The influence of floating exchange rate on economics development in Egypt until 2021

Abstract

The decision to float the currency is one of the important decisions taken by the state on November 3, 2016; this date is considered an important date for the occurrence of many important events that affected people. Some see these effects as negative and others see them as positive, but the real effects appear on the short run and become clear on the long run, the positive effects appear only through the development of a long-run program. The state must adopt this program to increase exports of high value. Courageous policies are required for this decision to succeed and for the state to reach what it aspires to, so in in this paper, the authors attempts to shed light on the important effects of floating the Egyptian pound, by studying the effects of pricing the national currency before and after the flotation, to find out whether this flotation has negative or positive impact on the economic growth of the Egyptian state. Real Exchange Behavior and Evidence from Egypt, Jordan, Morocco, and Tunisia i , it examines the effect of the real exchange rate misalignment (RERMIS) on the economic growth Morocco, and Tunisia. The paper constructs three measures of exchange rate based on purchasing power parity; a black market exchange rate; and a structured model. The empirical investigation confirmed the negative effect RERMIS on growth, using all measures of RERMIS, as predicted by growth models. The results also highlighted the role of other relationship between rate and The paper uses a structural vector auto-regression (SVAR) model, drawing on Bernanke (1986) and Sims (1986), to empirically examine and analyze the pass-through of exchange rate fluctuations to domestic prices in Egypt.