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Evaluating the effects of monetary policy shocks on aggregate demand components in GCC countries: evidence from svar

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  • Sayyed Mahdi Ziaei

    (University Technology Malaysia, Malaysia)

Abstract

In this research, for the first time effects of monetary policy shocks on aggregate demand components with a baseline of structural vector autoregressive (SVAR) models are evaluated in GCC countries. SVAR Results explain, when fix capital formation included in model, contemporaneous coefficients indicate that in most countries (except Kuwait) the interest rate responds positively to unexpected increase in monetary aggregate. The opposite side of the story is also true, broad money decreases with an unexpected increase in an interest rate. Furthermore, monetary policy interest rate (except Kuwait) especially between 1 to 4 years has the more effect on investment compare to other components of GDP in the case of GCC states. For GCC states, findings indicate that investment is the first while GDP is second component variable that are mostly affected by monetary policy shocks. Most effects of monetary policy on investment are seen in Saudi Arabia, Qatar, and Oman.

Suggested Citation

  • Sayyed Mahdi Ziaei, 2014. "Evaluating the effects of monetary policy shocks on aggregate demand components in GCC countries: evidence from svar," Journal of Developing Areas, Tennessee State University, College of Business, vol. 48(1), pages 405-423, January-M.
    • Handle: RePEc:jda:journl:vol.48:year:2014:issue1:pp:405-423
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    Cited by:

    1. Ben Mimoun, Mohamed & Boukhatem, Jamel & Raies, Asma, 2024. "Aggregate demand and inflation response to monetary policy shocks in Tunisia," Journal of Policy Modeling, Elsevier, vol. 46(3), pages 592-612.
    2. Elif ERER & Deniz ERER & Mustafa ÇAYIR & Nasuh Oğuzhan ALTAY, 2016. "TCMB, FED ve ECB Para Politikalarının Türkiye Ekonomisi Üzerindeki Etkileri: 1994-2014 Dönemi Analizi," Sosyoekonomi Journal, Sosyoekonomi Society, issue 24(29).

    More about this item

    Keywords

    GCC countries; Monetary Policy Shocks; Aggregate Demand Components;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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