The Impact of Fiscal and Monetary Policies on Inflation Empirical Evidence from Egypt from 1990 to 2020

Document Type : Original Article

Authors

1 Head of international economics department at Egyptian Chinese University

2 International Economics Department, Faculty of Economics and International Trade, Egyptian Chinese University ECU, Cairo, Egypt

3 Faculty of Economics and International Trade, Egyptian Chinese University ECU, Cairo, Egypt

Abstract

This paper studies the impact of fiscal and monetary policies on inflation in Egypt. Using a sample period from 1990–2020, we investigated the relationship between both of them by using the ARDL Bounds test for the co-integration test, where the dependent variable is inflation and government expenditure, tax revenue, and money supply as independent variables, using the stationary test first and estimating the short- and long-run relation. The empirical study found that all variables have a positive and significant impact according to the co-integration bound test, and the ECM error correction model finds that there is long-run causality between variables. The study recommends that the best policy to get rid of inflation is discipline in monetary and fiscal policies.

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