Estimating Egypt’s Potential Output: A Production Function Approach

Osama El-Baz

MPRA Paper from University Library of Munich, Germany

Abstract: The Egyptian economy has witnessed deterioration in its main macroeconomic indicators over the period (2008-2014). The main purpose of the paper was to estimate Egypt's potential output and identify the factors that might be responsible for the divergence of actual and potential output from each other. We used the production function approach to derive estimates of potential output and output gap over the period (1990-2014). The results of the analysis revealed that capital stock was the dominant factor contributing to GDP growth in Egypt, while the share of both labor and total factor productivity in GDP growth rate has been fluctuating over time. Intellectual property protection, efficiency of legal framework in settling disputes, strength of investor protection, and other factors exhibited a strong positive relationship with output gap in Egypt over the period (2010-2014).

Keywords: Potential Output; Output Gap; HP Filter; Production Function Approach (search for similar items in EconPapers)
JEL-codes: C1 E6 E65 E66 (search for similar items in EconPapers)
Date: 2016-05-20, Revised 2016-05-29
New Economics Papers: this item is included in nep-ara, nep-eff and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:71652

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