Divisia Monetary Aggregates for the GCC Countries
Ryadh M. Alkhareif and
William Barnett
A chapter in Recent Developments in Alternative Finance: Empirical Assessments and Economic Implications, 2012, pp 1-37 from Emerald Group Publishing Limited
Abstract:
This chapter builds monthly time-series of Divisia monetary aggregates for the Gulf area for the period of June 2004 to December 2011, using area-wide data. We also offer an “economic stability” indicator for the Gulf Cooperation Council (GCC) area by analyzing the dynamics pertaining to certain variables such as the dual price aggregates, aggregate interest rates, and the Divisia aggregate user-cost growth rates. Our findings unfold the superiority of the Divisia indexes over the officially published simple-sum monetary aggregates in monitoring the business cycles. There is also direct evidence on higher economic harmonization between GCC countries – especially in terms of their financial markets and the monetary policy. Monetary policy often uses interest rate rules, when the economy is subject only to technology shocks. In that case, money is nevertheless relevant as an endogenous indicator (Woodford, M. (2003). Interest and prices: Foundations of a theory of monetary policy. Princeton, NJ: Princeton University Press.). Properly weighted monetary aggregates provide critical information to policy-makers regarding inside liquidity created by financial intermediaries. In addition, policy rules should include money as well as interest rates, when the economy is subject to monetary shocks as well as technology shocks. The data show narrow aggregates growing while broad aggregates collapsed following the financial crises. This information clearly signals problems with the financial system's ability to create liquidity during the crises.
Keywords: monetary aggregation; GCC countries; Divisia monetary aggregates; index number theory (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations:
Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... 0386(2012)0000022006
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers
Related works:
Working Paper: Divisia Monetary Aggregates for the GCC Countries (2012) 
Working Paper: Divisia monetary aggregates for the GCC countries (2012) 
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:eme:isetez:s1571-0386(2012)0000022006
DOI: 10.1108/S1571-0386(2012)0000022006
Access Statistics for this chapter
More chapters in International Symposia in Economic Theory and Econometrics from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().