Higher oil prices can significantly dampen the spillover effects of US monetary policy on Gulf economies, a paper published by the International Monetary Fund finds.

Olumuyiwa Adedeji and co-authors examine how oil prices affect US monetary policy spillovers on non-oil GDP growth in Gulf Cooperation Council economies. They study GCC commercial bank excess reserves, oil price levels and interest rate data from 2004–18.

They find that an increase in US interest rates of 100 basis points reduces