HAS EGYPT'S EXCHANGE RATE POLICY CHANGED AFTER THE FLOAT?
Middle East Development Journal (MEDJ), 2012, vol. 04, issue 01, 1-27
The Central Bank of Egypt announced the flotation of the Egyptian Pound in January 2003. Yet, the somewhat stable exchange rate raises questions about its actual role in monetary policy. This paper assesses whether exchange policy significantly changed after thefloat. It first applies cointegration methodology using monthly data from 1981 to 2008 to show that there is a long-run relationship between the LE/US$ exchange rate and monetary fundamentals. A vector error-correction model shows that the speed of exchange rate adjustment to long-run equilibrium is slow and that there has not been a significant change in exchange rate determination after thefloat. Finally, Egypt'sde factoexchange rate regime could be classified as "fixed" for several years after thede jurefloat was announced.
Keywords: Exchange rate determination; cointegration; de facto classification; monetary policy; Egypt (search for similar items in EconPapers)
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