Inflation In Egypt Research Articles

Comparison study in inflation and economic development between Egypt and Saudi Arabia: Using data analysis

An increase in total demand over the natural supply causes inflation in Egypt. Currently, the government is not intervening to reduce prices, unlike Saudi Arabia, which does interfere. The government's direct aim is to limit the price rise, known as suppressed inflation. This study discusses the relationship between the inflation indicator and various dimensions of economic development (such as production, agriculture, industry, dependency, health, and education) in Egypt and Saudi Arabia from 1990 to 2022. The study found that inflation in Egypt was at a high rate during the study period, with an average of 9.9 %. This high average negatively affects four dimensions of development in Egypt: agriculture, dependency, health, and education. It positively impacts industry and production, but the positive impact is minimal compared to the adverse effects. The negative impact is powerful on the dimensions of education and health, which are related to the human element and have a primary influence on all other dimensions of economic development. This indicates the failure of the policy to combat inflation in Egypt and reduce its adverse effects on economic development dimensions. On the other hand, Saudi Arabia had a lower average inflation rate of 1.9 % during the study period, which negatively affected the health dimension of economic development but positively affected the dimensions of education and industry. The dependency dimension, measured by the external debt growth rate index, was excluded since there were no external debts with recursion.

What can SVAR models tell us about the impact of Monetary Policy shocks on Aggregate Demand components and Inflation in Egypt?

What can SVAR models tell us about the impact of Monetary Policy shocks on Aggregate Demand components and Inflation in Egypt?

The Asymmetric Impact of Exchange Rate on Inflation in Egypt Since 2013

The Asymmetric Impact of Exchange Rate on Inflation in Egypt Since 2013

The Relationship between Financial Development and Inflation Rate in Egypt

This study investigated the relationship between financial development and inflation in Egypt from 1980-2018. The study employed various econometric techniques, such as Johansen's test for co-integration, error correction model, Granger's causality test, Toda-Yamamoto causality test, and dynamic ordinary least squares model. The findings indicated that financial development had not significantly reduced inflation in Egypt over the studied period. Additionally, inflation was an obstacle to the country's financial development. The results also suggested a long-term equilibrium relationship between financial development and inflation, which is unidirectional and runs from inflation to financial development. The results revealed that the inflation rate, economic growth, exchange rate, and trade openness jointly impact financial development in the short and long term. It implied that the past values of these variables could be used to predict the current and future values of financial development. However, it was not possible to use the financial development index to predict the inflation rate in Egypt in the short and long term.

Impact of climate change on output and inflation in Africa’s largest economies

ABSTRACT Africa continues to endure the negative effects of climate change, which have become increasingly visible in the agricultural sector, posing challenges to policies aimed at price stability and economic growth. Thus, this study applies the Structural Auto-regression (SVAR) model to estimate the impact of climate change on output and inflation in Egypt, Nigeria, and South Africa using monthly data from 2002M01 to 2020M12. The findings reveal that a rise in climate change reduces the real output from its potential level and causes increases in food as well as general consumer prices across the countries. On the one hand, South Africa and Nigeria are estimated to have the most impact. On the other hand, Egypt's real output, food and consumer price inflation are estimated to have the least. Overall, the estimates show that climate change has the greatest impact on food price inflation, followed by general consumer price inflation, and finally real output. One key policy implication of this study's findings is that effective emission reductions that lowers climate change can boost economic growth while also reining in food and consumer price inflation. Thus, suggesting that bringing down climate change significantly can help central banks achieve price and output stability.

Analysis Factors Affecting Egyptian Inflation Based on Machine Learning Algorithms

<abstract><p>Given that inflation is one of the most important problems facing the Egyptian economy, determining the factors affecting it is very important. Thus, we aim to use machine learning algorithms like Support vector machine (SVM), K-nearest neighbor (KNN), Random Forest (R.F.), Neural Network (ANN), Gradient boosting (G.B.) and decision tree (D.T.) to determine the accurate algorithm and analyze the factors affecting on Egypt inflation. The study found that the G.B. algorithm is the most accurate among the used algorithms and showed that The major significant variables determining inflation in Egypt are the exchange rate (30.5%), gross fixed formation (24.5%) and government expenditure (12.3%). We also found a positive relationship between the inflation rate and government expenditure, money supply, gross domestic product (GDP) growth, gross fixed formation, foreign direct investment, GDP per capita and exchange rate. Furthermore, there is a negative relationship between the inflation rate, household expenditure and the external trade balance.</p></abstract>

