Inflation Inertia in Egypt and its Policy Implications

July 1, 2011

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper investigates the degree of inflation inertia in Egypt and its determinants using the cross country data consisting of over 100 countries. Medium-unbiased estimator of inflation inertia in Egypt is high compared to other countries, as indicated by its location around the upper quartile among the sample. The cross country analysis indicates that counter-cyclical macroeconomic policy and fiscal consolidation are a key to reduce inflation inertia and the costs of disinflation.

Subject: Disinflation, Inflation, Inflation targeting, Monetary policy, Monetary policy frameworks, Output gap, Prices, Production

Keywords: Disinflation, emerging market, Global, Inflation, inflation expectation, inflation inertia, inflation persistency, Inflation targeting, inflation targeting monetary policy framework, monetary policy, Monetary policy frameworks, Output gap, output gap persistency, shock volatility, WP

Pages:
26
Volume:
2011
DOI:
https://doi.org/10.5089/9781455297733.001
Issue:
160
Series:
Working Paper No. 2011/160
Stock No:
WPIEA2011160
ISBN:
9781455297733
ISSN:
1018-5941

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