Country heterogeneity and long-run determinants of inflation in the Gulf Arab states

  • Basher S
  • Elsamadisy E
  • 12


    Mendeley users who have this article in their library.
  • N/A


    Citations of this article.


Applying nonstationary panel data econometric methods, this paper analyzes the major sources and transmission of inflation in the Gulf Cooperation Council (GCC) countries over the 1980-2008 period. We argue that, in GCC countries, money is essentially demand determined, so that the high collinearity between money and aggregate demand indicators such as non-hydrocarbon output is expected and should be dealt with accordingly. Several important results emerge from the analysis. First, the money supply stands out as a significant determinant of inflation both in short- and long-run. Both foreign prices and the nominal effective exchange rate are shown to be more successful in explaining inflation in the long-run than the short-run. The half-life of the speed of adjustment reveals that it takes about 2.9 years for 50% of a shock to the long-run equilibrium to dissipate. An implication of our results is the case it makes for more sovereign monetary policies in GCC countries. (This abstract was borrowed from another version of this item.)

Author-supplied keywords

  • alfred haug
  • are those of the
  • authors and do not
  • comments from khalid alkhater
  • exchange rates
  • fiscal policy
  • for help with proofreading
  • from discussion with or
  • inflation
  • katrin assenmacher-
  • m
  • monetary policy
  • oil price
  • panel data
  • rafiq
  • rafiq and joakim westerlund
  • reflect the official view
  • rosmy jean louis
  • s
  • the views expressed here
  • this paper has benefitted
  • we particularly thank m
  • wesche

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document


  • Syed Abul Basher

  • Elsayed Mousa Elsamadisy

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free