IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/1977.html
   My bibliography  Save this paper

Economic reforms in Egypt : emerging patterns and their possible implications

Author

Listed:
  • Al-Mashat, Rania A.
  • Grigorian, David A.

Abstract

Since Egypt's government introduced an economic reform and structural adjustment program in 1991, Egypt's Central Bank has been engaged in massive sterilized interventions to support the fixed nominal exchange rate regime. The result of this process, however, has been an increasing fiscal burden, expressed in the volume of outstanding treasury bills and the interest payments on the stock of outstanding debt. The authors present evidence of this and point out new channels for increased costs through further sterilization. In addition to conventional sources of increased costs, such as differentials between foreign and domestic real interest rates, the declining popularity of domestic debt might increase the short-term interest rate, thus increasing the cost of servicing newly issued debt. The authors examine the possibility of an increased debt burden because of attempts to roll over outstanding debt and extend its maturity. The authors explore the importance of measures involving interest rates in light of recent literature on balance of payments crises. They also explain the rationale behind the empirical assessment of the interest (inflation) rate sensitivity of monetary aggregates. Finally, they offer estimates of an aggregate money demand equation by introducing the contract-intensive money ratio as a measure of financial innovation.

Suggested Citation

  • Al-Mashat, Rania A. & Grigorian, David A., 1998. "Economic reforms in Egypt : emerging patterns and their possible implications," Policy Research Working Paper Series 1977, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1977
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1998/11/17/000178830_9811170352385/Rendered/PDF/multi0page.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Calvo, Guillermo A. & Reinhart, Carmen M. & Vegh, Carlos A., 1995. "Targeting the real exchange rate: theory and evidence," Journal of Development Economics, Elsevier, vol. 47(1), pages 97-133, June.
    2. Guillermo A. Calvo, 1998. "Varieties of Capital-Market Crises," International Economic Association Series, in: Guillermo Calvo & Mervyn King (ed.), The Debt Burden and its Consequences for Monetary Policy, chapter 7, pages 181-207, Palgrave Macmillan.
    3. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    4. Calvo, Guillermo A. & Reinhart, Carmen M. & Vegh, Carlos A., 1995. "Targeting the real exchange rate: theory and evidence," Journal of Development Economics, Elsevier, vol. 47(1), pages 97-133, June.
    5. Arrau, Patricio & De Gregorio, Jose & Reinhart, Carmen M. & Wickham, Peter, 1995. "The demand for money in developing countries: Assessing the role of financial innovation," Journal of Development Economics, Elsevier, vol. 46(2), pages 317-340, April.
    6. Siklos, Pierre L, 1993. "Income Velocity and Institutional Change: Some New Time Series Evidence, 1870-1986," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(3), pages 377-392, August.
    7. Reinhart, Carmen M. & Dunaway, Steven, "undated". "Dealing with Capital Inflows Are There Any Lessons?," WIDER Working Papers 295321, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    8. Guillermo A. Calvo, 1995. "Varieties of Capital-Market Crises," Research Department Publications 4008, Inter-American Development Bank, Research Department.
    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. Dina M. Yousri & Christian Richter, 2018. "Sociological challenges for Egypt’s development: 1981–2013," International Economics and Economic Policy, Springer, vol. 15(4), pages 727-742, October.
    2. Amal Nagah Elbeshbishi, . "Evaluating the World Bank's Role in Supporting Structural Adjustment in Developing Countries With Special Reference to Egypt," Fordham Economics Dissertations, Fordham University, Department of Economics, number 2000.1, June.

