Much Ado about the Egyptian Pound: Exchange Rate Misalignment and the Path Towards Equilibrium

Noureldin, Diaa

doi:10.1515/rmeef-2018-0002

Cited by 8 publications

(9 citation statements)

References 29 publications

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“…Other variables derive from the Doing Business dataset, the World Development Indicators, and the Centre des Etudes Prospectives et d'Information Internationales (CEPII) gravity dataset. The real effective exchange rate derives from two sources (Darvas, 2012;Noureldin, 2017) that have been used to check the robustness of our results. Exchange rate misalignment also comes from Noureldin (2017).…”

Section: Methodsmentioning

confidence: 99%

“…The real effective exchange rate derives from two sources (Darvas, 2012;Noureldin, 2017) that have been used to check the robustness of our results. Exchange rate misalignment also comes from Noureldin (2017).…”

Section: Methodsmentioning

confidence: 99%

“…reported period compared to its trading partner countries. Figure 7 shows two other measures for the exchange rate development, namely, the REER (REER2) and exchange rate misalignment (Misal) estimated by Noureldin (2017). It is clear that the two measures of REER exhibited the same pattern between 2005 and 2016.…”

Section: The Effective Exchange Ratesmentioning

confidence: 96%

“…Scatter plots are drawn between the variables capturing the extensive and intensive margins and the exchange rate. The exchange rate is measured by the REER (calculated by Darvas, 2012) and the exchange rate misalignment (calculated by Noureldin, 2017). Figures 11-14 tackle the extensive trade margin.…”

Section: Trade Margins and Exchange Ratementioning

confidence: 99%

“…Figure16| Quantity and misalignment. Source: Constructed by the authors usingDarvas (2012),Noureldin (2017) and the General Organization for Import and Export Control (GOEIC) dataset.…”

mentioning

confidence: 99%

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How Do Trade Margins Respond to Exchange Rate? The Case of Egypt1

Zaki¹,

Abdallah²,

Sami³

2019

JAT

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This paper examines the effect of the exchange rate devaluation on the quantity and value of exports (intensive margin of trade), as well as the ability to export new products and/or venture into new export markets (extensive margin of trade). Using monthly firm-level and sector-level data for the period 2005-2016, the study is applied to Egypt, which appears to be an interesting case to investigate considering several changes that have occurred in its exchange rate regime. The exchange rate is measured by the real effective exchange rate and exchange rate misalignment. The results of the intensive margin show that a depreciation of the real exchange rate (RER) increases the value of exports without affecting the quantity of exports, highlighting the fact that the price effect is more significant than the quantity effect: depreciation lowers the foreign currency price of exports, but does not increase the quantity of exports. The response of the extensive margin shows that both the number of destinations and the number of products respond positively to the exchange rate depreciation. At the sectoral level, the intensive margin seems to matter for some products more than others. Indeed, the most beneficial products are those that are sensitive to RER depreciations and for which Egypt has a comparative advantage, such as fruits and vegetables, apparel and clothing, fibers, mineral fuels and oils, and some chemical products. At the destination level, European countries seem to be the most sensitive.

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Section: Methodsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Section: The Effective Exchange Ratesmentioning

confidence: 96%

Section: Trade Margins and Exchange Ratementioning

confidence: 99%

“…Figure16| Quantity and misalignment. Source: Constructed by the authors usingDarvas (2012),Noureldin (2017) and the General Organization for Import and Export Control (GOEIC) dataset.…”

mentioning

confidence: 99%

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How Do Trade Margins Respond to Exchange Rate? The Case of Egypt1

Zaki¹,

Abdallah²,

Sami³

2019

JAT

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External debt vulnerability in emerging markets and developing economies during the COVID-19 shock

El-Khishin

Mohieldin

2021

REPS

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Purpose This paper aims to assess to what extent the COVID-19 shock is expected to create a debt crisis in emerging markets and developing economies (EMDEs) through two main questions: what are the main determinants of EMDEs external vulnerability? How vulnerable are EMDEs to the current COVID-19 shock compared to the global financial crisis (GFC)? Design/methodology/approach In addition to a descriptive analysis of the determinants of EMDEs external vulnerability, this paper designs two sub-indices of overindebtedness and financial fragility that capture EMDEs’ distinct characteristics. The two sub-indices together illustrate the overall external vulnerability to the current shock. Findings EMDEs are more vulnerable compared to the GFC era. Current debt threats arise mainly from debt architecture and the domination of volatile debt forms – primarily foreign currency-denominated bonds. Excessive fear of debt-deflation spirals after the GFC prompted EMDEs to expand their growth trajectories through a pattern of cheap private lending, loose measures and unmonitored fiscal expansion. Research limitations/implications Conclusive post-crisis data are still unavailable. Practical implications EMDEs need to balance between temporary accommodative measures and a post-shock policy mix that prevent a deflation spiral without worsening indebtedness and financial fragility. Moreover, financial prudence in face of growing credit demand is crucial, particularly in light of the monetary expansion and injected liquidity. Originality/value The indices offer a framework for examining external vulnerability in EMDEs based on theoretical and historical revisions, IMF benchmarks and EMDEs specific debt characteristics. The indices components can be offered for empirical examination in separate future research once conclusive data become available.

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