Chapter

Monetary Policy in Egypt: A Retrospective and Preparedness for Inflation Targeting

Hanaa Kheir-El-Din

in What Drives Prices in Egypt?

Published by American University in Cairo Press

Published in print November 2009 | ISBN: 9789774163036
Published online September 2011 | e-ISBN: 9781617970344 | DOI: http://dx.doi.org/10.5743/cairo/9789774163036.003.0005
Monetary Policy in Egypt: A Retrospective and Preparedness for Inflation Targeting

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Inflation targeting (IT) has become an increasingly popular monetary policy strategy, with around twenty-one countries, eight industrial and thirteen emerging markets, now inflation targeters. According to theory, an increase in the money gap should have a positive impact on inflation. The out-of-sample forecasts of the three model specifications were evaluated re-estimating the above specifications for the period February 2000 to July 2004. Macroeconomic stability supports monetary policy formulation and creates a conducive environment to build policy credibility, an important prerequisite for IT. Egypt has experienced lower inflation rates and output variability than the comparator IT countries listed. In addition, compared to the other countries, it has been running a current account surplus over the comparison period (Soderling 2003).

Keywords: monetary policy; Egypt; inflation targeting; macroeconomic stability; inflation rates

Chapter.  9989 words.  Illustrated.

Subjects: Political Economy

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