Razzak, Weshah and Bentour, E M (2009): Real Interest Rates, Bubbles and Monetary Policy in the GCC countries.
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The Gulf Cooperation Council countries (GCC) include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. Their monetary policy objective is to stabilize the foreign price, i.e., exchange rate instead of the domestic price level, where the nominal interest rate is equalized with the US federal fund rate, but the inflation rates are independent. High oil prices and the depreciating US dollar caused inflation to rise and real interest rates to be persistently negative in the UAE and Qatar. Asset prices bubbles formed then burst creating large loses. They could have moderated the effect of, or avoided, the bubble had they floated the currency and stabilized domestic prices.
|Item Type:||MPRA Paper|
|Original Title:||Real Interest Rates, Bubbles and Monetary Policy in the GCC countries|
|Keywords:||inflation, real interest rate, bubbles|
|Subjects:||E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level; Inflation; Deflation
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies
E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E37 - Forecasting and Simulation: Models and Applications
|Depositing User:||Weshah Razzak|
|Date Deposited:||17. Dec 2009 05:30|
|Last Modified:||12. Feb 2013 00:43|
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Taylor, J. B., 1999, A Historical Analysis of Monetary Policy Rules, in John B. Taylor ed., Monetary Policy Rules, Chicago: University of Chicago Press for NBER, 319-40.
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