Relative Price Adjustment and Inflation Dynamics: The Case of Egypt

Kheir-El-Din, Hanaa

doi:10.5743/cairo/9789774163036.003.0008

Cited by 3 publications

(1 citation statement)

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“…Some argue that higher IR can a negative effect on inflation, as it discourages investments in productive activities and slows down economic growth. If the economy is operating below its potential, an increase in IR could further dampen economic activity, leading to lower demand for goods and services that contributes to disinflationary or deflationary pressures as investigated by Noureldin (2008), Cochrane (2016), and Domit et al (2016). On the contrary, when IR is high, borrowing becomes more expensive, and individuals and businesses are less likely to take out loans for investment purposes.…”

Section: Resultsmentioning

confidence: 99%

Modelling Inflation Dynamics and Global Oil Price Shocks in OAPEC Countries: TVP-VAR

Elsherif

2024

IJEEP

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This paper aims to examine the dynamic pass-through effect of oil price shocks on inflation in OAPEC countries using quarterly data ranging from 1990:Q1 to 2022:Q4. The incorporation of the TVP-VAR model along with the Markov Chain Monte Carlo method with stochastic volatility estimation offers a robust framework for capturing the time-varying nature of the relationship. Additionally, the analysis of the Impulse Response Function provides valuable insights into the short-term and long-term dynamics following oil price shocks. The results demonstrate a significant positive pass-through effect of oil prices on inflation in the sample member states, with heterogeneous magnitude and persistence. These variations are attributed to diversity in oil dependency, exchange rate regimes, monetary policy frameworks and the degree of openness to global markets. The study suggests the need for effective inflation management strategies and appropriate policy responses to oil price fluctuations. Furthermore, policymakers may consider adjusting exchange rates, interest rates, or trade policies to manage inflationary pressures effectively.

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Section: Resultsmentioning

confidence: 99%