Analyse: This thesis investigates the role of black markets in foreign exchange in the transmission of influences of policy changes and external shocks on the Egyptian economy.

By developing, estimating and simulating a simultaneous equation model, the thesis proves that the black market premium indeed influences and is influenced by the price level, real output, recorded remittances, fiscal revenue, net foreign assets and the money stock.

The exogenous variables treated in this study include the size of the migrant labor force, the level ef economic activity in major labor-importing countries and inflation differentials.

The main contribution lies in estimating the model which allows for institutional features typical of a labor exporting economy.

The policy experiments treated by this thesis, namely an official devaluation, a decline in migrant labor and a fiscal expansion reveal, within the context of ex-post simulations, the evolution of the macroeconomy in the presence of a black market.