Lost in Transmission? The Effectiveness of Monetary Policy Transmission Channels in the GCC Countries

36 Pages Posted: 1 Nov 2012

See all articles by Serhan Cevik

Serhan Cevik

International Monetary Fund (IMF)

Katerina Teksoz

Columbia University

Multiple version iconThere are 2 versions of this paper

Date Written: July 2012

Abstract

This paper empirically investigates the effectiveness of monetary policy transmission in the Gulf Cooperation Council (GCC) countries using a structural vector autoregressive model. The results indicate that the interest rate and bank lending channels are relatively effective in influencing non-hydrocarbon output and consumer prices, while the exchange rate channel does not appear to play an important role as a monetary transmission mechanism because of the pegged exchange rate regimes. The empirical analysis suggests that policy measures and structural reforms - strengthening financial intermediation and facilitating the development of liquid domestic capital markets - would advance the effectiveness of monetary transmission mechanisms in the GCC countries.

Keywords: Monetary Policy Transmission, Credit Channel, Structural Var, Interest Rates On Loans, Currency Pegs, Bank Credit, Economic Growth, Economic Conditions, Money And Interest Rates

JEL Classification: C51, E31, E50, E51, E52, O53

Suggested Citation

Cevik, Serhan and Teksoz, Katerina, Lost in Transmission? The Effectiveness of Monetary Policy Transmission Channels in the GCC Countries (July 2012). IMF Working Paper No. 12/191, Available at SSRN: https://ssrn.com/abstract=2169737

Serhan Cevik (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Katerina Teksoz

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

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