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How Closely the GCC Approximates an Optimum Currency Area?

Author

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  • Pattanaik, Sitikantha

    () (Central Bank of Oman)

Abstract

The six Gulf Cooperation Council (GCC) countries (namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and U.A.E.) have exhibited considerable cooperation in the past for deepening the process of economic integration, and there is an animated debate in the academic and policy circles as to whether the integration process can be intensified and carried forward so that eventually a common currency could replace the six national currencies by the year 2010 ** . The academic debate on optimum currency area suggests that individual countries at times may be better off just by joining hands to have a single currency, instead of each having its own currency. For several countries to constitute such an optimum currency area, however, they must satisfy certain preconditions; i.e., they must have similar economic structures with exposure to symmetric shocks, they must be open economies, well diversified and must also ensure high degree of factor mobility. In the context of this theoretical debate, this paper aims at assessing the degree to which the GCC may be meeting the requirements of an optimum currency area.

Suggested Citation

  • Pattanaik, Sitikantha, 2007. "How Closely the GCC Approximates an Optimum Currency Area?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 22, pages 573-597.
  • Handle: RePEc:ris:integr:0407
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    Citations

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    Cited by:

    1. Agénor, Pierre-Richard & Aizenman, Joshua, 2011. "Capital market imperfections and the theory of optimum currency areas," Journal of International Money and Finance, Elsevier, vol. 30(8), pages 1659-1675.
    2. Magda Kandil & Mohamed Trabelsi, 2012. "Is The Announced Monetary Union In Gcc Countries Feasible? A Multivariate Structural Var Approach," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 1-18.
    3. 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.
    4. Willem H. Buiter, 2010. "Economic, Political and Institutional Prerequisites for Monetary Union Among the Members of the Gulf Cooperation Council," Chapters,in: Currency Union and Exchange Rate Issues, chapter 3 Edward Elgar Publishing.
    5. Rosmy Jean Louis & Faruk Balli & Mohamed Osman, 2012. "On the choice of an anchor for the GCC currency: does the symmetry of shocks extend to both the oil and the non-oil sectors?," International Economics and Economic Policy, Springer, vol. 9(1), pages 83-110, March.
    6. M. Kabir Hassan & Ashraf Nakibullah & Abul Hassan, 2013. "Sterilisation and Monetary Control by the GCC Member Countries," The World Economy, Wiley Blackwell, vol. 36(12), pages 1566-1587, December.
    7. Rosmy Jean Louis & Faruk Balli & Mohamed Osman, 2012. "On the feasibility of monetary union among Gulf Cooperation Council (GCC) countries: does the symmetry of shocks extend to the non-oil sector?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 36(2), pages 319-334, April.

    More about this item

    Keywords

    Optimum Currency Area; Common Currency Monetary Convergence Criteria; GCC; Panel Data;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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