Forecasting the money multiplier and the control of money supply in Egypt

This article investigates whether money supply control through the multiplier‐monetary base framework is possible in Egypt. It was found that such a procedure would not have been possible between 1952 and 1990 when the financial needs of the Egyptian government dictated changes in high‐powered money. It was found that the ‘aggregate’ forecasting approach of the money multiplier provided satisfactory results, while the ‘component’ method did not. It is argued that changes in policy since 1991 would provide for better control over the monetary base and greater predictability of the money multiplier.