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The GCC Monetary Union: Some Considerations for the Exchange Rate Regime

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Author Info
S. Nuri Erbas
Behrouz Guerami
George T. Abed
Abstract

We compare the dollar peg to a dollar-euro basket peg as alternative exchange rate regimes for the incipient Gulf Cooperation Council (GCC) currency union. Quantitative evidence suggests basket peg does not dominate dollar peg for improving external stability. However, as GCC exports and external financial assets become more diversified, a more flexible exchange policy may be necessary for competitiveness and stability. Pegging the prospective common GCC currency to a basket, like the dollar-euro basket, may provide a conservative transitional strategy toward a more flexible exchange rate policy.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/66.

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Length: 24 pages
Date of creation: 21 Apr 2003
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Handle: RePEc:imf:imfwpa:03/66

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Related research
Keywords: Cooperation Council for the Arab States of the Gulf ; Exchange rate regimes ; Currency pegs ;

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References listed on IDEAS
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.:
  1. Stefan E. Oppers, . "Dual Currency Boards: A Proposal for Currency Stability," IMF Working Papers 00/199, International Monetary Fund.
  2. David Brodsky & Gary Sampson, 1984. "The sources of exchange rate instability in developing countries: Dollar, french Franc and SDR pegging countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 120(1), pages 133-154, March. [Downloadable!] (restricted)
  3. Williamson, John, 1993. "Exchange Rate Management," Economic Journal, Royal Economic Society, vol. 103(416), pages 188-97, January. [Downloadable!] (restricted)
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(explanations, 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.)

  1. Louis, Rosmy & Balli, Faruk & Osman, Mohammad, 2008. "Monetary Union Among Arab Gulf Cooperation Council (AGCC) Countries: Does the symmetry of shocks extend to the non-oil sector?," MPRA Paper 11611, University Library of Munich, Germany. [Downloadable!]
  2. Buiter, Willem H, 2008. "Economic, Political, and Institutional Prerequisites for Monetary Union Among the Members of the Gulf Cooperation Council," CEPR Discussion Papers 6639, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Abu-Qarn, Aamer & Abu-Bader, Suleiman, 2006. "On the optimality of a GCC Monetary Union: Structural VAR, Common Trends and Common Cycles Evidence," MPRA Paper 971, University Library of Munich, Germany. [Downloadable!]
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  4. Davide Furceri & Georgios Karras, 2008. "Is the Middle East an Optimum Currency Area? A Comparison of Costs and Benefits," Open Economies Review, Springer, vol. 19(4), pages 479-491, September. [Downloadable!] (restricted)
  5. Louis, Rosmy & Osman, Mohammad & Balli, FAruk, 2007. "On The Road to Monetary Union – Do Arab Gulf Cooperation Council Economies React in the same way to United States' Monetary Policy Shocks?," MPRA Paper 11610, University Library of Munich, Germany, revised Nov 2008. [Downloadable!]
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