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Inflation Differentials in the GCC

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  • Oral Williams
  • Kamiar Mohaddes

Abstract

This paper uses a pairwise approach to investigate the main factors that have been driving inflation differentials in the Gulf Cooperation Council (GCC) region for the past two decades. The results suggest that inflation differentials in the GCC are largely influenced by the oil cycle, mainly through the credit and fiscal channels. This implies that closer coordination of fiscal policies will be key for facilitating the closer integration of the GCC economies and ahead of the move to a monetary union. The results also indicate that after controlling for cyclical factors, convergence increased even during the recent oil boom.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/294.

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Length: 30
Date of creation: 01 Dec 2011
Date of revision:
Handle: RePEc:imf:imfwpa:11/294

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Related research

Keywords: Oil prices; Oil revenues; Oil sector; inflation; inflation rates; monetary fund; monetary union; price level; inflation rate; inflation process; increase in inflation; central bank; inflationary pressures; money supply; european monetary union; real output; inflation convergence; inflation dynamics;

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References

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  1. Alonso-Borrego, Cesar & Arellano, Manuel, 1999. "Symmetrically Normalized Instrumental-Variable Estimation Using Panel Data," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 17(1), pages 36-49, January.
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  6. Magda E. Kandil & Hanan Morsy, 2009. "Determinants of Inflation in GCC," IMF Working Papers 09/82, International Monetary Fund.
  7. Syed Abul Basher & Elsayed Mousa Elsamadisy, 2012. "Country heterogeneity and long-run determinants of inflation in the Gulf Arab states," OPEC Energy Review, Organization of the Petroleum Exporting Countries, Organization of the Petroleum Exporting Countries, vol. 36(2), pages 170-203, 06.
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  10. Busetti, Fabio & Forni, Lorenzo & Harvey, Andrew & Venditti, Fabrizio, 2006. "Inflation convergence and divergence within the European Monetary Union," Working Paper Series, European Central Bank 0574, European Central Bank.
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Cited by:
  1. Paul Cashin & Kamiar Mohaddes & Mehdi Raissi & Maziar Raissi, 2012. "The Differential Effects of Oil Demand and Supply Shocks on the Global Economy," IMF Working Papers 12/253, International Monetary Fund.
  2. Cashin, P. & Mohaddes, K. & Raissi, M., 2012. "The Global Impact of the Systemic Economies and MENA Business Cycles," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 1250, Faculty of Economics, University of Cambridge.

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