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The Effect Of Exchange Rates On Economic Growth In Ethiopia
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Book Synopsis The effect of exchange rates on economic growth in Ethiopia by : Muluken Nigussie Tessema
Download or read book The effect of exchange rates on economic growth in Ethiopia written by Muluken Nigussie Tessema and published by GRIN Verlag. This book was released on 2020-04-08 with total page 81 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2016 in the subject Business economics - General, grade: 3.68, Saint Mary's University, language: English, abstract: This study attempts to investigate the effect of exchange rates on economic growth in Ethiopia using annual time series data spanning from 1985/86 to 2014/15. The explanatory variables in this study were real effective exchange rate, government final consumption expenditure, gross fixed capital formation, broad money supply and trade openness. The multilateral real exchange rates is used to measure real exchange rates. Results from Vector Error Correction Model revealed that real effective exchange rates, broad money supply and trade openness have a positive long run effect on economic growth, while government final consumption have a negative long run effect on the economic growth of Ethiopia. From the regression results, it was noted that undervaluation of the currency is contractionary in the long run and neutral in the short- run. As such, the effect of exchange rates on economic growth works through the supply channel. It is the reflection of various economic and policy shocks, mainly a strategy shifts, of the government. Based on the findings of this study, the researcher recommended that since the Ethiopian output is dominated by primary agricultural products and it is insensitive for the change in exchange rate. Government intervention is needed to balance the adverse effect of exchange rate movements until the economy well transformed from agricultural lead economy to industrial lead economy and becomes less dependent on imported raw materials.
Book Synopsis The Effect of Exchange Rates on Ethiopian Economy by : Muluken Nigussie Tessema
Download or read book The Effect of Exchange Rates on Ethiopian Economy written by Muluken Nigussie Tessema and published by . This book was released on 2017-05 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Effects of Monetary Policy on International Trade in Ethiopia by : Gediyon Bekele Moliso
Download or read book Effects of Monetary Policy on International Trade in Ethiopia written by Gediyon Bekele Moliso and published by GRIN Verlag. This book was released on 2021-10-25 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: Academic Paper from the year 2021 in the subject Economics - Monetary theory and policy, grade: A, , language: English, abstract: This study examined the effect of monetary policies on Total Trade (proxy of international trade) in Ethiopia between 1989 to 2019.International trade was captured using Total Trade (proxy of international trade) while the independent variables that described the various macroeconomic policies in Ethiopia were money supply, exchange rate, real lending rate and inflation rate. Time series data on the variables of the study was gotten from Annual reports of the National Bank of Ethiopia (NBE) from 1989-2019. The secondary data was analyzed using E-views 9.0 software. A model was formulated for the study. The Augmented Dickey Fuller (ADF) stationary test showed that the variables in the study were stable at both levels and at first difference. The regression of the independent variables with Total Trade (proxy of international trade) showed the existence of a long run relationship. Using the Autoregressive Distribute Model (ARDL), the empirical results money supply exerts a significant positive effect on Total Trade (proxy of international trade) in the long run while real lending rate and inflation rate exerts a significant negative effect on Total Trade (proxy of international trade) in the long run and Total Trade (proxy of international trade) one period lag of the variable significantly affects the Total Trade (proxy of international trade) in the short run. LagTT or D(LTT(-1)), a one percent increase in expectation push Total Trade (proxy of international trade) by 51% in short run. This result is similar to the theory of adaptive expectations, they states that individuals will form future expectations based on past events. The study thus concluded that the monetary policy channels through which Total Trade (proxy of international trade) in Ethiopia can be influenced are money supply, lending rate and inflation rate. The study testes all the diagnostic test like serial correlation, Normality, heteroschedasticity and stability. The estimate of the speed of adjustment coefficient found in this study indicates that about a 75% of the variation in the Total Trade (proxy of international trade) from its equilibrium level is corrected within a year.
