U.S. Monetary Policy Spillovers to GCC Countries: Do Oil Prices Matter?

Abstract

This paper provides empirical evidence that the size of the spillovers from U.S. monetarypolicy to non-oil GDP growth in the GCC countries depends on the level of oil prices. Thepotential channels through which oil prices could affect the effectiveness of monetary policyare discussed. We find that the level of oil prices tends to dampen or amplify the growthimpact of changes in U.S. monetary policy on the non-oil economies in the GCC.

Keywords: Bank rates, Market interest rates, Real interest rates, Discount rates, Interest rates on loans, Growth, Gulf Corporation Council, Spillovers, U.S. Monetary Policy, WP, GCC country, non-oil, oil price, fund rate, GCC

JEL Classification: E44, F14, F15, F42, O47, E01, G21, E52, E5, G13