The Gulf Co‐operation Council: A Slow Path to Integration?

Dar, Humayon A.; Presley, John R.

doi:10.1111/1467-9701.00405

Cited by 23 publications

(11 citation statements)

References 2 publications

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“…Fulfilment of most of the convergence criteria has been achieved, with inflation being the lone exception. Despite these impressive advances, many economists and analysts argue that the progress has been remarkably slow and additional steps are required for the monetary union to be effective (Dar and Presley, 2001; and Darrat and Al‐Shamsi, 2005, among others).…”

Section: Introductionmentioning

confidence: 99%

On the Optimality of a GCC Monetary Union: Structural VAR, Common Trends, and Common Cycles Evidence

Abu‐Qarn

Abu‐Bader

2008

World Economy

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This paper examines the suitability of the proposed monetary union among the members of the Gulf Cooperation Council (GCC). To do so, we identify the underlying structural shocks that these economies are subject to and assess the extent to which the shocks are symmetric.Additionally, we test for common trends and common business cycles among the GCC economies. We find that while the transitory demand shocks are typically symmetric, the permanent supply shocks are asymmetric. Furthermore, we do not find synchronous long-run and short-run movements in output. Despite the progress that has been made in terms of integration, our findings indicate that the conditions for forming a GCC monetary union have not as yet been met.

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Section: Introductionmentioning

confidence: 99%

On the Optimality of a GCC Monetary Union: Structural VAR, Common Trends, and Common Cycles Evidence

Abu‐Qarn

Abu‐Bader

2008

World Economy

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“…In spite of Saudi Arabia being the largest economy in the region, its participation in intracountry trade is very low (Dar & Presley, ). However, the authors suggest that the private sector can drive the process of regionalism among these economies.…”

Section: Resultsmentioning

confidence: 99%

The feasibility of currency union in Gulf Cooperation Council countries: A business cycle synchronisation view

Essaadi

2017

World Economy

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This paper study the feasibility of a monetary union among Gulf Cooperation Council (GCC) countries, by measuring the evolution of economic integration among them. Considering the critical role of crisis and shocks in the integration process within the region, we determine whether GCC countries are characterised by a common business cycle. We suggest a different empirical approach that, unlike previous studies, allows one to endogenously detect structural changes in the comovement process between outputs. We apply a new measure for this region that is based on the time‐varying coherence function. Such a measure not only detects comovement dynamics but also distinguishes these dynamics in terms of short‐ and long‐term cycles. Additionally, we can test whether certain countries tend to be more synchronised. The main finding of this study is that not all GCC countries share a common short‐term business cycle. However, in the long term, all country‐pairs indicate a medium‐level synchronisation in the most recent subperiods. The new role of the United Arab Emirates’ regional trade platform allows it to strengthen long‐term business cycle comovement, thus differentiating it from other GCC country‐pairs that have shown a decline in the last two subperiods.

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“…These studies typically emulate those of the EU and emphasis is often put on the convergence criteria 4 as researchers weigh the costs against the benefits of these countries joining in a monetary union (Khan , 2009;Sturm and Siegfried, 2005;Pattanaik, 2007;Dar and Presley, 2001;Jadresic, 2002;Iqbal and Fasano, 2003;Fasano and Schaechter, 2003;Iqbal, 2002, 2003;Hebous, 2006;Laabas and Limam, 2002;Oman Economic Review, 2002;Ibrahim, 2004,). Sturm and Siegfried's (2005) study is one of the most comprehensive works on the GCC countries.…”

Section: Section 2 Backgroundmentioning

confidence: 99%

On the choice of an anchor for the GCC currency: does the symmetry of shocks extend to both the oil and the non-oil sectors?

Louis

Balli

Osman

2011

Int Econ Econ Policy

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This paper assesses the costs of forming a monetary union among the Gulf Cooperation Council (GCC) countries by looking at economic linkages within the GCC, and between the GCC and the potential anchors (the US, and major European countries such as France, Germany and Italy) for their proposed new currency. We investigate the importance of the US dollar compared to the Euro by focusing on aggregate demand (AD) and aggregate supply (AS) shock symmetry across these countries. We differentiated between oil and non-oil sector by estimating structural vector autoregression (SVAR) models with a combination of variables: oil output, non-oil output, total output, nominal/real price of oil and overall price level. One set of models was identified with the long-run restrictions of Blanchard and Quah (1989), whereas the set that assesses the robustness of the findings was estimated with the short-run restrictions of Sims (1992). We find overwhelming support for AD shock symmetry across the GCC countries and between the GCC and the US, but none for the major European countries with the GCC. Non-oil AS shocks are mostly asymmetric, but oil AS shocks are mostly symmetric when the real price of oil is included. This agrees with the view that GCC countries are subjected to common oil shocks. It also suggests that previous VAR models estimated to pass judgment on the feasibility of monetary union across GCC countries may have suffered from problems of mis-specification if the real price of oil was not . We surmise that the US dollar is a better anchor candidate for anchoring the new GCC currency than the Euro, since US monetary policy can at least help smooth demand shocks in these countries.

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The Gulf Co‐operation Council: A Slow Path to Integration?

Cited by 23 publications

References 2 publications

On the Optimality of a GCC Monetary Union: Structural VAR, Common Trends, and Common Cycles Evidence

On the Optimality of a GCC Monetary Union: Structural VAR, Common Trends, and Common Cycles Evidence

The feasibility of currency union in Gulf Cooperation Council countries: A business cycle synchronisation view

On the choice of an anchor for the GCC currency: does the symmetry of shocks extend to both the oil and the non-oil sectors?

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