Book Synopsis The relationship of inflation and economic growth in Ethiopia by : Deseke Kebede
Download or read book The relationship of inflation and economic growth in Ethiopia written by Deseke Kebede and published by GRIN Verlag. This book was released on 2017-11-28 with total page 69 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research Paper (undergraduate) from the year 2017 in the subject Economics - Economic Cycle and Growth, grade: 1, , language: English, abstract: The purpose of the study is to examine the relationship between inflation and economic growth in Ethiopia over the period of 1991/92- 2014/15 by using data at quarter base. The study was employed Johansen method of co-integration and vector error correction model and a technique of conditional least square. The result shows that both in long-run and short-run the relationship between inflation and economic growth is positive. Despite to this, the granger causality test tells us bi- directional causation between these two variables. The result also revealed that threshold level of inflation beyond on which inflation negatively affects economic growth of Ethiopia is 5 percent. Therefore, co-ordination between macro- economic policy makers is vital and should have to raise their hands and put their eyes on measures that keep down inflation below 5 percent to have sustainable economic growth in the country.
Book Synopsis Exchange Rate Policy and Economic Reform in Ethiopia by : Asmerom Kidane
Download or read book Exchange Rate Policy and Economic Reform in Ethiopia written by Asmerom Kidane and published by . This book was released on 1997 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Effects of Monetary Policy on Inflation in Ethiopia. ARDL Co-Integration by : Gediyon Bekele Moliso
Download or read book Effects of Monetary Policy on Inflation in Ethiopia. ARDL Co-Integration written by Gediyon Bekele Moliso and published by GRIN Verlag. This book was released on 2022-09-12 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Academic Paper from the year 2022 in the subject Economics - Monetary theory and policy, , language: English, abstract: The goal of this research is to close lack of sufficient, contemporary and comprehensive studies on the topic under study and gain a better understanding of the relationship between monetary policy and Ethiopian inflation. The paper is organized as follows. After this introduction, the following section reviews the relevant literature, both theoretical and empirical. After this review, the methodological framework is presented. A series of test are show to assess the sensibility of the model. The discussion of the results is presented. Finally, some concluding remarks are shown. The monetary policy pursued by a country's Central Bank has a significant impact on the country's economic and financial status. It is commonly acknowledged that maintaining price stability through monetary policy can contribute to long-term growth. When the rate of inflation is low enough, consumers and companies do not have to consider it when making daily decisions, according to Christiano and Fitzgerald. The method, through which a country's monetary authority manages the supply of money, frequently by targeting an interest rate in order to promote economic growth and stability, is known as monetary policy. It is essentially a set of actions performed by monetary authorities, usually the central bank, to control and regulate the supply of money to the public as well as the flow of credit in order to achieve preset macroeconomic objectives. Its stated objective is to maintain relatively steady pricing and low unemployment. All methods of monetary policy, in reality, require changing the amount of base currency in circulation. Open market operations are the open sales and purchases of (government-issued) debt and credit instruments that change the liquidity of the base currency. The monetary authority's constant market operations influence the supply of currency, which has an impact on other market variables including short-term interest rates and the exchange rate.
