Dissertation
THE INTERNATIONAL ECONOMICS OF GULF COOPERATION COUNCIL DEFICITS AND RESERVES
Washington State University
Doctor of Philosophy (PhD), Washington State University
01/2021
DOI:
https://doi.org/10.7273/000002425
Handle:
https://hdl.handle.net/2376/121479
Abstract
The channels and direction of budget deficits along with the role of the demand for international reserves are crucial in mitigating external and internal crises and safeguarding the economic system of the Gulf Cooperation Council (GCC).
Chapter 1 extends the research of Granger non-causality between budget deficits by employing a macro-panel data structure in a two-dimensional vector autoregression model with an exogenous variable (VAR-X) process where oil is included as the exogenous control variable. I test both a homogeneous model where the States share the underlying data generating process and then as a robustness check, I specify a heterogeneous model over the period 1993 – 2017. I reject the hypothesis that the twin-deficits doctrine applies when GCC States share the same underlying data generating process and when each States’ parameters are heterogeneous. Additionally, I find that a uni-directional causal relationship between the two deficits exists in reverse order.
Chapter 2 estimates the optimal level of international reserves for each of the six GCC member States and then evaluates the optimality of their current holdings of reserves from 2000-2015. Using an optimization approach, I was able to compare if the actual level of international reserves of the GCC States are larger or smaller than the model optimal level. Results indicate that the observed holdings of international reserves for the GCC states is a dynamic process based on precautionary motives adjusting reserves based on the changing environment and expected possible costs and benefits.
Chapter 3 specifies a full dynamic model for Oman’s demand for international reserves by reconciliating the demand for reserves theory and the monetary approach to the balance of payment theory. I use an autoregressive distributed lag model reparametrized in conditional error-correction form to specify both the long-run influences and short-run dynamics. This empirical integration satisfies simultaneous equilibriums in both the money market and the monetary authority composition of assets. Bound testing procedures are used to test for model cointegrations. Results indicate that reserves policy in Oman is based on short-run considerations and that the long-run policy is mainly managed by the country’s sovereign wealth funds.
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Details
- Title
- THE INTERNATIONAL ECONOMICS OF GULF COOPERATION COUNCIL DEFICITS AND RESERVES
- Creators
- SALIM AHMED SAID AL JAHWARI
- Contributors
- JINHUI BAI (Advisor)SALVADOR ORTIGUEIRA (Advisor)MARK GIBSON (Committee Member)
- Awarding Institution
- Washington State University
- Academic Unit
- Economic Sciences, School of
- Theses and Dissertations
- Doctor of Philosophy (PhD), Washington State University
- Publisher
- Washington State University
- Number of pages
- 130
- Identifiers
- 99900606756401842
- Language
- English
- Resource Type
- Dissertation