The causality relationship between the Budget Deficit and Inflation in Egypt during the period (1991-2021)

The causality relationship between the Budget Deficit and Inflation in Egypt during the period (1991-2021)

External debt in time of inflation in Egypt: a vector error correction model

External debt in time of inflation in Egypt: a vector error correction model

أثر اقتصاد الظل على کل من التضخم وایرادات الضرائب فی مصر خلال الفترة من 1996 – 2017

يمثل اقتصاد الظل نسبة لا يستهان بها في معظم الاقتصادات في الوقت الحالي ومنها مصر، وهذا ينعکس سلبا على الاقتصاد القومي، حيث يؤدي اقتصاد الظل إلى تآکل القاعدة الضريبية ومن ثم انخفاض الايرادات الضريبية، نظرا لأنه لا يمکن فرض ضريبة عليه، مما يضطر الحکومات إلى اللجوء إلى طرق أخرى لتمويل نفقاتها. وتبعا لذلک، يوفر زيادة حجم اقتصاد الظل الدافع لتحويل مصادر الإيرادات من الضرائب إلى التمويل من خلال ضريبة التضخم، تمشيا مع الدافع لتمويل النفقات العامة. وتهدف هذه الدراسة، الى تحديد أثر اقتصاد الظل کمتغير مستقل من ناحية على کلا من التضخم والايرادات الضريبية کمتغيرات تابعة من ناحية اخرىفي مصر خلال الفترة 1996-2017وذلک باستخدام طريقة المربعات الصغرى (OLS). وقد توصلت الدراسة وفقا لنتائج النموذج القياسي إلى: وجود أثر معنوي إيجابيلاقتصاد الظل على التضخم في مصر، بينما کان الاثر معنوي سلبي لاقتصاد الظل على الايرادات الضريبية. Abstract: The shadow economy represents a significant proportion in most economies at the moment, including Egypt, and this reflects negatively on the national economy, where the shadow economy erodes the tax base and then reduces tax revenues, since it cannot be taxed, therefore forcing governments to resort to other ways to finance their expenditures. Accordingly, increasing the size of the shadow economy provides the impetus for converting sources of revenue from taxes to financing through inflation tax, in line with the motivation to finance public expenditures. The aim of the study is to determine the impact of the hidden economy as an independent variable on both inflation and tax revenues as dependent variables in Egypt during the period 1996-2017 using the least squares method (OLS method). According to the results of the econometric model, the study found a significant positive effect of the shadow economy on inflation in Egypt, while the effect of the shadow economy on tax revenues was negative.

THE RELATION BETWEEN CENTRAL BANK INDEPENDENCE AND INFLATION RATE IN EGYPT: AN EMPIRICAL ANALYSIS DURING 1998-2019

This paper examines the relation between granting central banks more independence represented in both its manifested legal charter as well as actual practices adopted and inflation in Egypt during the period from 1998-2019. To do so, this paper first looks at the evolution of different central bank independence (CBI) measures and adopts the most comprehensive relevant one. Consequently, it runs a regression model adopting an autoregressive distributed lag (ARDL) model, regressing the dependent variable inflation on its determinants of legal CBI, actual CBI, M2 and openness, to capture such relation in both the short and long term time dimensions in the case of Egypt. The paper further provides an interpretation of computed outcomes, where it presents robust evidence of an inverse relation between inflation and CBI in Egypt in the period under study in its legal and actual form and in both the short-run and the long-run. Keywords: Central bank independence, Central Bank of Egypt, Inflation, Autoregressive distributed lag, unit root testJEL Classifications: E31, E42, E58, E370DOI: https://doi.org/10.32479/ijefi.10941

Determinants of Inflation in Egypt and Mexico: An Empirical Evidence

This paper empirically examines the influencing role of internal and external factors on the inflation rate for two emerging economies, Egypt and Mexico. The price level over the long run is affected by both internal and external factors in both countries. It was also found that both fiscal and monetary policies can be used to fight inflation over the long run . Furthermore, both the US interest rate and price affect the price level with the same sign in both countries over the long run . However, over the short run while as we expect the US price affects the price in Mexico it does not have any effect on Egypt’s price. https://doi.org/10.15458/ebr96