Book Synopsis Economic Implications of Foreign Exchange Rationing in Ethiopia by : Paul Dorosh
Download or read book Economic Implications of Foreign Exchange Rationing in Ethiopia written by Paul Dorosh and published by . This book was released on 2009 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: Ethiopia enjoyed remarkable economic growth from 2004/05 to 2008/09, in large part due to increases in foreign transfers and capital inflows combined with expanded domestic credit to fund major increases in private and public investments in infrastructure and housing. However, this rapid growth was accompanied by a major appreciation of the real exchange rate (by 34 percent between July 2004 and July 2008) that reduced incentives for domestic production of exportables and non-protected importables. Moreover, major external shocks to the economy (including increases in world prices of fuel in 2007 and early 2008) exacerbated foreign exchange and macro-economic imbalances. Beginning in March 2008, access to foreign exchange for imports has been restricted (rationed) to avoid excessive drawdown of foreign exchange reserves. Computable General Equilibrium (CGE) model simulations suggest that there are substantial adverse efficiency and distributional effects of foreign exchange rationing. Foreign exchange controls result in the creation of large rents that likely accrue mainly to nonpoor households. At the same time, foreign exchange controls reduce economic efficiency so that real incomes from factors of production (land, capital and labor) decline, as do overall household incomes (except for those who gain large rents). Moreover, foreign exchange controls inhibit depreciation of the real exchange rate, and thus slow or prevent reversal of the real exchange rate appreciation between 2004/05 and 2007/08, which has resulted in major price disincentives for exports and production of import substitutes. The modeling results presented here are not meant as definitive estimates, but rather as indicators of the broad magnitudes of the effect of the policies simulated. Further efforts are needed to refine the model simulations so as to include the effects of changes in world prices and to assess dynamic effects of shocks and policies on growth and income distribution. Nonetheless, the broad policy implications of this analysis are clear. There are substantial costs to both foreign exchange rationing and real exchange rate appreciation in terms of growth (reduced incentives for production of tradables) and income distribution (large rents accruing to the non-poor). Policy reforms need not involve full liberalization of the foreign exchange market, however. Various versions of managed floats and controls in foreign capital markets exist that can gradually reduce economic rents, improve incentives for exports and increase overall economic efficiency. Indeed, policies since late 2008 have effectively reduced the earlier appreciation of the real exchange rate. To recover more fully from the effects of the adverse external price and capital inflow shocks of 2007 and 2008, and to sustain the rapid propoor growth of recent years, though, further measures to restore real price incentives to exports, and reduce rents and economic inefficiencies arising from import rationing should be considered.
Book Synopsis The effect of Government budget deficit on monetary aggregates and the foreign sector. The case of Ethiopia by : Tewolde Girma Hailemikael
Download or read book The effect of Government budget deficit on monetary aggregates and the foreign sector. The case of Ethiopia written by Tewolde Girma Hailemikael and published by GRIN Verlag. This book was released on 2017-03-20 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research Paper (postgraduate) from the year 2013 in the subject Business economics - Economic Policy, grade: Very good, Bahir Dar University, course: Economic Policy analysis, language: English, abstract: The main objective of the study is to examine the effect of budget deficit on monetary aggregates and the foreign sector of Ethiopia using the Vector Error Correction Model over the period 1970/71 to 2010/11. Estimation result shows the existence of a fairly significant relationship between fiscal deficit, monetary aggregates and the foreign sector in Ethiopia. Budget deficit is at the root of monetary expansion. Monetary expansion intern contributes positively to rising inflation and overvalued exchange rate. The Inflation and overvalued exchange rate intern contributes to the low performances of the foreign sector through adversely affecting export incentive. Fiscal deficit for small open economy like Ethiopia is also sign of stimulated domestic import demand, because government not only spends on goods and services produced in domestic economy. Thus, the result is in favor of the twin deficit hypothesis therefore fiscal restraint bucked by export diversification will improve the performance of the foreign sector and status of inflation.
Download or read book The Exchange Rate written by Fiseha Haile and published by . This book was released on 2019 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Ethiopia has achieved sustained high growth for more than a decade. At the same time, the country has been facing several economic challenges, including falling exports, chronic foreign currency shortages, as well as a slow pace of structural transformation. In recent years, the already overvalued birr has appreciated sharply in real terms, partly driven by the appreciation of the dollar, thereby making Ethiopia's competitiveness and industrialization drive more difficult. In response to these challenges, this paper looks at the question of why the real exchange rate is a useful policy instrument. The analysis suggests that Ethiopia needs a more flexible exchange rate policy. A competitive or undervalued exchange rate is important in bringing about productivity-enhancing structural change. There is robust evidence that a real devaluation stimulates exports in general and manufacturing exports in particular, improves the trade and current account balances, and spurs economic growth. Currency undervaluation is a second-best policy intervention that can help offset some of the key constraints to manufacturing growth prevalent in low-income countries and speed up structural transformation. However, exchange rate adjustments need to take into account the increase in the cost of capital imports and debt burden.
