Understanding the Inflationary Process in the GCC Region: The Case of Saudi Arabia and Kuwait
IMF Working Papers, August 1, 2008
Source details
- Canonical URL
- Understanding the Inflationary Process in the GCC Region: The Case of Saudi Arabia and Kuwait
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Bibliographic details
- Authors: Hesham Alogeel, Maher Hasan
- Published: August 1, 2008
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451870510.001
Research objective and model
- Investigates factors that affect inflation in the GCC region by examining the inflationary processes in Saudi Arabia and Kuwait.
- Utilizes a model that accounts for foreign factors affecting inflation, such as trading partners' inflation and exchange rate pass-through effect, as well as domestic influences.
Key findings
- In the long run, higher inflation in trading partners' countries is the main driving force for inflation in Saudi Arabia and Kuwait.
- Exchange rate pass-through effect contributes to inflation, but its contribution is significant yet lower than trading partners' inflation.
- Oil prices provide a significant but lower contribution to long-run inflation dynamics relative to trading partners' inflation.
- Demand shocks affect inflation in the short run.
- Money supply shocks affect inflation in the short run.
Subjects and keywords (as listed)
- Demand for money, Exchange rate pass-through, Inflation, Monetary base, Oil prices
- Keywords: excess demand, exchange rate, money supply, price level, WP
Source: Hesham Alogeel and Maher Hasan; IMF Working Paper, August 1, 2008.