الفهرس 
Chapter 1. IntroductionOnly 14 pages are availabe for public view
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Abstract
As one of the macroeconomic policies packages, monetary policy aims to achieve the national economy’s ultimate objectives (i.e., stabilizing the real gross domestic product (GDP), employment, and long-run inflation). To this end, monetary policy potentially targets one of the policy regimes (anchors) : the nominal interest rate, inflation, nominal GDP (NGDP), or the nominal exchange rate. At a specific time, policymakers cannot target more than one regime. That is, choosing a specific regime lets other variables change freely. Besides, no specific regime is compatible for all economies all the time. It varies through time and across countries. Investigating the appropriate monetary policy regime for developing economies in general and the Egyptian economy, in particular, is relatively rare. To the best, previous studies conducted for those economies only investigate a specific policy regime instead of comparing many of them. Conducting a comparative analysis, the current study aims at empirically analyzing and exploring the four policy anchors stated above for the Egyptian economy over the period (1976-2019) to specify which anchor is the most appropriate in light of the Egyptian macroeconomic conditions and its uncertain environment. Filling gaps in the previous studies, the current study investigates the macroeconomic consequences of the 2011 revolution in Egypt and the effects of the November 2016 floating of Egyptian pound (LE) exchange rate. Moreover, this study gauges the inflation threshold for Egypt by investigating the asymmetric relationship between inflation and real GDP. In addition, taking education and, hence, human capital as a fundamental pillar of economic development, this study examines the effects of inflation variability on education expenditure. More specifically, inflation—which is one of the fundamental variables in this study—is used to connect monetary economics (proxied, in this context, by inflation) with education economics (proxied by education expenditure). To test the research hypotheses, the current study utilizes a battery of econometric techniques, such as the generalized method of moments (GMM) to control for the potential endogeneity problem among variables and, therefore, produce robust results. For specifying the inflation threshold and measuring the potential asymmetric relationship between inflation and real GDP, this study uses the logistic smooth transition regression (LSTR) technique. Furthermore, various conventional and structural breaks unit root tests are used to check for stationarity of the variables. For analyzing shocks to the main variables for every econometric model, the impulse response functions (IRFs) and Cholesky variance decomposition methods are used. The findings of this study are as follows : (1) The nominal interest rate targeting, inflation targeting, and the nominal exchange rate targeting regimes are all not appropriate and ineffective in delivering good performance for monetary policy in the Egyptian economy over the study period. Instead, the NGDP targeting regime is confirmed as the only regime that fits the Egyptian economy. Besides, monetary policy conducted in Egypt over the study period suffers from the indeterminacy of equilibrium, escalating inflation rates. Monetary policy in such circumstances is suboptimal and needs to be modified through adopting an effective monetary policy targeting regime (i.e., the NGDP targeting rule) ; (2) Inflation has an asymmetric impact on the real GDP beyond the estimated threshold (at 9.32%); (3) Inflation impacts education expenditure inversely and, hence, has deleterious effects on human capital and development strategy. Based on its findings, this study has fundamental and theoretical implications. The findings support the validity of the NGDP level targeting theory over its alternatives. Anchoring a certain level of nominal GDP plays a critical role in approaching the ultimate objectives of monetary policy. This study suggests monetary authorities and policymakers looking deeply into implementing the NGDP targeting regime to maximize its benefits, minimize the central bank’s loss function, and overcome the demerits of the alternative regimes. Furthermore, monetary authorities and policymakers should exercise caution while selecting the best targeting regime. They should be updated to keep up with the changes in the domestic, regional, and external uncertain economic environment since these changes have substantial impacts on monetary policy and, hence, economic performance. More preeminently, the study findings suggest that policymakers control inflation to be less than the threshold level to prevent the deleterious effect of inflation on economic growth. Besides, benefiting from education as an engine for human capital needs inflation to be at its lowest levels. In addition, policymakers should recognize that most of the shocks hitting the Egyptian economy and many developing countries are propagated primarily from the supply - side and inelasticity of the production apparatus. Furthermore, monetary policy should be operated more independently from financing the government’s budget deficit.