GCC Economic Integration : Statistical Harmonization for an Effective Monetary Union

The research would predominantly look at the statistical harmonisation among key macroeconomic variables like GDP, Inflation rates, and Exchanges Rates. For a single monetary variable across the GCC countries to work in the future, there is a need to test whether the different macroeconomic variables mentioned before are compatible with each other both in the short run and long run. Cointegration testing can be performed through framework such as the Johansen Cointegration test, while short run dynamics models can be analysed through impulse response functions (IRF). By using IRF, for instance, the effect of a change in the 'convergence thresold' variable (say a New GCC currency) over Inflation Rates can be analysed for each of the top three GCC members. This would provide key information of the implication of using a common currency for each country's policy makers