Boosting Economic Growth through Monetary Policy: An Empirical Study in Egypt (1991–2022)

Document Type : Original Article

Authors

1 Economics department, Faculty of Economics and Political Science, Cairo University, Giza, Egypt

2 University of Paris 1 Panthéon-Sorbonne, Paris, France

Abstract

For Egypt to meet the 17 Sustainable Development Goals (SDGs) by 2030, economic growth is an essential prerequisite. The Central Bank of Egypt can use monetary policy as a practical tool to achieve this goal. However, economists have differing opinions regarding the impact of monetary policy on economic growth. The present study assesses the association between monetary policy and economic growth in Egypt from 1991 to 2022, using the Vector Autoregression (VAR) and the Vector Error Correction (VECM) models. The models mentioned above are employed to investigate both the short-run dynamics as well as the long-run relationships. Our findings indicate that the money supply and domestic credit provided by banks in Egypt have a significant positive effect on economic growth, while the real interest rate has a significant negative impact in both the short run and the long run. Accordingly, Egypt should adopt a proactive and transformative monetary policy to achieve economic growth in particular and the SDGs in general.

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