Estimating a Small Open-Economy Model for Egypt: Spillovers, Inflation Dynamics, and Implications for Monetary Policy

International Monetary Fund
Authors registered in the RePEc Author Service: Elif Ceren Arbatli ()

No 11/108, IMF Working Papers from International Monetary Fund

Abstract: This paper estimates a small open economy model for Egypt to analyze inflation, output dynamics and monetary policy during 2005-2010. The interest rate channel is found to be relatively weak in Egypt, complicating the use of interest rates as the immediate target of monetary policy. However, the paper also finds a significant level of persistence in the policy rate, making monetary policy pro-cyclical. More active use of interest rate policy, measures to improve domestic debt markets and a gradual move towards inflation targeting can help support a successful disinflation strategy for Egypt.

Keywords: Economic models; Spillovers (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ara, nep-cba, nep-mac and nep-mon
Date: 2011-05-01
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