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Challenges For Adopting Inflation Targeting Regime In Egypt

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  • Ibrahim AWAD

    () (College of Business in Rabigh-King Abdulaziz University - Saudi Arabia, Qatar University)

Abstract

This study intends to investigate challenges facing the CBE for adopting IT regime. Through exploiting the experience of Czech Republic, Poland, and Brazil in the early days of their adopting IT the study underscores the following challenges; (i) A more active role to be played by the CBE is needed to convince decision-making circuits inside the government for the adoption of IT. (ii) The CBE should be factually independent. (iii) Coordination between monetary policy and fiscal policy should be established so that the inflation target given to the CBE is determined to ensure the government’s solvency. (iv) A satisfactory level of knowledge has to be acquired by the CBE concerning the following issues; the degree of the exchange rate pass-through effect, the level of real exchange rate, and both timing and effect of monetary transmission mechanisms. (v) Several questions are still unfulfilled concerning many issues (e.g. the measurement of price level that will be targeted, the design of the model that fits the Egyptian economy, variables included in the reaction function of the CBE, the reaction of the CBE to different shocks). (vi) Some institutional arrangements are urgently needed both to implement a household survey of inflation expectations and to improve and update the Egyptian statistics.

Suggested Citation

  • Ibrahim AWAD, 2013. "Challenges For Adopting Inflation Targeting Regime In Egypt," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 11, pages 59-81, June.
  • Handle: RePEc:aic:revebs:y:2013:i:11:awadi
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    References listed on IDEAS

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    1. Arminio Fraga & Ilan Goldfajn & André Minella, 2004. "Inflation Targeting in Emerging Market Economies," NBER Chapters,in: NBER Macroeconomics Annual 2003, Volume 18, pages 365-416 National Bureau of Economic Research, Inc.
    2. Guy Debelle & Miguel A Savastano & Paul R Masson & Sunil Sharma, 1998. "Inflation Targeting as a Framework for Monetary Policy," IMF Economic Issues 15, International Monetary Fund.
    3. Al-Shawarby, Sherine & Selim, Hoda, 2012. "Are international food price spikes the source of Egypt's high inflation ?," Policy Research Working Paper Series 6177, The World Bank.
    4. Ibrahim L. AWAD, 2011. "Assessing The Performance Of Monetary Policy Under Economic Reform And Structural Adjustment Program: The Case Of Egypt," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 7, pages 201-223, May.
    5. Ibrahim L. Awad, 2008. "Towards measurement of political pressure on central banks: the case of the central bank of egypt," Prague Economic Papers, University of Economics, Prague, vol. 2008(3), pages 254-275.
    6. Frederic S. Mishkin & Klaus Schmidt-Hebbel, 2001. "One Decade of Inflation Targeting in the World: What Do We Know and What Do We Need to Know?," NBER Working Papers 8397, National Bureau of Economic Research, Inc.
    7. Michael F. Bryan & Stephen G. Cecchetti, 1994. "Measuring Core Inflation," NBER Chapters,in: Monetary Policy, pages 195-219 National Bureau of Economic Research, Inc.
    8. Adam Gersl & Tomás Holub, 2006. "Foreign Exchange Interventions Under Inflation Targeting: The Czech Experience," Contemporary Economic Policy, Western Economic Association International, vol. 24(4), pages 475-491, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    monetary policy; Inflation targeting regime; Adopting inflation targeting in Egypt;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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