Critical Advantages and Disadvantages of Exchange Rate Regimes: The Case of Gulf Cooperation Council (GCC)

Kamaran Qader Yaqub
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Kamaran Qader Yaqub: Sulaimani polytechnic University, Iraq

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 3s, 5686-5700

Abstract: This study examines different theoretical perspectives in choosing exchange rate regimes as well as providing empirical evidence on the macroeconomic performance of each regime. A fixed exchange rate regime may have better performance for some countries, while a flexible exchange rate regime may be better for other countries. So it cannot be said that fixed or flexible is better all the time and in every country. Therefore, the characteristics of economic are significant to choose right exchange rate regimes. This paper attempts to examine the main advantages and disadvantages of fixed exchange rate regime in the Gulf Cooperation Council (the United Arab Emirates, the State of Bahrain, the Kingdom of Saudi Arabia, the Sultanate of Oman, the State of Qatar, and the State of Kuwait). The characteristic of GCC economy will be examined in order to estimate whether the fixed exchange rate regime is appropriate for GCC countries or not. The study concludes that the GCC states would benefit more from fixed exchange rate regime, because they will be able to use monetary policy to resolve internal and external balance.

Date: 2024
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