The Monetary Transmission Mechanism in Egypt

Rania Al-Mashat and Andreas Billmeier ()

No 2007/285, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the monetary transmission mechanism in Egypt against the background of the central bank's intention to shift to inflation targeting. It first describes the changing transmission channels over the last decade. Second, the channels are evaluated in a VAR model. The exchange rate channel plays a strong role in propagating monetary shocks to output and prices. Most other channels (bank lending, asset price) are rather weak. The interest rate channel is underdeveloped but appears to be strengthening since the introduction of the interest corridor in 2005, which bodes well for adopting inflation targeting over the medium term.

Keywords: WP; monetary policy stance; interest rate channel; U.S. dollar; lending rate; private sector (search for similar items in EconPapers)
Pages: 43
Date: 2007-12-01
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Citations: View citations in EconPapers (34)

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Journal Article: The Monetary Transmission Mechanism in Egypt (2008)
Working Paper: The Monetary Transmission Mechanism in Egypt (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2007/285

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