Impact of Money Supply on Inflation Rate in Egypt: A VECM Approach

Dekkiche Djamal ()
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Dekkiche Djamal: Research Laboratory in Financial Market Management Using Automated Media and Mathematics (GMFAMI), Relizane University, Relizane, Algeria

Economics and Business, 2022, vol. 36, issue 1, 134-148

Abstract: In this work, the research team employed a VECM regression model to evaluate the relationship between money supply and inflation rate (INF) in Egypt from 1990 to 2019. The model includes four independent variables: money supply (MS), imports (IMP), Gross Domestic Product (GDP), and exchange rate (EXCH). A Johansen-Juselius co-integration test and a Vector Error Correction Model were used to determine the existence of long-term and short-term links between the variables. The results demonstrated the existence of co-integrating links between the variables. Aside from the effects of GDP, all independent factors had a positive effect on the inflation rate. Depending on the results, the money supply is the primary long-term predictor of the inflation rate in Egypt.

Keywords: Exchange rate; GDP; inflation rate; importations; money supply; VEC (search for similar items in EconPapers)
JEL-codes: C32 E51 P24 P44 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ecobus:v:36:y:2022:i:1:p:134-148:n:9

DOI: 10.2478/eb-2022-0009

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