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 Economics and Econometrics Research Institute (EERI), Brussels in its series EERI Research Paper Series with number EERI_RP_2010_03.
Date of creation: 03 Jan 2010
Date of revision:
Inflation; real interest rate; bubbles.;
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.
- Elmostafa Bentour and Weshah Razzak, . "Real Interest Rates, Bubbles and Monetary Policy in the GCC countries," API-Working Paper Series 0912, Arab Planning Institute - Kuwait, Information Center.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-20 (All new papers)
- NEP-ARA-2010-03-20 (MENA - Middle East & North Africa)
- NEP-CBA-2010-03-20 (Central Banking)
- NEP-MAC-2010-03-20 (Macroeconomics)
- NEP-MON-2010-03-20 (Monetary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John B. Taylor, 1999.
"A Historical Analysis of Monetary Policy Rules,"
in: Monetary Policy Rules, pages 319-348
National Bureau of Economic Research, Inc.
- Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
- Ashraf Nakibullah, 2011. "Monetary Policy and Performance of the Oil-Exporting Gulf Cooperation Council Countries," International Journal of Business and Economics, College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 10(2), pages 139-157, August.
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