Determinants of Inflation in GCC
AbstractInflationary pressures have heightened in the oil-rich Gulf Cooperation Council (GCC) since 2003. This paper studies determinants of inflation in GCC, using an empirical model that includes domestic and external factors. Inflation in major trading partners appears to be the most relevant foreign factor. In addition, oil revenues have reinforced inflationary pressures through growth of credit and aggregate spending. In the short-run, binding capacity constraints also explain higher inflation given increased government spending. Nonetheless, by targeting supply-side bottlenecks, the increase in government spending is easing capacity constraints and will ultimately help to moderate price inflation.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 09/82.
Date of creation: 01 Apr 2009
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Other versions of this item:
- Magda Kandil & Hanan Morsy, 2011. "Determinants Of Inflation In Gcc," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 141-158.
- NEP-ALL-2009-05-23 (All new papers)
- NEP-CBA-2009-05-23 (Central Banking)
- NEP-MAC-2009-05-23 (Macroeconomics)
- NEP-MON-2009-05-23 (Monetary Economics)
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