AN ECONOMIC STUDY OF GEOGRAPHIC DISPARITIES OF FOOD PRICES AND INFLATION IN EGYPT

With the full recognition that the problem of inflation in Egypt is due mainly to factors related to the recent economic policy, while others are related to structural reasons, that ignited the flames of inflation led by monopolies prevailing in the commodity market. The problem is the rise in food and drink prices (FCPI) in particular. The problem is further compounded by the increase in poverty in Egypt, which rose to 31.8% in October 2017. The most serious is the increase of extreme poverty rate of 5.8% of the population is mainly due to rising food prices. The research is concerned with the analysis of general price index and the food price index in four regions, namely, rural upper Egypt, urban upper Egypt, rural lower Egypt, and urban lower Egypt. The research compare between the evolution of consumer price indices in two period, the first period cover, 22 months before the adoption of the floating exchange rate policy and second period cover 15 months after the adoption from November 2016 of the new policy and it. The main of the research are summarized in the following points: 1- Increase the general index of prices and number. 2- A marked increase in the indices in the geographical areas in the countryside from the urban during two periods. 3- There is a significant effect of the time component on the increase in the price index during two periods of study, which was more evident in the float period. 4- The food price index had a clear effect on the increase in the general price index in the regions. 5- The conditions of the increase in the monthly inflation rates in the pre-flotation period in the Egyptian geographical regions, although there was a decrease in the floating period over time, in the floating period. 6- High urban inflation rates for rural areas, despite their rise.

Exchange rate pass-through to inflation in Egypt: a structural VAR approach

PurposeThe theoretical and empirical literature stipulated that exchange rate shocks do influence the domestic price of imports. Hence, this paper aims to investigate the underlying relationship between the exchange rate and prices known as the exchange rate pass-through.Design/methodology/approachThe paper uses a structural vector auto-regression (SVAR) model, drawing on Bernanke (1986) and Sims (1986), to empirically examine and analyze the pass-through of exchange rate fluctuations to domestic prices in Egypt.FindingsThe empirical results of the monthly data between 2003 and 2015 revealed that the exchange rate pass-through in Egypt is fairly substantial but incomplete and slow in the three price indices [IMP, producer price index and consumer price index (CPI)]. However, the impact is more prominent for consumer prices than for any other price index. This finding could be attributed to the fact that the CPI in Egypt is composed of a relatively large number of subsidized commodities and goods with administered prices as well as the authorities’ behavior in manipulating prices (i.e. export ban). This is expected to weaken the transmission of exchange rate shocks.Practical implicationsThe result has interesting implications for Egypt’s ability to attain an effective inflation targeting regime.Originality/valueThe study contributes to the literature by assessing the effect of changes in the exchange rate (the Egyptian £vis-à-visthe US$) on prices using an updated time series from 2003 to 2015. It addresses the limitations of the study of Nafieet al.(2004), which found no strong relationship between the exchange rate and inflation rate in the Egyptian context. One of these limitations was using the CPI, as the only price index.

Modelling and forecasting inflation in Egypt: univariate and multivariate approaches

Inflation forecasts are highly important in the actual management of monetary policy implying that central banks must acquire accurate inflation forecasts. Given the high risks involved in inflation, models that account for uncertainty are expected to do well in terms of forecasting power. The current paper focuses on estimating 12 different specifications including 10 univariate models and 2 multivariate models. The univariate models are generalized autoregressive conditional heteroskedasticity in mean (GARCH-M) and threshold autoregressive generalized conditional heteroskedasticity in mean (TARCH-M) models assuming three different distributions for the error term as well as an extension of the GARCH-M model that allows for time-varying higher order moments. Furthermore, we employed three models that take into consideration the possibility of structural shifts, namely, Markov switch, threshold autoregressive and time-varying coefficients (TVCs) models. The multivariate models are the vector- half operator model and the dynamic stochastic general equilibrium - vector autoregression model (DSGE-VAR). Results indicate that TVCs model and time-varying higher moments outperform other competing models. Finally, forecasts are improved by generating combined forecasts using equal weights, Bayesian model averaging and dynamic model averaging.

Inflation in Egypt: A fiscal or monetary phenomenon?

