Journal article
SYNCHRONIZATION OF ECONOMIC SHOCKS BETWEEN GULF COOPERATION COUNCIL AND UNITED STATES, EUROPE, JAPAN, AND OIL MARKET: CHOICE OF EXCHANGE RATE REGIME
Contemporary economic policy, v 30(4), pp 584-602
01 Oct 2012
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
Using a structural vector autoregression (SVAR) with block exogeneity, this study examines the impacts of external shocks originating from the United States, the European Union, Japan, and the oil market as well as those of the regional shocks, on the oil-rich countries of the Gulf Cooperation Council (GCC), viewed as a prospective monetary union. It takes into account the implications of the shock impacts for selecting an appropriate common exchange rate arrangement. The SVAR variance decomposition and impulse response analyses strongly underscore the relative impacts of the global shocks over the regional ones. The findings imply that the world's two major currencies, the U.S. dollar and the euro, should figure highly in a GCC's common basket of currencies. Accordingly, a transitional movement to a more flexible exchange rate arrangement such as a basket peg may be desirable for these trade-dependent economies in the long run, as is argued in the optimal currency literature for developing countries. (JEL E52, O52, C22)
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Details
- Title
- SYNCHRONIZATION OF ECONOMIC SHOCKS BETWEEN GULF COOPERATION COUNCIL AND UNITED STATES, EUROPE, JAPAN, AND OIL MARKET: CHOICE OF EXCHANGE RATE REGIME
- Creators
- Won Joong Kim - Kangwon National UniversityShawkat Hammoudeh - Drexel UniversityEisa A. Aleisa - Saudi Arabian Monetary Authority
- Publication Details
- Contemporary economic policy, v 30(4), pp 584-602
- Publisher
- Wiley
- Number of pages
- 19
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000309601900008
- Scopus ID
- 2-s2.0-84867231668
- Other Identifier
- 991019167542504721
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Economics
- Public Administration