Date of Graduation

Spring 5-15-2020

Document Type

Thesis

Degree Name

Master of Science in International and Development Economics (MSIDEC)

College/School

College of Arts and Sciences

Department/Program

Economics

First Advisor

Libo Xu

Abstract

This paper aims to identify the drivers of Egypt’s aggregate macro fluctuations during the period 2002-2013. In particular, the paper will empirically investigate the effects of the unexpected shocks to consumers’ preference, cost-push, technology, and monetary policy on the dynamic behavior of output growth, inflation, and short-term nominal interest rate. The paper estimates a dynamic stochastic general equilibrium (DSGE) model with sticky prices for Egypt within a New Keynesian framework. The paper uses maximum likelihood, with quarterly data of key macroeconomic variables: GDP, inflation rate, and nominal interest rate from year 2002q1 until 2013q4. We have found that preferences shocks are a major source of instability in output growth. Cost-push shock is the most important contributor to movements in inflation and short-term nominal interest. It appears to be that the preference, cost-push, and monetary policy shocks are more important than the technology shock in explaining the dynamic behavior of the macroeconomy.

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