Readiness Of The Gulf Monetary Union: Revisited

Rock-Antoine Mehanna () and M. Kabir Hassan
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Rock-Antoine Mehanna: Notre Dame University

No 441, Working Papers from Economic Research Forum

Abstract: This paper revisits Mehanna’s (2004) assessment of the viability of the future project of the Gulf Monetary Union (a goal set for 2010) while examining member countries over three time periods: (1) 1990-1999; (2) 2000-2006; and (3) average period 1990-2006. It follows the theory of Optimum Currency Areas and borrows from the European Monetary Union (the Maastricht Agreement’s convergence criteria) for theoretical and comparison purposes. This study examines nine indicators for the six members of the Gulf Cooperation Council (GCC). These indicators cover economic integration, trade openness, monetary policy, economic development, fiscal, and military policies. New findings reveal that GCC countries have achieved more convergence in terms of indicators under study mainly due to the petro-dollar era. However, econometric results suggest that GCC countries are still out of phase and not harmonized in terms of trade, monetary policy and economic development. Relevant policy implications are discussed.

Pages: 14
Date: 2008-01-10, Revised 2008-01-10
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