IMF Staff Country Reports

Kuwait: Selected Issues

September 18, 2023

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Format: Chicago

International Monetary Fund. Middle East and Central Asia Dept. "Kuwait: Selected Issues", IMF Staff Country Reports 2023, 332 (2023), accessed December 3, 2024, https://doi.org/10.5089/9798400255434.002

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Summary

This Selected Issues paper empirically investigates the banking sector and macroeconomic spillovers to Kuwait from US monetary policy tightening. It finds that pass-through from the US policy rate to lending and deposit rates in Kuwait is high in the short run, and complete in the long run. It also finds that the impact of US monetary policy tightening on the Kuwaiti economy depends on the level of oil prices relative to their fiscal breakeven. The estimation results suggest that the negative impact of US monetary policy tightening on non-oil gross domestic product growth depends on the level of oil prices. The overall growth impact of US monetary policy tightening is found to be larger and more persistent when oil prices are below their fiscal breakeven level. This paper finds that spillovers from US monetary policy tightening to the Kuwaiti economy depend on oil prices. It shows that market interest rates in Kuwait comove strongly with the US policy rate.

Subject: Expenditure, Fiscal governance, Fiscal policy, International organization, Monetary policy, Monetary tightening, Oil prices, Prices

Keywords: Bank interest interest rate, Fiscal governance, Global, Monetary policy spillover, Monetary tightening, Oil GDP growth, Oil prices, Projection regressions--impact, Tightening cycle

Publication Details

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