The impact of monetary policy on inflation in Egypt from 1981 to 2019: An Econometric analysis

Document Type : Original Article

Authors

1 Faculty of African Graduate Studies - Cairo University

2 Faculty of Commerce, Aswan University

Abstract

The impact of monetary policy on inflation in Egypt from 1981 to 2019: An Econometric analysis

This paper aims to evaluate the role of monetary policy with its different tools in affecting inflation rate in Egypt, using autoregressive distributed lag Bounds test Approach on the Egyptian time series macroeconomic data for the period (1981-2019).
The study found that the inflation in Egypt is more correlated in the long run with the public deficit rather than the increase in the money supply. According to the analysis, inflation in Egypt is basically due to the structural unbalances in the Egyptian economy. This in in addition to the external or exported inflation in which the increases in import prices affected the domestic price levels. And thus, monetary policy alone could not affect inflation rate in Egypt unless it associated with economic policy targeting these structural imbalances in the Egyptian economy.

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