Price level and inflation in the GCC countries

Hasan Murshed and Ashraf Nakibullah

International Review of Economics & Finance, 2015, vol. 39, issue C, 239-252

Abstract: The prevailing pegged exchange rate system has been blamed for the recent higher inflation in the GCC countries. However, empirical evidence for period 1975–2011 shows that the short-run and long-run exchange rate pass-through elasticities to the consumer price levels of the GCC countries, in contrast to the popular belief, are either close to zero or statistically insignificant. The trading partners' (foreign) inflation is the main determinant of the consumer price inflation in these countries. Domestic factors play only a small part in the long-run determination of inflation of the GCC countries.

Keywords: Imported inflation; Exchange rate pass-through; ARDL model; Bounds testing technique (search for similar items in EconPapers)
JEL-codes: E31 F41 O53 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:39:y:2015:i:c:p:239-252

DOI: 10.1016/j.iref.2015.04.008

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