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The Relationship between the De Facto Exchange Rate Regimes and Inflation in Egypt

Journal of Administrative and Economics Science

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Title The Relationship between the De Facto Exchange Rate Regimes and Inflation in Egypt
 
Creator Elhendawy, Emad Omar
 
Description The purpose of this study is to identify the relationship between de facto exchange rate regimeswhich have been followed in the Egyptian economy and the rate of inflation in the period 1974-2007. Itaddressed the theoretical and empirical studies that dealt with the relationship between exchange rateregimes and inflation and reviewed the de facto exchange rate regimes in Egypt. Since 1960, Egypt hadalready been applying two exchange rate regimes, the first exchange rate regime was a de facto crawlingband with multiple exchange rates and the presence of a parallel market exchange rate in the period 1974-1990. The second one was a moving band which began in 1991, according to the classification ofReinhart and Rogoff 2004. This paper tried to measure the relationship between the two exchange rateregimes, and the rate of inflation. The study found a significant relationship between exchange rateregimes and inflation in the period under study. The rate of inflation under the pegged moving bandregime of exchange rate increased by 4.81percent annually compared to the crawling band regime ofexchange rate with multiple exchange rates.The main cause of inflation in Egypt in the long term is the budget deficit, while the factors that limitinflation in the long term are spending on fixed capital formation, private consumption expenditure andgovernment consumption expenditure.Keywords: De facto Exchange Rate Regimes -Inflation - Cointegration Vector Error Correction -VarianceDecompositions -Impulse Response Functions.
 
Publisher Qassim University Academic Publishing and translation
 
Contributor —
 
Date 2013-02-12
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
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Format application/pdf
 
Identifier http://publications.qu.edu.sa/ojs/index.php/economic/article/view/607
 
Source Journal Of Administrative And Economics Science; Vol 6, No 1
 
Language eng
 
Relation http://publications.qu.edu.sa/ojs/index.php/economic/article/view/607/579