Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83315
Authors: 
Awad, Ibrahim L.
Year of Publication: 
2008
Series/Report no.: 
IES Working Paper 34/2008
Abstract: 
The purpose of this paper is to answer the question of whether the switching to the Inflation Targeting (IT) regime is necessary for the Egyptian case or not? Our judgment of applying IT regime in the Egyptian economy is established on doubled criterion. That is, the practical experience of the inflation targeters, and the efficiency of Monetary Targeting Regime (MTR) in the case of Egypt. Defining the efficiency of a monetary policy regime by the efficiency of the embedded nominal anchor to send the right message to all practitioners about the potential behavior of the price level, I assessed the efficiency of MTR in Egypt by measuring; whether there is a relationship between money and prices, the stability of the velocity of circulation, and the stability of the demand for money function. The study concluded that MTR is not efficient to tie down individuals expectations about the future path of inflation in Egypt. Taking into account that IT regime is a way to reform monetary policy and it does not worsen economic performance it becomes necessary for Egypt to switch to the IT regime once the prerequisites for IT regime have been met.
Subjects: 
inflation targeting
demand for money function
monetary policy in Egypt
JEL: 
E31
E41
E51
E52
E58
E59
Document Type: 
Working Paper
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