 INFLATION IN EGYPT: INTERNAL OR EXTERNAL DRIVEN?Middle East Development Journal (MEDJ), 2013, vol. 05, issue 03, 1-15 Abstract: This paper investigates whether internal or external factors explain inflation in Egypt over the period 2003M1–2012M12. Using an autoregressive distributed lag model, results indicate that money supply and global commodity prices affect inflation in the long-run, while important short-run factors are inflation persistence, exchange rate depreciation and supply side bottlenecks. It is also shown that global commodity prices, especially energy prices, pass-through into headline inflation in Egypt with a short lag. These results take into account the different stationary characteristics of different time series variables and are robust to different model specifications. Policy recommendations include the necessity of reforming the government's energy subsidy bill, less monetization of the deficit and gradual liberalization of the currency in order to curb inflationary pressures in Egypt and put the economy on a more sustainable path. Keywords: Inflation; Egypt; autoregressive distributed lag (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wsi:medjxx:v:05:y:2013:i:03:n:s1793812013500193 Ordering information: This journal article can be ordered from DOI: 10.1142/S1793812013500193 Access Statistics for this article Middle East Development Journal (MEDJ) is currently edited by Lyn Squire More articles in Middle East Development Journal (MEDJ) from World Scientific Publishing Co. Pte. Ltd. |
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