IDEAS home Printed from https://ideas.repec.org/a/wsi/medjxx/v01y2009i01ns179381200900005x.html
   My bibliography  Save this article

Inflation And Growth In Egypt: Is There A Threshold Effect?

Author

Listed:
  • HALA ABOU-ALI

    (Faculty of Economics and Political Science, (FEPS), Cairo University, Giza, Egypt)

  • HANAA KHEIR-EL-DIN

    (Egyptian Center for Economic Studies, (ECES) and FEPS, Cairo University, Egypt)

Abstract

This paper addresses the relationship between inflation and growth in Egypt for the last quarter century. Two distinct sub-periods are observed: somewhat higher and more volatile GDP growth rate is associated with higher inflation prior to 1990/1991; from this year onwards, lower and less volatile growth is associated with significantly lower inflation. It was found that the impact of inflation on GDP growth is not significantly different between the two periods. Testing for non-linear effects of inflation on growth in Egypt, it appears that there is no threshold of inflation, beyond which it is harmful to growth. To the contrary, the findings suggest that inflation at any level negatively impacts economic growth. It is thus beneficial to focus monetary policy towards maintaining price stability.

Suggested Citation

  • Hala Abou-Ali & Hanaa Kheir-El-Din, 2009. "Inflation And Growth In Egypt: Is There A Threshold Effect?," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 1(01), pages 59-78.
    • Handle: RePEc:wsi:medjxx:v:01:y:2009:i:01:n:s179381200900005x
    DOI: 10.1142/S179381200900005X
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S179381200900005X
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S179381200900005X?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. By Mohsin S. Khan & Abdelhak S. Senhadji, 2001. "Threshold Effects in the Relationship Between Inflation and Growth," IMF Staff Papers, Palgrave Macmillan, vol. 48(1), pages 1-1.
    2. Atish Ghosh & Steven Phillips, 1998. "Warning: Inflation May Be Harmful to Your Growth," IMF Staff Papers, Palgrave Macmillan, vol. 45(4), pages 672-710, December.
    3. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119, Decembrie.
    4. Dudley Seers, 1962. "A Theory Of Inflation And Growth In Under-Developed Economies Based On The Experience Of Latin America," Oxford Economic Papers, Oxford University Press, vol. 14(2), pages 173-195.
    5. Michael Sarel, 1996. "Nonlinear Effects of Inflation on Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 199-215, March.
    6. Mr. Peter Doyle & Mr. Peter F. Christoffersen, 1998. "From Inflation to Growth: Eight Years of Transition," IMF Working Papers 1998/100, International Monetary Fund.
    7. Stanley Fischer, 1983. "Inflation and Growth," NBER Working Papers 1235, National Bureau of Economic Research, Inc.
    8. Xavier X. Sala-i-Martin, 1997. "I Just Ran Four Million Regressions," NBER Working Papers 6252, National Bureau of Economic Research, Inc.
    9. Young, Mary, 1997. "United States and Canada - Native Americans and Wage Labor: Ethnohistorical Perspectives. Edited by Alice Littlefield and Martha C. Knack. Norman and London: University of Oklahoma Press, 1996. Pp. x,," The Journal of Economic History, Cambridge University Press, vol. 57(2), pages 556-557, June.
    10. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, vol. 87(2), pages 178-183, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Muhammad Salman Ahmad & Elżbieta Izabela Szczepankiewicz & Dai Yonghong & Farid Ullah & Ihsan Ullah & Windham Eugene Loopesco, 2022. "Does Chinese Foreign Direct Investment (FDI) Stimulate Economic Growth in Pakistan? An Application of the Autoregressive Distributed Lag (ARDL Bounds) Testing Approach," Energies, MDPI, vol. 15(6), pages 1-16, March.
    2. Joseph Magnus Frimpong & Eric Fosu Oteng-Abayie, 2010. "When is Inflation Harmful? Estimating the Threshold Effect for Ghana," American Journal of Economics and Business Administration, Science Publications, vol. 2(3), pages 232-239, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ibarra, Raul & Trupkin, Danilo R., 2016. "Reexamining the relationship between inflation and growth: Do institutions matter in developing countries?," Economic Modelling, Elsevier, vol. 52(PB), pages 332-351.
    2. López-Villavicencio, Antonia & Mignon, Valérie, 2011. "On the impact of inflation on output growth: Does the level of inflation matter?," Journal of Macroeconomics, Elsevier, vol. 33(3), pages 455-464, September.
