Macroeconomics, Iran and Egypt experiences

Hoda Selim was the discussant for two papers falling under the macroeconomic theme at the ERF 20th Annual Conference. The first paper entitled ‘Iran’s inflation Experience: Demand Pressures, External Shocks, and Supply Constraints‘ co-authored by Magda Kandil and Ida Mirzaie, showcased the Iranian inflation experience, pressures, shocks and constraints. Although Iran is an oil producing country, and oil brings in a lot of liquidity and money from outside to the domestic market, inflationary pressures have heightened.

[youtube http://www.youtube.com/watch?v=gyAmE9LPlis]

The increased liquidity has led to substantial ‘expansion’ in credit and more of a cumulative demand facing binding capacity constraints in light of the structural bottlenecks that exist on the supply side, namely in two sectors; the real estate and food production.

The second paper, Is Monetary Policy in Egypt Back-ward or Forward-Looking? provided an overview of the Egyptian Monetary Policy and the Central Bank of Egypt‘s response to inflation through its own policy rates. Some of the paper’s empirical results show a significant interest ‘rate smoothing effect’ and the authors suggest that the exchange rate and the Egyptian revolution of 2011 have applied upward pressure on short-term interest rates in Egypt.

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