Previous Issues
Volume :25 Issue : 2 1997
Add To Cart
Download
Microeconomic convergence and prospects for monetary integration in the GCC: an Empirical Inquiry
Auther : Ali Diabi - Mohammed AL Jarrah
The paper attempts to inquire into the issue of macroeconomic convergence and prospects for monetary integration in GCC in light of more than one decade of economic cooperation. Convergence is defined in the paper as the narrowing of the paper is both analytical and empirical. Multivariate co integration and factor analysis are used to find statistical evidence for convergence. The empirical findings seem to suggest that, over all, some of the selected macroeconomic series do not drift too far apart from one another. It is however worth nothing that the level of macroeconomic convergence that has been achieved is not adequate, particularly in regard to internal fiscal and external imbalances and to a certain inflation. These asymmetries, if not kept within bounds, might jeopardize the monetary union project. So, the GCC Members are urged to show willingness for further cooperation and consistent policy coordination to enhance economic convergence and thus create the conditions for a successful transition toward a monetary union .