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Did Egypt Satisfy Prerequisites for an it Regime?

Ibrahim L. Awad ()

Acta Oeconomica Pragensia, 2009, vol. 2009, issue 6, 63-80

Abstract: The purpose of this study is to answer the question 'Is Egypt ready to apply an IT regime?' The study presumed that a country is ready to apply an IT regime once the prerequisites for an IT regime are met. Comparing the current position of Egypt with some emerging market economies, the conclusions of the study are as follows: (i) the CBE is not factually independent. Although the CBE has been granted legal instrument independence, the existence of government representatives as voting members on the MPC and the coercion of the CBE to extend finance to the government are two elements sufficient to undermine the de facto independence of the CBE; (ii) inflation targets are expected to be missed under the possibility that the behavior of the CBE will be similar to the behavior of the majority of emerging market economies, i.e., adopting an IT regime whereas implicitly targeting FX rates; and (iii) the current level of knowledge about some central issues of designing an IT regime and the quality of the available data are not satisfactory to support the adoption of an IT regime. The study concludes that Egypt is still not ready to apply an IT regime.

Keywords: Inflation targeting regime; Prerequisites for an inflation targeting regime; Inflation targeting in Egypt (search for similar items in EconPapers)
JEL-codes: E50 E58 E60 (search for similar items in EconPapers)
Date: 2009
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DOI: 10.18267/j.aop.289

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Handle: RePEc:prg:jnlaop:v:2009:y:2009:i:6:id:289:p:63-80