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The Elasticities Approach to Egypt’s Balance of Payments and Equilibrium Exchange Rate

Author

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  • Lord, Montague J.

Abstract

The study aims to calculate Egypt’s real effective exchange rate at both the bilateral and multilateral levels, estimates the effect of real cross-rate movements on trade in goods and services and on foreign direct investment, and determines the fundamental equilibrium exchange rate for Egypt’s balance of payments. As part of this process, the study specifies and estimates a balance of payments model with considerable disaggregation in its trade components. The model provides a theory-consistent representation of the behavioral relationships in the balance of payments, and it offers forecasting and policy simulation capabilities targeted to the needs of the Government of Egypt. As such, the model serves a dual purpose. First, it provides a framework for making rational and consistent predictions about the standard components of the balance of payments. Secondly, it offers a means of quantitatively evaluating the impact of exchange rate policies on the balance of payments.

Suggested Citation

  • Lord, Montague J., 1999. "The Elasticities Approach to Egypt’s Balance of Payments and Equilibrium Exchange Rate," MPRA Paper 41166, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:41166
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    File URL: https://mpra.ub.uni-muenchen.de/41166/1/MPRA_paper_41166.pdf
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    More about this item

    Keywords

    Egypt; balance of payments; exchange rate policies; macroeconometri model;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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