Desynchronized: The Comovement of Non-Hydrocarbon Business Cycles in the GCC

25 Pages Posted: 12 Dec 2011

See all articles by Serhan Cevik

Serhan Cevik

International Monetary Fund (IMF)

Date Written: December 2011

Abstract

This paper investigates the empirical characteristics of business cycles and the extent of cyclical comovement in the Gulf Cooperation Council (GCC) countries, using various measures of synchronization for non-hydrocarbon GDP and constituents of aggregate demand during the period 1990-2010. By applying the Christiano-Fitzgerald asymmetric band-pass filter and a mean corrected concordance index, the paper identifies the degree of non-hydrocarbon business cycle synchronization - one of the main prerequisites for countries considering to establish a monetary union. The empirical results show low and heterogeneous synchronization in non-hydrocarbon business cycles across the GCC economies, and a decline in the degree of synchronicity in the 2000s, if Kuwait is excluded from the sample, partly because of divergent fiscal policies.

Keywords: Business cycles, Cooperation Council for the Arab States of the Gulf, Economic models, Hydrocarbons, Monetary unions

Suggested Citation

Cevik, Serhan, Desynchronized: The Comovement of Non-Hydrocarbon Business Cycles in the GCC (December 2011). IMF Working Paper No. 11/286, Available at SSRN: https://ssrn.com/abstract=1971437

Serhan Cevik (Contact Author)

International Monetary Fund (IMF) ( email )

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

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