Book Synopsis The Exchange Rate by : Fiseha Haile Gebregziabher
Download or read book The Exchange Rate written by Fiseha Haile Gebregziabher and published by . This book was released on 2019 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Ethiopia has achieved sustained high growth for more than a decade. At the same time, the country has been facing several economic challenges, including falling exports, chronic foreign currency shortages, as well as a slow pace of structural transformation. In recent years, the already overvalued birr has appreciated sharply in real terms, partly driven by the appreciation of the dollar, thereby making Ethiopia?s competitiveness and industrialization drive more difficult. In response to these challenges, this paper looks at the question of why the real exchange rate is a useful policy instrument. The analysis suggests that Ethiopia needs a more flexible exchange rate policy. A competitive or undervalued exchange rate is important in bringing about productivity-enhancing structural change. There is robust evidence that a real devaluation stimulates exports in general and manufacturing exports in particular, improves the trade and current account balances, and spurs economic growth. Currency undervaluation is a second-best policy intervention that can help offset some of the key constraints to manufacturing growth prevalent in low-income countries and speed up structural transformation. However, exchange rate adjustments need to take into account the increase in the cost of capital imports and debt burden.
Book Synopsis Impact of Financial Market Liberalization on the Ethiopian Economy by : Menelik Geremew
Download or read book Impact of Financial Market Liberalization on the Ethiopian Economy written by Menelik Geremew and published by LAP Lambert Academic Publishing. This book was released on 2013 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study analyzes the practical implications of financial market liberalization on Saving, Investment, Inflation and Economic Growth in Ethiopia, using time series data covering the period 1974 - 2004. The Johansen Maximum Likelihood Estimation Procedure is used to see the short and long run dynamics of macroeconomic variables and their response to a major policy shift from a closed command economy to a semi-open market economy. The Mckinnon-Shaw hypotheses is tested and used as a bench mark to compare the effect of removal of repressive policies and development of financial markets against the pre-reform pervasive government intervention policies in accelerating economic growth, increasing domestic saving and investment. The shifts in policy regimes are captured by period dummies in the regressions. The results indicate that saving is positively and significantly affected by the real deposit rate of interest and income growth. Domestic investment has a positive long-run equilibrium relationship with output growth whereas the real depreciation of the exchange rate and an increasing level of government debt are found to have a negative effect on private domestic investment.
Book Synopsis The Relationship Between the Foreign Exchange Regime and Macroeconomic Performance in Eastern Africa by : Ms.Janet Gale Stotsky
Download or read book The Relationship Between the Foreign Exchange Regime and Macroeconomic Performance in Eastern Africa written by Ms.Janet Gale Stotsky and published by International Monetary Fund. This book was released on 2012-06-01 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the relationship between the foreign exchange regime and macroeconomic performance in Eastern Africa. The study focuses on seven countries, five of which decisively liberalized their foreign exchange regimes. The study assesses the relationship between (i) growth and various determinants, including the exchange regime, the real exchange rate, and current account liberalization; and (ii) inflation and various determinants, including lagged inflation, the nominal exchange rate, the exchange regime, and liberalization. We find that in our sample, for the determinants of growth, investment and the real exchange rate are significant determinants but not the exchange regime or liberalization; and for inflation, the lagged inflation rate, nominal exchange rate, and the de facto regime are significant. Exchange rate pass-through is limited.
