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Is Egypt Ready to Apply Inflation Targeting Regime?

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  • Ibrahim L. AWAD

    (Institute of Economic Studies, Charles University, Prague)

Abstract

The purpose of this study is to answer the question ‘Is Egypt ready to apply IT regime? The researcher presumed that; a country is ready to apply IT regime once the prerequisites for IT regime are available. Comparing the current position of Egypt with some emerging market economies, the conclusions point to the following: (i) the CBE is not factually independent. Although the CBE has been granted legal independent instrument, the existence of the government representatives as voting members in the MPC and the coercion of the CBE to extend finance to the government are two elements sufficient to underpin the de facto independence of the CBE; (ii) inflation targets are expected to be missed under the possibility that the behavior of the CBE will be similar to the behavior of the majority of emerging market economies, i.e. adopting IT regime whereas implicitly targeting FX rate; and (iii) the current level of knowledge about some central issues of designing IT regime and the quality of the available data are not satisfactory to support the adoption of IT regime. The study concluded that Egypt is still not ready to apply IT regime.

Suggested Citation

  • Ibrahim L. AWAD, 2008. "Is Egypt Ready to Apply Inflation Targeting Regime?," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 2, pages 141-159, November.
    • Handle: RePEc:aic:revebs:y:2008:i:2:awadi
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    References listed on IDEAS

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    Cited by:

    1. Marwa A. Elsherif, 2016. "Exchange Rate Volatility and Central Bank Actions in Egypt: Generalized Autoregressive Conditional Heteroscedasticity Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 1209-1216.
    2. Nora Abu Asab & Juan Carlos Cuestas, 2021. "Towards adopting inflation targeting: The credibility and limitations of monetary policy under the fixed exchange system—the case of Jordan," The World Economy, Wiley Blackwell, vol. 44(1), pages 262-285, January.

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    More about this item

    Keywords

    Inflation Targeting Regime; Prerequisites for Inflation Targeting regime; Inflation targeting in Egypt;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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