Trade Deficit in Egypt: Is It Can Be Controlled?
This study empirically estimates the critical parameters of trade deficit in EgyptA for the period 1970 2014 by using dynamic ordinary least squares (DOLS)A approach of Stock and Watson (1993) The analysis is based on time series fromA 1970 to 2014. Time series properties of the processes that generate the data beA assessed to specify the order of integration for each series to satisfy the conditionsA of applying the DOLS procedure. Our estimation results show that all variablesA have its theoretical expected sign, which confirm that there exists a positive andA significant relationship among the trade deficit in Egypt and real income, relativeA domestic prices to foreign prices, International reserves. On the other hand, thereA is a negative and significant relationship between trade deficit and real effectiveA exchange rate.