Measuring the effect of some economic policy variables on reducing unemployment in Egypt

Abstract

The research aims to measure the impact of some economic policy variables, specifically public spending, public revenues, broad money supply, exchange rate, real interest rate, foreign direct investment, exports and imports as percentages of GDP on unemployment rates in Egypt during the period (1990-2020) using Time Series data. After conducting the stability test using the ADF test, it was found that all the model variables became static after the first difference. Therefore, the Autoregressive Distributed Lag Model was built and estimated. The research found that there is a co-integration relationship and that there is an inverse significant relationship between (government spending, government revenues, broad money supply, incoming foreign direct investment, and exports as percentages of GDP) and (unemployment rates), which is consistent with economic logic. The study also found that there is a positive and moral relationship between the exchange rate, real interest rates and imports as percentages of GDP with unemployment rates, and this is consistent with economic logic. The study recommended the need to increase the degree of coordination between (financial, monetary and commercial) economic policies in a manner that ensures their impact on economic activity in general and reduce unemployment rates in particular.