. 40(10), pages 2153-2171, October.

    More about this item

    Keywords

    Business Cycles; Synchronization; Band-Pass Filter; Concordance;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F15 - International Economics - - Trade - - - Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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