Thesis (M.Sc.) - Cairo University - Faculty of Economics and Political Sciences- Department of Economics

Abstract: After reviewing the literature on fiscal space, the thesis tries to compare between the conventional ways, commonly found in the literature on fiscal space, and the efficiency-enhancing ways of fiscal space creation, with a special focus on the revenue-mobilization and public expenditure sides. The study uses Egypt as a case study. First, it analyzes the domestic feasible ways of creating fiscal space in Egypt by using the Egyptian tax effort index and by running Data Envelopment Analysis (DEA) to examine the inefficiencies of the Egyptian public spending. Second, the study uses a static Computable General Equilibrium (CGE) model calibrated to the Egyptian economy using the SAM of 2009/2010 to assess the macroeconomic impact of the different feasible ways from both a conventional and efficiency-enhancing perspectives. The results show that there is a room for creating fiscal space in Egypt using tax revenues and expenditure reform. The macroeconomic impact of all simulated tax and expenditure scenarios is contractionary in the short run; however the conventional and efficiency-enhancing ways of creating fiscal space are somehow different in both the short and long terms

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