Policy Analysis of Shadow Pricing, Foreign Borrowing, and Resource Extraction in Egypt

摘要

This paper describes a long-term optimal growth model for Egypt focussing on issues of investment allocation, optimal saving and foreign borrowing, extraction of oil and gas and shadow pricing. All sectors of the economy other than oil and gas are aggregated into nontraded or traded goods; only the latter can substitute for imported goods. Oil and tradable goods can be exported, although the latter faces a downward slopping demand curve. The model is run first with exogenous total investment and foreign borrowing; then investment is left free, subject only to an absorption capacity constraint limiting the speed with which it can increase from period to period. Finally, foreign borrowing is allowed to vary, with the interest rate charged to loans being an increasing function of the amount borrowed. In all variants of the model we test the sensitivity of the results to changes in some of the basic parameters (future oil prices, discoveries of new oil/gas reserves, pure rate of time preference).