Real Interest Rates, Bubbles and Monetary Policy in the GCC countries
AbstractThe Gulf Cooperation Council countries (GCC) include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. Their monetary policy objective is to stabilize the foreign price, i.e., exchange rate instead of the domestic price level, where the nominal interest rate is equalized with the US federal fund rate, but the inflation rates are independent. High oil prices and the depreciating US dollar caused inflation to rise and real interest rates to be persistently negative in the UAE and Qatar. Asset prices bubbles formed then burst creating large loses. They could have moderated the effect of, or avoided, the bubble had they floated the currency and stabilized domestic prices.
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Bibliographic InfoPaper provided by Arab Planning Institute - Kuwait, Information Center in its series API-Working Paper Series with number 0912.
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Other versions of this item:
- Razzak, Weshah & Bentour, E M, 2009. "Real Interest Rates, Bubbles and Monetary Policy in the GCC countries," MPRA Paper 19384, University Library of Munich, Germany.
- E. M. Bentour & W. A. Razzak, 2010. "Real Interest Rates, Bubbles and Monetary Policy in the GCC countries," EERI Research Paper Series EERI_RP_2010_03, Economics and Econometrics Research Institute (EERI), Brussels.
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
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