The Effect of Fixed Exchange Rates on Monetary Policy of the GCC Countries

Ashraf Nakibullah


The GCC member countries have maintained fixed exchange rates against the US dollar for a long time now. These countries also allow liberal cross-border capital movements. Given these arrangements, they have theoretically given up the monetary independence according to the trilemma stating that countries with fixed exchange rates cannot pursue both domestic monetary independence and free capital mobility. This paper tests trilemma for the GCC member countries excluding Saudi Arabia and the UAE due to the unavailability of the pertinent interest rates data from these countries. Using the most recent quarterly data for the period 2004 to 2015, the general finding is that these countries still have some monetary independence. Results for Qatar indicate that they can maintain a full monetary autonomy if the circumstances make them to do so.

Full Text:




  • There are currently no refbacks.

Paper Submission E-mail:

Applied Economics and Finance    ISSN 2332-7294 (Print)   ISSN 2332-7308 (Online)

Copyright © Redfame Publishing Inc.

To make sure that you can receive messages from us, please add the '' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders. If you have any questions, please contact: