Date of Graduation

Spring 5-15-2020

Document Type


Degree Name

Master of Science in International and Development Economics (MSIDEC)


College of Arts and Sciences



First Advisor

Libo Xu


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.