An Inflation Targeting Regime in Egypt: A Feasible Option?
Tarek Ghalwash
DOI: 10.4236/me.2010.12009   PDF    HTML     6,675 Downloads   12,491 Views   Citations

Abstract

This paper addresses first whether scientific evidence—theoretical and empirical—exists to support the inflation targeting regime and, secondly whether inflation target is worthwhile for Egypt. The method in this paper builds on a literature review of the theoretical and empirical research in the field of economics. Our conclusion shows that there is incomplete evidence from a number of countries supporting the inflation targeting regime as an effective monetary policy framework for the achievement of macroeconomic stability. The paper concludes that the Central Bank of Egypt and the Egyptian economy is not yet ready for the implementation of an inflation targeting regime.

Share and Cite:

Ghalwash, T. (2010) An Inflation Targeting Regime in Egypt: A Feasible Option?. Modern Economy, 1, 89-99. doi: 10.4236/me.2010.12009.

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1] F. Kydland and E. Prescott, “Rules Rather Than Discretion: The Inconsistency of Optimal Plans,” Journal of Political Economy, Vol. 85, No. 3, 1977, pp. 473492.
[2] S. Roger and M. Stone, “On Target? The International Experience with Achieving Inflation Targets,” IMF Working Paper WP/05/163, Washington D.C., 2005.
[3] L. Ball and N. Sheridan, “Does Inflation Targeting Matter?” In: B.S. Bernanke and M. Woodford, Eds., the InflationTargeting Debate, University of Chicago Press, Chicago, 2005, pp. 249276.
[4] R. Almashat, “Monetary Policy in Egypt: A Retrospective and Preparedness of Inflation Targeting,” ECES Working Paper, No. 134, 2008.
[5] I. L. Awad, “Is Egypt Ready to Apply Inflation Targeting Regime?” Review of Economic and Business Studies, No. 2, 2008.
[6] G. Debelle and C. H. Lim, “Preliminary Considerations of an Inflation Targeting Framework for the Philippines,” IMF Working Paper WP/98/39, Washington D.C., March 1998.
[7] P. R. Masson, M. A. Savastano and S. Sharma, “The Scope for Inflation Targeting in Developing Countries,” IMF Working Paper WP/97/130, Washington D.C., October 1997.
[8] E. Tutar, “Inflation Targeting in Developing Countries and Its Applicability to the Turkish Economy,” An Unpublished M. A. Economics Thesis Submitted to the Faculty of the Virginia Polytechnic Institute and State University Blacksburg, Virginia, 2002.
[9] E. Truman, “Inflation Targeting in the World Economy,” Institute for International Economics, Washington D.C., 2003.
[10] G. Bakradze and A. Billmeier, “Inflation Targeting in Georgia: Are We There Yet?” IMF Working Paper WP /07/193, International Monetary Fund, Washington D.C., 2007.
[11] L. Leiderman and L.E.O. Svensson, “Inflation Targets,” Centre of Economic Policy Research, London, 1995.
[12] H. Schmidt and F. Mishkin, “Monetary Policy under Inflation Targeting,” Central Bank of Chile, Santiago, 2005.
[13] B. S. Bernanke and F. S. Mishkin, “Inflation Targeting: A New Framework for Monetary Policy?” Journal of Economic Perspectives, Vol. 11, No. 2, pp. 97116.
[14] T. G. Petursson, “Exchange Rate or Inflation Targeting in Monetary Policy?” Center Bank of Iceland Monthly Bulletin, Vol. 2000, No. 1, 2000, pp. 3645.
[15] U. Hazirolan, “Inflation Targeting: Japanese Case and Prospects for Turkey,” Undersecreteriat of the Treasury, Ankara, 1999.
[16] F. S. Mishkin, “Issues in Inflation Targeting, Price Stability and the LongRun Target for Monetary Policy,” Ottawa, Bank of Canada, 2001.
[17] L. Meyer, “Does Money Matter?” Federal Reserve Bank, St. Louis, 2001.
[18] F. S. Mishkin and K. SchmidtHebbel, “A decade of inflation targeting in the world: What do we know and what do we need to know?” In: F. S. Mishkin Ed., Monetary Policy Strategy, The MIT Press, Cambridge, Massachusetts, 2007, pp. 117219.
[19] V. Corbo, M.O. Landerrretche and H. K. Schmidt, “Does Inflation Targeting Make a Difference?” In: N. Loayza and R. Saito Eds., Inflation Targeting: Design, Performance, Challenges, Central Bank of Chile, Santiago, 2002, pp. 221270.
[20] G. Jonsson, “The Relative Merits and Implications of Inflation Targeting for South Africa,” IMF Working Paper WP/99/116, Washington D.C., August 1999.
[21] U. Hazirolan, “Inflation Targeting: Japanese Case and Prospects for Turkey,” Undersecreteriat of the Treasury, Ankara, 1999.
[22] F. Mishkin and H. K. Schmidt, “One Decade of Inflation Targeting in the World: What do We Know and What do We Need to Know?” In: N. Loayza and R. Soto Eds., Inflation Targeting: Design, Performance, Challenges, Central Bank of Chile, Santiago, 2002, pp. 171219.
[23] J. M. Neumann and J. von Hagen, “Does Inflation Targeting Matter?” Federal Reserve Bank of St. Louis Review, Vol. 84, No. 4, 2002, pp. 127148.
[24] V. Corbo, M.O. Landerrretche and K. SchmidtHebbel, “Does Inflation Targeting Make A Difference?” In: N. Loayza and R. Saito, Eds., Inflation Targeting: Design, Performance, Challenges, Central Bank of Chile, Santiago, .
[25] L. Ball and N. Sheridan, “Does Inflation Targeting Matter?” In: B. S. Bernanke and M. Woodford Eds., The InflationTargeting Debate, University of Chicago Press, 2005, pp. 249276.
[26] M. J. Dueker and A. M. Fischer, “Do Inflation Targeters Outperform NonTargeters?” Federal Reserve Bank of St. Louis Review, Vol. 88, No. 5, 2006, pp. 431450.
[27] L. Svensson, “Inflation Targeting,” In: L. Blum and S. Durlauf, Eds., The New Palgrave Dictionary of Economics, 2nd Edition, 2007.
[28] M. Dotsey, “A Review of Inflation Targeting in Developed Countries,” Federal Reserve Bank of Philadelphia Business Review, No. Q3, 2006, pp. 1020.
[29] S. Lin and H. Ye, “Does Inflation Targeting Really Make a Difference? Evaluating the Treatment Effect of Inflation Targeting in Seven Industrial Countries,” Journal of Monetary Economics, Vol. 54, No. 8, 2007, pp. 2521 2533.
[30] C. E. Walsh, “Inflation Targeting: What Have We Learned?” International Finance, Vol. 12, No. 2, 2009, pp. 195233.
[31] C. Gon?alves and A. Carvalho, “Inflation Targeting Matters: Evidence from OECD Economics’ Sacrifice Ratios,” Journal of Money, Credit and Banking, Vol. 41, No. 1, 2009, pp. 233243.
[32] A. Angeriz and P. Arestis, “Assessing Inflation Targeting through Intervention Analysis,” Oxford Economic Papers, Vol. 60, No. 2, 2008, pp. 293317.
[33] Batini, Nicoletta, and D. Laxton, “Under What Conditions Can Inflation Targeting Be Adopted? The Experience of Emerging Markets,” Working Papers Central Bank of Chile, No. 406, Central Bank of Chile, 2005.
[34] Vega, Marco, and Diego Winkelried, “Inflation Targeting and Inflation Behavior: A Successful Story? International Journal of Central Banking, Vol. 1, No. 3, 2005, pp. 153 175.
[35] C. Goncalves and J. M. Salles, “Inflation Targeting in Emerging Economies: What do the Data Say?” Journal of Development Economics, Vol. 85, No. 12, 2008, pp. 312318.
[36] R. D. Brito and B. Bystedt, “Inflation Targeting in Emerging Economies: Panel Evidence,” Journal of Development Economics, Vol. 91, No. 2, 2009, pp. 198210.
[37] G. Debelle and S. Fischer, “How Independent Should a Central Bank be?” In: J. C. Fuhrer Ed., Goals, Guidelines and Constraints Facing Monetary Policymakers, Federal Reserve Bank, Boston, Conference Series No. 38, 1994, pp. 195221.
[38] A. Chandavarkar, “Central Banking in Developing Countries,” Macmillan Press LTD, New York, 1996.
[39] S. Cevik, “When a Prime Minister Makes Monetary Policy,” Morgan Stanley Report about Egypt, 2007. www. morganstanley.com/views/gef/archive/2007/20070328W ed.html
[40] L. Svensson, “Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets,” European Economic Review, Vol. 41, No. 6, 1997, pp. 11111146.
[41] B. S. Bernanke and F. S. Mishkin, “Inflation Targeting: A New Framework for Monetary Policy?” Journal of Economic Perspectives, Vol. 11, No. 2, 1997, pp. 97116.
[42] IMF, “Arab Republic of Egypt: Report on the Obse rvance of Standards and CodesData Module,” IMF Country Report, No. 05/238, Washington DC, 2005.
[43] J. Gottschalk and D. Moore, “Implementing Inflation Targeting Regimes: The Case of Poland,” Journal of Comparative Economics, Vol. 29, No. 1, March 2001, pp. 2439.
[44] G. Bakradze and A. Billmeier, “Inflation Targeting in Georgia: Are We There Yet?” IMF Working Paper WP /07/193, International Monetary Fund, Washington D.C., 2007.

Copyright © 2024 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.