Abstract
The real interest parity (RIP) condition states that the
interest rate differential between two economies is equivalent to the
differential between the forward exchange rate and the spot exchange
rate. This study examines the integration of financial markets in the
GCC countries by verifying the validity of RIP in their economies. Using
univariate and different panel unit root tests, we find evidence
supporting the RIP theory, which indicates that the financial markets in
these countries are well integrated and that the adoption of a common
currency would be relatively easy. JEL classification: F21; F36; C23
Keywords: Real Interest Parity, GCC Countries, Panel Unit Root Tests,
Monetary Union
Publisher
Pakistan Institute of Development Economics (PIDE)
Subject
Development,Geography, Planning and Development
Cited by
3 articles.
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