    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. Calvo, Guillermo A. & Mendoza, Enrique G., 1996. "Mexico's balance-of-payments crisis: a chronicle of a death foretold," Journal of International Economics, Elsevier, vol. 41(3-4), pages 235-264, November.
    2. Reinhart, Carmen & Vegh, Carlos, 1994. "Inflation stabilization in chronic inflation countries: The empirical evidence," MPRA Paper 13689, University Library of Munich, Germany.
    3. Gillman M. & Siklos & P.L.Silver & J.L., 1996. "Money Velocity with Costly Credit," Department of Economics - Working Papers Series 515, The University of Melbourne.
    4. Asea, Patrick K & Reinhart, Carmen M, 1996. "Economic Growth and Economic Consequences of External Shocks in Sub-Saharan Africa: Introduction," Journal of African Economies, Centre for the Study of African Economies, vol. 5(3), pages 1-6, October.
    5. Akhand Akhtar Hossain, 2015. "The Evolution of Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 14611.
    6. Reinhart, Carmen M. & Smith, R. Todd, 2002. "Temporary controls on capital inflows," Journal of International Economics, Elsevier, vol. 57(2), pages 327-351, August.
    7. Uribe, Martin, 2003. "Real exchange rate targeting and macroeconomic instability," Journal of International Economics, Elsevier, vol. 59(1), pages 137-159, January.
    8. Masudul Hasan Adil & Neeraj Hatekar & Pravakar Sahoo, 2020. "The Impact of Financial Innovation on the Money Demand Function: An Empirical Verification in India," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 14(1), pages 28-61, February.
    9. Masudul Hasan Adil & Aditi Chaubal, 2024. "Money demand stability in India: allowing for an unknown number of breaks," Empirical Economics, Springer, vol. 67(3), pages 941-983, September.
    10. Ibrahim Chowdhury, 2004. "Sources of exchange rate fluctuations: empirical evidence from six emerging market countries," Applied Financial Economics, Taylor & Francis Journals, vol. 14(10), pages 697-705.
    11. Luis-Felipe Zanna, 2009. "Ppp Exchange Rate Rules, Macroeconomic (In)Stability, And Learning," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(4), pages 1103-1128, November.
    12. Ozlem Aytac, 2008. "A Model of Exchange-Rate-Based Stabilization for Turkey," CAEPR Working Papers 2008-001, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    13. Frankel, Jeffrey A & Schmukler, Sergio L, 2000. "Country Funds and Asymmetric Information," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 5(3), pages 177-195, July.
    14. Prof.Dr. Cevat GERNI & Doc.Dr. O. Selcuk EMSEN & Dr. M. Kemal DEGER, 2005. "Erken Uyari Sistemlerý Yoluyla Turkiye’Deki Ekonomik Krizlerin Analizi," Istanbul University Econometrics and Statistics e-Journal, Department of Econometrics, Faculty of Economics, Istanbul University, vol. 2(1), pages 39-62, November.
    15. Aivazian, Sergei & Stepanov, Vladimir & Kozlova, Maria, 2006. "Measuring the Synthetic Categories of Quality of Life in a Region and Identification of Main Trends to Improve the Social and Economic Policy (Samara Region and its Constituent Territories)," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 2(2), pages 18-84.
    16. Edwards, Sebastian & Vegh, Carlos A., 1997. "Banks and macroeconomic disturbances under predetermined exchange rates," Journal of Monetary Economics, Elsevier, vol. 40(2), pages 239-278, October.
    17. Chia-Hsun Hsieh & Shian-Chang Huang, 2012. "Time-Varying Dependency and Structural Changes in Currency Markets," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(2), pages 94-127, March.
    18. Nouriel Roubini & Paul Wachtel, 1997. "Current Account Sustainability in Transition Economies," Working Papers 97-03, New York University, Leonard N. Stern School of Business, Department of Economics.
    19. Konstantin Styrin & Oleg Zamulin, 2012. "A Real Exchange Rate Based Phillips Curve," Working Papers w0179, New Economic School (NES).
    20. Pierre-Olivier Gourinchas & Rodrigo Valdes & Oscar Landerretche, 2001. "Lending Booms: Latin America and the World," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 47-100, January.

    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:wbk:wbrwps:1977. 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: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    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.