Would the Food Insecure Raise their Hands? Applying the case of Egypt in the era of COVID-19

Racha Ramadan

Food security can be considered an economic access challenge in Egypt, as poverty and food security are highly correlated. The spread of the novel coronavirus, with its economic drawback, is expected to jeopardise Egyptian food security by exacerbating existing challenges. Using the Economic Research Forum (ERF) COVID-19 Monitor data for Egypt (Wave 2), logit models are estimated to examine the determinants of food security in Egypt, during June 2021, post the spread of COVID-19. Two indicators are used to measure food security. First the households’ ability to obtain the usual amount of food, without reporting any change because of a decline in income or increase in prices. This is considered as economic access to food. The second measure considers food consumption; households are considered food secured if they do not have to reduce their usual number of meals/portions. The results show that females, low-educated, self-employed, those working in hard-hit sectors, those who lost their income and households with a high share of children under six years old are all more likely to be food insecure.

The impact of regulatory capital pressure on profitability and risk: Evidence from Tunisian banks

Rim Zakraoui, Dorra Mezzez Hmaied

The paper analyses the effect of regulatory pressure on bank behaviour, using a sample of Tunisian banks covering the period 2005-2020. Firstly, the paper examines the impact of regulatory capital on bank profitability and risk. Secondly, it contributes to the literature which has received scant attention from researchers investigating the nonlinear impact of regulatory pressure on bank behaviour. Thirdly, we consider different determinants of bank profitability and risk. Finally, we use both static and dynamic models to test for the persistence of bank profitability and risk, as well as to make sure that the results are not biased by endogeneity. The results suggest that regulatory capital pressure improves bank profitability and stability. This effect is, however, conditioned by the existence of a certain threshold, after which stringent capital regulation may have adverse effects. Our results have important policy implications on optimal bank capital regulation.

Exchange Rate Pass-Through, Inflation and Monetary Policy in Egypt

Athar Elnagger, Christian Richter

The role of exchange rate pass-through has been dominating the heated debates over effective monetary policies, as well as exchange rate regime in general equilibrium models. Empirical literature from developed economies has shown evidence that the pass-through to prices can be incomplete in many cases. These studies have indicated that there are substantial differences between countries. Due to the lack of empirical literature for developing countries, this research contributes to the field by examining the exchange rate pass-through in Egypt from 2005 to 2018, using nine endogenous variable Vector Auto-regressive Models (VAR); this research estimates the degree and the size of exchange rate pass-through to domestic prices. In addition, we use a reduced two-dimensional VAR to estimate once for the relation between inflation (CPI) and money supply (M2) and once for the relation between inflation (CPI) and imports, along with Granger causality test to investigate causality between two variables. In the last part of the analysis, we investigate the exchange rate pass-through to inflation (CPI) in Egypt before floatation from December 2005 until October 2016 and the post floatation period, which is from November 2016 until February 2018. The results have important implications for the ability of Egypt to achieve an effective inflation-targeting regime.

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