Malcom X the Ballot or the Bullet Analysis

The Inadequacy of financial intervention in Egypt trimmed down the usefulness of monetary policy in justifying opposing shocks.

One way to justify depressing economic shocks is to relax the monetary policy by expanding the money supply and reducing interest rates for a better outcome that is reduced costs of financing an investment in the country. Monetary policy’s efficiency, however, is caused by the effectiveness of financial intervention.

If domestic finance specially the one handed to the private sector have a habit of falling considerably during the low stages of a business cycle for the reasons unrelated to the monetary policy then , rising the level of money supply will in most cases result in surplus liquidity in the banking system than in higher investments rates. These elements of the supply of finance to banks aid in explaining why rates of growth in Egypt were intensified and relatively high in the first half of 1990s, but decelerated at the end of the decade.

Macroeconomic stabilization stopped the expansion of banking credit to the government, This sudden action allowed the banking system to have additional resources and lending it to the private sector. Private sector had additional finance so this led to increase in the economic growth rate, but at the same time as