Consumption and credit in a less developed country:-An econometric analysis of Egypt-

A well-known aspect of underdevelopment is whatMcKinnon termed ’financial repression’. Curiously, this aspect was overlooked by development theorists, who transplanted to their models consumption functions designed for advanced market economies where financial repression is virtually absent. 2 The main object of this study is to explore its effect on Egypt's private consumption. In addition, the author examines the relevance to Egypt of the ”permanent-income” and ”life-cycle” hypotheses, the effect of changes in both the functional and size distributions of income (caused by the drastic egalitarian measures undertaken by Egypt's revolutionary regime), and provides time-series estimates of income and price elasticities of food and non-food consumption (for the period 1957 – 1973). In the process, cross-section estimates from Egypt were briefly surveyed, for critical comparison with the paper's estimates.