On the Inflationary Process in Kuwait: Some Empirical Results

Yousif Khalifa Al-Yousif
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Yousif Khalifa Al-Yousif: United Arab Emirates University, College of Business and Economics(CBE), Postal: P.O.Box 15551, Al-Ain United Arab Emirates ,, http://www.uaeu.ac.ae/

Economia Internazionale / International Economics, 1996, vol. 49, issue 2, 167-176

Abstract: This paper investigates the empirica1 validity of the monetarist view of inflation in the small open economy of Kuwait. The estimates presented indicate that growth in money stock was a primary source of inflation in Kuwait; its impact is swift, completed within one quarter of the money change. Such a quick and significant impact of money supply growth on inflation supports the adoption of restrictive monetary policy as a means to curb inflation in Kuwait. In addition to money growth, the results also show that inflationary expectations exert a positive and significant effect on inflation, although with a relatively long lag of about seven quarters. Hence, lowering the public’s expectations of higher inflation can also be an effective anti-inflation policy.

Date: 1996
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