Do Gcc Countries Form An Optimum Currency Area' An Empirical Analysis Of The Generalized Purchasing Power

The objective of this study is to examine the possibility of optimum currency area in GCC countries, namely Saudi Arabic, Bahrain, Kuwait, Oman, Qatar and United Arab Emirates during the period 1981-2013, by applying the Generalized Purchasing Power Parity (G-PPP) and by using Real Exchange Rate (RER) Data. Our empirical results show a long term relationship among real exchange rates, which confirms that, envisaged monetary integration in GCC.