Oil Shocks and Kuwait’s Dinar Exchange Rate: the Dutch Disease Effect
AbstractThis study investigates the impact of oil prices on the exchange rate in Kuwait which uses the fixed exchange rate regime to the US dollar. Time series data from 1970-2008 covering all the oil shocks are used. In order to achieve the results of this study, the VAR model, the Johansen-Juselius Multivariate Cointegration test and the Granger causality test are implemented. Due to the results we have arrived at, we recommend that Kuwait either maintains its exchange rate regime (pegged to a basket of currencies), or uses a crawling peg regime.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 26844.
Date of creation: 12 Oct 2010
Date of revision:
oil shocks; real exchange rate; Kuwait; VAR;
Find related papers by JEL classification:
- E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
- F31 - International Economics - - International Finance - - - Foreign Exchange
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-27 (All new papers)
- NEP-ARA-2010-11-27 (MENA - Middle East & North Africa)
- NEP-ENE-2010-11-27 (Energy Economics)
- NEP-MAC-2010-11-27 (Macroeconomics)
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