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Inflation Differentials in the GCC: Does the Oil Cycle Matter?

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Author Info

  • 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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Keywords: Oil prices; Oil revenues; Oil sector;

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References

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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. Paul Cashin & Kamiar Mohaddes & Mehdi Raissi, 2012. "The Global Impact of the Systemic Economies and MENA Business Cycles," IMF Working Papers 12/255, International Monetary Fund.

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