Estimating a Small Open-Economy Model for Egypt: Spillovers, Inflation Dynamics, and Implications for Monetary Policy

The IUP Journal of Monetary Economics, Vol. IX, No. 4, pp. 6-42, November 2011

Posted: 22 Aug 2012

See all articles by Elif C. Arbatli

Elif C. Arbatli

International Monetary Fund (IMF)

Kenji Moriyama

International Monetary Fund (IMF)

Multiple version iconThere are 2 versions of this paper

Date Written: August 21, 2012

Abstract

This paper estimates a small open-economy model for Egypt to analyze inflation, output dynamics and monetary policy during the period 2005-2010. The interest rate channel is found to be relatively weak in Egypt, complicating the use of interest rates as the immediate target of monetary policy. However, the paper also finds a significant level of persistence in the policy rate, making monetary policy pro-cyclical. More active use of interest rate policy is expected to improve domestic debt markets, and a gradual move towards inflation targeting can help support a successful disinflation strategy for Egypt.

Suggested Citation

Arbatli, Elif C. and Moriyama, Kenji, Estimating a Small Open-Economy Model for Egypt: Spillovers, Inflation Dynamics, and Implications for Monetary Policy (August 21, 2012). The IUP Journal of Monetary Economics, Vol. IX, No. 4, pp. 6-42, November 2011, Available at SSRN: https://ssrn.com/abstract=2133177

Elif C. Arbatli (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Kenji Moriyama

International Monetary Fund (IMF) ( email )

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
281
PlumX Metrics