Fiscal and monetary policy are characterized by mutual interdependence. In particular, the levels of budget deficit and public debt affect interest rates and prices. Hence, fiscal policy status affect the conduct and targets of monetary policy, and can undermine its effectiveness in curbing inflation. This paper utilizes a Structural Vector Auto-regression (SVAR) approach to investigate the impact of fiscal shocks on monetary policy and overall price level in Egypt. This is particularly relevant for the Egyptian economy since it currently witnesses unprecedented inflation rates and high levels of public debt as well. Hence, it is crucial to understand how the high levels of public debt affect prices, interest rates and other variables. Empirical model results found evidence supporting the application of fiscal theory of prices in Egypt. The main findings of this work is that inflation in Egypt is primarily a fiscal phenomenon, rather than a monetary one, as the impulse response functions have shown that a positive shock to fiscal deficit leads to a significant increase in consumer price index. Although the Central bank reacts to high prices by increasing the discount rate, the effect of this instrument on the price level is not significant, given the high level of budget deficit and public debt. Furthermore, variance decomposition showed that budget deficit proceeds the discount rate in explaining changes in prices, implying that monetary policy alone has limited effectiveness in targeting inflation.

Mean Reversion of long run inflation in Egypt

Mean Reversion of long run inflation in Egypt

Sterilization and Inflation in the Long-Term Empirical Evidence from Egypt

Although many central banks actively sterilized intervention, there is still no consensus on sterilized effect on the inflation in the long - term. This study aims at answering the question of whether or not sterilized intervention by the central bank of Egypt causes inflation in the long term. In this paper we use annual data from 1980 to 2011and use Granger Causality test, Error Correction model (VECM) and Variance Decomposition. The causal relationship between sterilization and inflation rustles indicate that, there is a bi-directional causality in two and three lags and inflation cause sterilization in four and five lags, that any intervention by the central bank sterilization in Egypt is causing inflation in the period 1980-2011. The VECM results clearly indicate the existence of a long run positive relationship between sterilization and inflation, where sterilization value increased by 10% the change in inflation will be 22% in long – term, but in the short term, all the independent variables were not significant except for the impact of inflation on the same, it is positive and significant. This means that the results of the intervention of the Central Bank of Egypt through the sterilization policy does not limit the inflation in the short term but lead to increased rates of inflation in the long term through the influence in the fiscal deficit, as the sterilization value increased by 10% the change in budget deficit will be 4.4%. The variance decomposition rustles indicates that the relative importance (contrast ratio prediction error interpreter) for a shock occur in sterilization in the interpretation of the change in inflation is positive, continuing and growing, this importance was 1.56% in the second year of shock and then 5.49% in the third year of the shock and then 10.94% in the fourth year and so that up to 45.42% in the tenth year of the shock. This indicates that there is a positive, growing and continuing relationship between sterilization and inflation in Egypt in the period of study.

Inflation in Egypt: Internal or External Driven?

This paper investigates whether internal or external factors explain inflation in Egypt over the period 2003M1–2012M12. Using an autoregressive distributed lag model, results indicate that money supply and global commodity prices affect inflation in the long-run, while important short-run factors are inflation persistence, exchange rate depreciation and supply side bottlenecks. It is also shown that global commodity prices, especially energy prices, pass-through into headline inflation in Egypt with a short lag. These results take into account the different stationary characteristics of different time series variables and are robust to different model specifications. Policy recommendations include the necessity of reforming the government’s energy subsidy bill, less monetization of the deficit and gradual liberalization of the currency in order to curb inflationary pressures in Egypt and put the economy on a more sustainable path.

The Sources of Inflation in Egypt A Multivariate Co-integration Analysis:

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The Sources of Inflation in Egypt: A Multivariate Co-integration Analysis

The aim of this paper is to empirically investigate the sources of inflation in Egypt. For this, price dynamics is herein represented by a vector error-correction model, which we use to test for the existence of a long-run relationship between the consumer price index, real gross domestic product (GDP), the exchange rate, interest rate, money supply and world prices. Then using the augmented VAR approach, we test for Granger non-causality between the different variables and inflation. The main results that are of interest to monetary policy in Egypt suggest that structural reforms based on improving the country’s productive capacity, shrinking the budget deficit and credit to the government, are crucial for controlling inflation.