Lost in Transmission? The Effectiveness of Monetary Policy Transmission Channels in the GCC Countries

Serhan Cevik and Katerina Teksoz

Middle East Development Journal, 2013, vol. 5, issue 3, 1350018-1-1350018-21

Abstract: This paper empirically investigates the effectiveness of monetary policy transmission in the Gulf Cooperation Council (GCC) countries using a structural vector autoregressive model. The originality and significance of the paper are in constructing and analyzing “synthetic” aggregate variables for the GCC as a whole. The results indicate that the interest rate and bank lending channels are relatively effective in influencing non-hydrocarbon output and consumer prices, while the exchange rate channel does not appear to play an important role as a monetary transmission mechanism because of the pegged exchange rate regimes. The empirical analysis suggests that policy measures and structural reforms — strengthening financial intermediation and facilitating the development of liquid domestic capital markets — would advance the effectiveness of monetary transmission mechanisms in the GCC countries.

Date: 2013
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Related works:
Journal Article: LOST IN TRANSMISSION? THE EFFECTIVENESS OF MONETARY POLICY TRANSMISSION CHANNELS IN THE GCC COUNTRIES (2013)
Working Paper: Lost in Transmission? The Effectiveness of Monetary Policy Transmission Channels in the GCC Countries (2012)
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DOI: 10.1142/S1793812013500181

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