Do government debt, trade openness, and oil prices affect inflation rates in GCC countries?

Objective — The paper investigates the symmetric and asymmetric effects of government debt, trade openness, and oil prices on inflation in the Gulf Cooperation Council (GCC) in the presence of external shocks for the period 1980–2024, focusing on the contribution of external shocks to the inflation process.Methodology — The study uses Panel Autoregressive Distributed Lag (PARDL) and Panel Nonlinear ARDL (PNARDL) models to capture potential asymmetries and estimate short- and long-run relationships. The IS bootstrap causality test, which performs better in small samples, is utilized to investigate the pattern and the direction of the crisis-sensitive causality.Findings — The findings suggest the existence of significant long-run relationships between inflation, government debt, trade openness, and oil prices. The PNARDL results show a significant nonlinear response to changes in trade openness, and positive and negative shocks affect inflation differently. The error-correction results support convergence toward long-run equilibrium, and the causality results show that these relationships are country-specific and sensitive to crises, particularly on the eve of major global events. The results imply that GCC fiscal and monetary policy effectiveness in fighting inflation must account for asymmetric transmission channels and external vulnerabilities. Originality — This paper is novel in jointly analyzing the impact of debt, trade openness, and oil prices using a nonlinear panel for the GCC economies over a long period of time and integrating a crisis-sensitive bootstrap causality analysis.