Thesis (Ph.D.) - Cairo University - Faculty of Economics and Politcal Science - Department of Economics

The purpose of this thesis is to provide an assessment of the potential efficacy of fiscal policy in Egypt as a countercyclical policy tool. This dissertation discusses three related topics and consist of four chapters. The First chapter provides a survey on empirical literature ,the Second chapter is an assessment of the Twin-deficit Hypothesis with empirical evidence from Egypt, the third chapter examine the Sustainability of the current account Deficits with an evidence from a Nonlinear Cointegration analysis. And the fourth Chapter is an empirical estimation of Fiscal Multiplier in Egypt using SVAR analysis. Chapter two provides an empirical analysis of the twin-deficit hypothesis in the presence of structural breaks in Egypt. The chapter analyze the relationship between the two deficits using the Autoregressive Distributed lag (ARDL) approach and the bootstrap causality test while considering the presence of breaks. Based on the econometric results, no support for the twin deficit hypothesis was found in Egypt over the long run. But a support for the Ricardian equivalence hypothesis was found. The absence of any relationship between the two variables in the long run is backed by the results of our bootstrap causality test. Still, the short-run analysis with the ARDL model provides support for the existence of a relationship between the two deficits in the short run

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