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GCC Monetary Union and the Degree of Macroeconomic Policy Coordination
Author:
Mr. Bassem M Kamar
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and
Samy Ben Naceur
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Series:
IMF Working Papers
Volume/Issue:
Volume 2007: Issue 249
Language:
English
Publication Date:
01 Oct 2007
DOI:
https://doi.org/10.5089/9781451868128.001
ISBN:
9781451868128
ISSN:
1018-5941
Pages:
33
Keywords:
WP; monetary policy; common currency
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Coordinating macroeconomic policies is a pre-requisite to a successful launch of the common currency in the GCC countries. Relying on the Behavioral Equilibrium Exchange Rate approach as a theoretical framework, we apply the Pooled Mean Group methodology to determine the similarity of the impact of a selected set of macroeconomic indicators on the real exchange rate in each country. Our empirical evidence points to a clear coordination of monetary policy, fiscal policy, government consumption, and openness across the member countries. While RER misalignments also show a substantial convergence building over time, differences in the misalignments of the two polar cases remain rather substantial, calling for further coordination and policy harmonization.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund