Essays on the effectiveness of monetary policy in Egypt

This book consists of three empirical essays in evaluating the effects of monetary policy on macroeconomics variables in Egypt using macro and firm level data. The motivations of this study are evolved around the issues of the effectiveness of interest rate, bank lending and balance sheet channels of monetary policy, and the identification of monetary policy at macro and firm-level. The first essay investigates the effects of monetary policy and foreign shocks on output, inflation and exchange rate in Egypt. Monetary policy shocks are identified using non-recursive SVAR identification scheme by allowing the Central Bank of Egypt (CBE) set the interest rate after observing the current level of world oil price, foreign interest rate, domestic output, inflation and exchange rate. The empirical results revealed that monetary policy shocks through changes in interest rates have a significant effect on output, inflation and exchange rate. Moreover, the foreign shocks, namely world oil price, foreign output and foreign interest rate, also have significant effects on output, inflation and exchange rate.