Book Synopsis Macroeconomic Determinants of Economic Growth in Ethiopia. A Vector Correction Model by : Asmamaw Kassahun Agdew
Download or read book Macroeconomic Determinants of Economic Growth in Ethiopia. A Vector Correction Model written by Asmamaw Kassahun Agdew and published by GRIN Verlag. This book was released on 2019-10-07 with total page 77 pages. Available in PDF, EPUB and Kindle. Book excerpt: Thesis (M.A.) from the year 2016 in the subject Economics - Case Scenarios, grade: 3.89, , language: English, abstract: The main objective of this study is to investigate the macroeconomic determinants of economic growth in Ethiopia from 1974-2014. A Vector Error Correction Model (VECM) to cointegration approach is applied in order to investigate the long run and short run relationship between real GDP and its macroeconomic determinants. The finding of the cointegration test shows that there is a stable long run relationship between real GDP, gross domestic saving, labor, human capital, export, FDI, foreign aid and external debt. The long run empirical result reveals gross domestic saving, human capital proxied by government expenditure on health and education, and labor force have positive and significant relationship with real output. However export and real GDP have positive but insignificant relationship. External debt, foreign aid and FDI have negatively significant relationship with real GDP during the study period. The short run dynamic results shows that human capital, saving and FDI have positive relationship with output growth whereas labor, export, aid and external debt have negative relationship with Real GDP. The coefficient of equilibrating error term (ECM) suggests that the speed of adjustment (feedback effect towards the long run equilibrium) takes few years for full adjustment when there is a shock in the system. In order to sustain long run growth the government or policy makers should design appropriate policies that results in the efficient use of resources contributing to economic growth and proper management of variables resulting to negative growth in order to reverse their effect on output.
Book Synopsis The Contribution of Tourism to the Ethiopian Economy and Its Impact on the GDP by : Molla Dessie
Download or read book The Contribution of Tourism to the Ethiopian Economy and Its Impact on the GDP written by Molla Dessie and published by . This book was released on 2020-11-18 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bachelor Thesis from the year 2016 in the subject Economics - Case Scenarios, Addis Ababa University, course: economics, language: English, abstract: The main objective of the study is to see overall contribution of tourism to the Ethiopian economy. Specifically: Tourism contribution to the GDP of the country, Tourism contribution to employment, Tourism contribution to foreign exchange generation, To examine the causal effect of tourism on economic growth. Furthermore this research is to investigate the contribution of tourism for the Ethiopian economy over the year 2004-2014 for descriptive and 1991-2014 for econometrics. Graphs, table and, percent and Autoregressive Distributed Lag (ARDL) Approach to Co-integration and Error Correction Model are applied in order to investigate the long-run effect of tourism receipt on economic growth. Specifically this research assessed the impact of tourism on GDP, employment, foreign exchange earnings, and economic growth. The result shows tourism positive contribution to GDP, employment, foreign exchange earnings and stable relationship between tourism receipt and economic growth. The empirical result reveals that tourism receipt found to have positive impact on economic growth. So the government and citizens should strive to improve tourism industry and to generate more income especially foreign exchange. According to WTO, tourism is a combination of activities travelling to and staying in places outside their usual environment for not more than one year for leisure, business and other activities. It is beyond the common perception of tourism as being limited to holiday activity. The WTO further explains that tourism refers to all activities of visitors including both tourist (overnight visitors) and same day visitors. This definition was adopted by UK government and WTO used it since 2004. Tourism developed many years back when people travel from one place to another place for different purpose. Human beings have been active
Book Synopsis The Parallel Foreign Exchange Market and Macroeconomic Performance in Ethiopia by : Deresse Degefa
Download or read book The Parallel Foreign Exchange Market and Macroeconomic Performance in Ethiopia written by Deresse Degefa and published by . This book was released on 2001 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Real Exchange Rate Price and Agricultural Supply Response in Ethiopia by : Asmerom Kidane
Download or read book Real Exchange Rate Price and Agricultural Supply Response in Ethiopia written by Asmerom Kidane and published by . This book was released on 1999 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Adjustment in Ethiopia by : Tadesse Abadi
Download or read book Adjustment in Ethiopia written by Tadesse Abadi and published by . This book was released on 1996 with total page 220 pages. Available in PDF, EPUB and Kindle. Book excerpt:
