Kuwait: Selected Issues
Kuwait: Selected Issues
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Volume/Issue:
Volume 2023
Issue 332
Publication date: September 2023
ISBN: 9798400255434
$20.00
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Topics covered in this book
This title contains information about the following subjects.
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Banks and Banking , Economics- Macroeconomics , Money and Monetary Policy , Public Finance , International - Economics , oil GDP growth , tightening cycle , monetary policy spillover , bank interest interest rate , projection regressions--impact , Oil prices , Fiscal governance , Monetary tightening , Global
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Summary
This Selected Issues paper empirically investigates the banking sector and macroeconomic spillovers to Kuwait from US monetary policy tightening. It finds that pass-through from the US policy rate to lending and deposit rates in Kuwait is high in the short run, and complete in the long run. It also finds that the impact of US monetary policy tightening on the Kuwaiti economy depends on the level of oil prices relative to their fiscal breakeven. The estimation results suggest that the negative impact of US monetary policy tightening on non-oil gross domestic product growth depends on the level of oil prices. The overall growth impact of US monetary policy tightening is found to be larger and more persistent when oil prices are below their fiscal breakeven level. This paper finds that spillovers from US monetary policy tightening to the Kuwaiti economy depend on oil prices. It shows that market interest rates in Kuwait comove strongly with the US policy rate.
