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.

Exogenous vs. Endogenous Obstacles to Funding Female Entrepreneurs in MENA Countries (2013-2019)

Imène Berguiga, Philippe Adair

Do female entrepreneurs in MENA countries face obstacles to funding their businesses, either through self-selection or discrimination? A literature review reveals controversial evidence thereof but, to date, no paper has tackled this funding issue for female entrepreneurs in MENA countries from a dynamic perspective. Three pooled samples, from the 2013 and 2019 World Bank Enterprise Survey (WBES), and a cohort over 2013-2020, include three North African countries (Egypt, Morocco and Tunisia) and three Middle East countries (Jordan, Lebanon and Palestine); they document the financial behaviour of both owners and managers, according to gender. Probit regressions address loan demand (including Heckman probit) and loan supply, with respect to self-selection versus discrimination. In 2013, there is neither self-selection nor discrimination for female entrepreneurs, whereas female entrepreneurs are prone to self-selection in 2019, compared to their male counterparts. Self-selection behaviour from the demand side does not result from discrimination on the supply side. Sampling biases in the WBES, together with the characteristics of female clients of microfinance institutions, suggest that micro-entrepreneurs would have experienced self-selection and, possibly discrimination, regarding credit.

The role of cooperatives in enhancing social and economic inclusion: determinants of turnover growth and survival under COVID-19

Najat El Mekkaoui, Sara Loukili

The social and solidarity economy, through cooperative structures, has been promoted for its potential to reduce poverty, enhance economic inclusion and provide alternative solutions to labour market issues in developing countries. Nevertheless, very few empirical evaluations of their impact exist. We build an original qualitative and quantitative survey on the population of cooperatives in different sectors in Morocco and estimate the determining factors of their turnover growth, accounting for sample selection bias, as well as their survival rate. Findings point to the existence of three levels of determinants affecting (i) internal factors, (ii) management (president) and (iii) external factors (legal and market environment). We underline the sector’s fragility, the possibility of the existence of negative signaling, the heterogeneity between actors and outcomes and the weak role played by women in leadership positions.

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