Understanding the Inflationary Process in the GCC Region: The Case of Saudi Arabia and Kuwait

August 1, 2008

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Format: Chicago

Hesham Alogeel, and Maher Hasan. Understanding the Inflationary Process in the GCC Region: The Case of Saudi Arabia and Kuwait, (USA: International Monetary Fund, 2008) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper investigates the factors that affect inflation in the GCC region by examining the inflationary processes in Saudi Arabia and Kuwait. The paper utilizes a model that accounts for foreign factors affecting inflation, such as trading partners' inflation and exchange rate pass-through effect, as well as domestic influences. The analysis concludes that, in the long run, higher inflation in trading partners' countries is the main driving force for inflation in the two countries, with significant but lower contributions from the exchange rate pass-through effect and oil prices. Demand and money supply shocks affect inflation in the short run.

Subject: Demand for money, Exchange rate pass-through, Inflation, Monetary base, Oil prices

Keywords: Excess demand, Exchange rate, Money supply, Price level, WP

Publication Details

Pages:

37
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/193
Stock No:

WPIEA2008193
ISBN:

9781451870510
ISSN:

1018-5941

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