Kuwait: Selected Issues

International Monetary Fund

No 2023/332, IMF Staff Country Reports from International Monetary Fund

Abstract: 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.

Keywords: oil GDP growth; tightening cycle; monetary policy spillover; bank interest interest rate; projection regressions--impact; Oil prices; Fiscal governance; Monetary tightening; Global (search for similar items in EconPapers)
Pages: 29
Date: 2023-09-18
New Economics Papers: this item is included in nep-ger
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=539191 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfscr:2023/332

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Staff Country Reports from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().