Abstract:

A dynamic stochastic general equilibrium (DSGE) model is used in this paper to assess the effectiveness of the operating and intermediate targets in attaining the monetary goals that the Central Bank of Egypt (CBE) adopted in the wake of the global financial crisis. The study covers the period from January 1993 till March 2010, which marks the active utilization of monetary policy in Egypt. The results reveal that the operating targets are appropriate, yet the intermediate target is not functional in attaining the fundamental goal of price stability. Interest rates are more suitable for a long term impact on all ultimate goals.