The Impact of Floating Egyptian Pound on Agricultural Sector in Egypt

Abstract

This research aimed to estimate the impact of applying flexible exchange rate on the Egyptian agriculture sector. Egypt applied floating exchange rate regime three times during the period 1991-2018. This research is based on some analytical approaches to achieve its objective such as robust regression and vector error correction model (VECM).It concluded that floating of Egyptian pound was not a good decision and it had a negative impact on Egyptian agricultural sector. The positive relationship between real Egyptian agricultural gross domestic product and real agricultural imports as well as the positive relationship between real agricultural imports and dollar exchange rate in Egypt which are not apply the economic logic, proof that the floating exchange rate regime and the macroeconomic policies applied during the study period were not effective as Egypt imports good and service with high prices due to the devaluation of Egyptian pound. So, the growth in agricultural gross domestic product was not real. The Egyptian government should pay more attention on the agricultural sector.