    3. Manamba EPAPHRA, 2016. "Nonlinearities in Inflation and Growth Nexus: The Case of Tanzania," Journal of Economics and Political Economy, KSP Journals, vol. 3(3), pages 471-512, September.
    4. Jesús Crespo Cuaresma & Maria Antoinette Silgoner, 2004. "Groth effects of inflation in Europe: How low is too low, how high is too high?," Vienna Economics Papers 0411, University of Vienna, Department of Economics.
    5. Mothuti Gosego & Phiri Andrew, 2018. "Inflation-Growth Nexus in Botswana: Can Lower Inflation Really Spur Growth in the Country?," Global Economy Journal, De Gruyter, vol. 18(4), pages 1-11, December.
    6. Jesús Crespo Cuaresma & Maria Silgoner, 2014. "Economic Growth and Inflation in Europe: A Tale of Two Thresholds," Journal of Common Market Studies, Wiley Blackwell, vol. 52(4), pages 843-860, July.
    7. Jean-Baptiste Nkume, 2014. "Optimal Inflation Threshold for Economic Growth in Malawi," Journal of Economics and Behavioral Studies, AMH International, vol. 6(12), pages 933-946.
    8. Erdenebat Bataa & Andrew Vivian & Mark Wohar, 2019. "Changes in the relationship between short‐term interest rate, inflation and growth: evidence from the UK, 1820–2014," Bulletin of Economic Research, Wiley Blackwell, vol. 71(4), pages 616-640, October.
    9. Burdekin, Richard C.K. & Denzau, Arthur T. & Keil, Manfred W. & Sitthiyot, Thitithep & Willett, Thomas D., 2004. "When does inflation hurt economic growth? Different nonlinearities for different economies," Journal of Macroeconomics, Elsevier, vol. 26(3), pages 519-532, September.
    10. Eller, Markus & Haiss, Peter & Steiner, Katharina, 2006. "Foreign direct investment in the financial sector and economic growth in Central and Eastern Europe: The crucial role of the efficiency channel," Emerging Markets Review, Elsevier, vol. 7(4), pages 300-319, December.
    11. Ndoricimpa, Arcade & Osoro, Nehemiah & Kidane, Asmerom, 2016. "Threshold effects of inflation on economic growth in selected African regional economic communities: Evidence from a dynamic panel threshold modeling," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 41, pages 5-23.
    12. Raphael Espinoza, 2012. "Factor Accumulation and the Determinants of TFP in the GCC," OxCarre Working Papers 094, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    13. Marcelo Ochoa & Walter Orellana Rocha, 2002. "Una aproximación no lineal a la relación inflación - crecimiento económico: Un estudio para América Latina," Revista de Análisis del BCB, Banco Central de Bolivia, vol. 5(2), pages 87-126, December.
    14. Zheng, Zhijie & Huang, Chien-Yu & Yang, Yibai, 2021. "Inflation And Growth: A Non-Monotonic Relationship In An Innovation-Driven Economy," Macroeconomic Dynamics, Cambridge University Press, vol. 25(5), pages 1199-1226, July.
    15. Hossain, A., 2005. "Granger-Causality Between Inflation, Money Growth, Currency Devaluation and Economic Growth in Indonesia, 1951-2002," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 2(3), pages 45-68.
    16. Ndoricimpa Arcade, 2017. "Working Paper 249 - Threshold Effects of Inflation on Economic Growth in Africa: Evidence from a Dynamic Panel Threshold Regression," Working Paper Series 2359, African Development Bank.
    17. Stephanie Kremer & Alexander Bick & Dieter Nautz, 2013. "Inflation and growth: new evidence from a dynamic panel threshold analysis," Empirical Economics, Springer, vol. 44(2), pages 861-878, April.
    18. Tsionas, Efthymios G. & Christopoulos, Dimitris K., 2003. "Maastricht convergence and real convergence: European evidence from threshold and smooth transition regression models," Journal of Policy Modeling, Elsevier, vol. 25(1), pages 43-52, January.
    19. Hossain, A., 2006. "Sources of Economic Growth in Indonesia, 1966-2003," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(2).
    20. Jesús Crespo Cuaresma & Maria Antoinette Silgoner, 2004. "Growth effects of inflation in Europe: How low is too low, how high is too high?," Vienna Economics Papers vie0411, University of Vienna, Department of Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:medjxx:v:01:y:2009:i:01:n:s179381200900005x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/medj/medj.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.