The nexus between internal and external macroeconomic imbalances: evidence from Egypt

Omneia Helmy and Chahir Zaki

Middle East Development Journal, 2017, vol. 9, issue 2, 198-232

Abstract: This paper examines the nexus between internal and external imbalances of the Egyptian economy. In fact, both the twin-deficit hypothesis (TDH) and the Feldstein–Horioka (FH) paradox are examined. Using quarterly data (between 2002 and 2014) in order to capture the short-term dynamics that might affect the Egyptian economy, a Granger causality test and an error-correction model are run in order to determine both the short-term adjustment and the long-run relationship between internal and external imbalances. Our main findings show that the TDH is rejected and a reversed causality running from the current account to the budget deficit exits. Moreover, the FH puzzle is partially rejected since Egypt, while not being perfectly integrated in the world capital market, has a high degree of capital mobility.

Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://hdl.handle.net/10.1080/17938120.2017.1368217 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:rmdjxx:v:9:y:2017:i:2:p:198-232

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rmdj20

DOI: 10.1080/17938120.2017.1368217

Access Statistics for this article

Middle East Development Journal is currently edited by Raimundo Soto

More articles in Middle East Development Journal from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().