Do Political Instability and Military Expenditure Undermine Economic Growth in Egypt? Evidence from the ARDL Approach

Maher, Mohamed; Zhao, Yanzhi

doi:10.1080/10242694.2021.1943625

Cited by 26 publications

(18 citation statements)

References 107 publications

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“…To ensure that the regressors in our and are not cointegrated with one another, we apply the (Phillips and Ouliaris, 1990 ) cointegration test. This technique is based on residuals and has improved power qualities when testing for cointegration in small samples (Haug, 1992 ; Maher and Zhao, 2021 ). The multivariate Phillips–Ouliaris technique examines the null hypothesis, which says that the variables do not include a cointegrating vector under the test (Haug, 1992 ).…”

Section: Methodology and Datamentioning

confidence: 99%

Does political risk undermine environment and economic development in Pakistan? Empirical evidence from China–Pakistan economic corridor

Ashraf

2022

Econ Change Restruct

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China–Pakistan Economic Corridor (CPEC) invests billion in Pakistan’s energy, infrastructure, and other development projects to step toward Eurasia’s economic integration. However, CPEC may exacerbate climate change vulnerabilities for Pakistan’s struggling economy due to potential environmental hazards and consequences. In this context, the current study seeks to examine the impact of political risk on carbon emissions and economic growth in Pakistan while also considering the relevance of trade openness, Chinese outward Foreign Direct Investment , and One Belt One Road policy. To investigate this impact, we use the autoregressive distributed lag technique to cointegration and the fully modified ordinary least squares estimator for robustness results, using data spanning . Our empirical findings reveal that trade openness, FDI, and OBOR policy contribute to pollution and economic growth, but political stability slows the rate of environmental deterioration and increases economic growth. Furthermore, the existence of robust political stability mitigates the negative impacts of FDI and trade openness on the environment, while strong political stability aids the positive effects of FDI and trade openness on economic growth. Also, the findings confirmed that a better political environment promotes economic development while simultaneously lowering carbon emissions. Our results may assist the Government of Pakistan in transforming into a model green initiative in the region.

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Section: Methodology and Datamentioning

confidence: 99%

Does political risk undermine environment and economic development in Pakistan? Empirical evidence from China–Pakistan economic corridor

Ashraf

2022

Econ Change Restruct

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“…As a result, the value of the Egyptian currency depreciated by almost 50% against the US dollar. This decision coincided with another one taken by the CBE to raise the overnight deposit and lending interest rates by 3%, reaching 14.75% and 15.75%, respectively, (Maher and Zhao, 2021) in the context of "leaning against the wind" policy when depreciating exchange rate is accompanied by rising interest rates. Egyptian economic growth slowed from an average rate of 8.8% during the first sub-period under the so-called "Open-Door" (i.e., Infitah) policy of 1974 to 6.2% and 4.3% during the 1980s and 1990s, respectively, from 1976 to 2019.…”

Section: Background Of the Egyptian Economy And Its Monetary Policymentioning

confidence: 71%

“…For example, in 1990, the CBE increased the nominal interest rate in response to increases in the nominal exchange rate. Similarly, in November 2016, when the US dollar's exchange rate against the Egyptian pound increased significantly due to black market pressures-which ranged around 18 pounds/US$-the CBE leaned against the wind by raising the overnight deposit and lending interest rates by 3%, reaching 14.75% and 15.75%, respectively(Maher and Zhao, 2021). Additionally, according toEdwards (2006), this relatively large β 5 could be justified by the extended history of higher inflation in the Egyptian economy and the historically high volatility in real exchange rates.…”

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confidence: 99%

The Taylor Rule in Egypt: Is it Optimal? Is there Equilibrium Determinacy?

Maher¹,

Zhao²,

Tang³

2022

Journal of Economic Integration

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We investigate Egypt's Taylor rule (interest rate targeting) between 1976 and 2019 by including the main economic variables in its reaction function. Using the Taylor principle, we investigate Egypt’s monetary policy optimality. To this end, we conduct the generalized method of moments (GMM) estimation procedure with different Taylor rule specifications to deal with potential endogeneity among variables. Our GMM estimates reveal that the partial adjustment coefficient is of considerable magnitude, indicating the explanatory power of policy inertia on many total variations in the current values of the nominal interest rate in Egypt. Furthermore, the inflation gap coefficient violates the Taylor principle, making the policy procyclical and inflation "spiral" and inducing divergence from the long-run equilibrium. Therefore, Egypt's Taylor rule, and thus monetary policy, reflects the indeterminacy of equilibrium and is a passive and destabilizing policy. Besides, the output gap coefficient was unexpectedly found to be insignificant.

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“…Political instability refers to both social-political unrest, such as the 2011 revolution, but also the potential for government regimes to collapse (Abdelkader, 2017). There is a strong correlation between political instability and negative economic growth, as the uncertainty associated with instability harms macroeconomic variables such as private investment (Mayer & Zhao, 2021). President El-Sisi has brought relative stability to Egypt, but recent developments such as armed clashes in the Sinai Peninsula and border tensions with Libya and Sudan may derail this stability in the future (Mayer & Zhao, 2021).…”

Section: Barriers To a Clean Energy Transition In Egyptmentioning

confidence: 99%

Long-term Energy System Modelling for a Clean Energy Transition in Egypt's Energy Sector

Gibson

2023

Preprint

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Egypt has the potential to generate significant amounts of renewable energy, particularly solar PV, concentrated solar power (CSP) and onshore and offshore wind. Its large economy and rapidly growing population mean that the country is facing increasing energy demand. The energy sector is reliant on fossil fuels, particularly natural gas, for electricity production and is at risk of locking itself into a high carbon pathway. Globally, reducing greenhouse gas (GHG) emissions associated with national energy sectors is a target outlined in the UN’s Paris Agreement. To reduce carbon dioxide (CO2) emissions associated with a higher dependence on fossil fuels, Egypt must consider upscaling renewable energy technologies (RET) to achieve a clean energy transition (CET). This research modelled six scenarios using OSeMOSYS to identify the technologies and policy target improvements that are needed to upscale RETs within the energy sector. OSeMOSYS is a bottom-up, long-term energy system model that applies linear optimisation techniques to determine an array of least-cost technologies to satisfy a defined energy demand. The results showed that solar PV and onshore wind are key technologies to be upscaled to contribute towards Egypt’s CET. The optimal renewable target is the International Renewable Energy Agency’s (IRENA) 53% of electricity to be sourced from RETs by 2030, which will cost $16.4 billion more up to 2035 than Egypt’s current Integrated Sustainable Energy Strategy (ISES) target of 42% by 2035; it also saves 732.0 Mt of CO2 over the entire modelling period to 2070. Socio-economic barriers to this transition are considered, such as recent discoveries of natural gas reserves combined with a history of energy insecurity, political instability impacting investor confidence, and a lack of international climate funding. The paper concludes with policy recommendations that will enable Egypt to achieve a CET.

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Do Political Instability and Military Expenditure Undermine Economic Growth in Egypt? Evidence from the ARDL Approach

Cited by 26 publications

References 107 publications

Does political risk undermine environment and economic development in Pakistan? Empirical evidence from China–Pakistan economic corridor

Does political risk undermine environment and economic development in Pakistan? Empirical evidence from China–Pakistan economic corridor

The Taylor Rule in Egypt: Is it Optimal? Is there Equilibrium Determinacy?

Long-term Energy System Modelling for a Clean Energy Transition in Egypt's Energy Sector

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