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Author: Muluken Nigussie Tessema
Publisher: GRIN Verlag
ISBN: 334614514X
Category : Business & Economics
Languages : en
Pages : 81
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Book Description
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.
Author: Muluken Nigussie Tessema
Publisher: GRIN Verlag
ISBN: 334614514X
Category : Business & Economics
Languages : en
Pages : 81
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Book Description
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.
Author: Muluken Nigussie Tessema
Publisher:
ISBN: 9783330069671
Category :
Languages : en
Pages : 92
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Book Description
Author: Asmerom Kidane
Publisher:
ISBN:
Category : Ethiopia
Languages : en
Pages : 56
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Book Description
Author: Gediyon Bekele Moliso
Publisher: GRIN Verlag
ISBN: 3346521524
Category : Business & Economics
Languages : en
Pages : 41
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Book Description
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.
Author: Paul Dorosh
Publisher:
ISBN:
Category :
Languages : en
Pages : 28
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Book Description
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.
Author: Tewolde Girma Hailemikael
Publisher: GRIN Verlag
ISBN: 366841887X
Category : Political Science
Languages : en
Pages : 24
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Book Description
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.
Author: Gediyon Bekele Moliso
Publisher: GRIN Verlag
ISBN: 3346721086
Category : Business & Economics
Languages : en
Pages : 30
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Book Description
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.
Author: Seneshaw Tamru
Publisher: Intl Food Policy Res Inst
ISBN:
Category : Political Science
Languages : en
Pages : 27
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Book Description
Exchange rate policies can have important implications on incentives for export agriculture. However, their effects are often not well understood. We study the issue of foreign exchange controls and pricing in the value chain for Ethiopia’s coffee - its most important export crop. Relying on unique pricing and cost data, we find that coffee exporters are willing to incur losses during exporting by offering high prices for coffee locally in order to access scarce foreign exchange. The losses in export markets are then more than recovered in importing, indicating rents - import parity prices are significantly lower than the prices charged for imported goods, so that profits on imports are much higher than the losses incurred in exporting. We further show that the high coffee wholesale prices are transmitted to farmers, so that they benefit from the rents downstream. These results suggest that a better exchange rate alignment to reduce the overvaluation of the local currency in this case would have a lower impact on export crop producer prices than typically is anticipated.
Author: Ashiber Tsegaye
Publisher: GRIN Verlag
ISBN: 3346135446
Category : Business & Economics
Languages : en
Pages : 25
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Book Description
Academic Paper from the year 2019 in the subject Economics - Case Scenarios, grade: A, Addis Ababa University, language: English, abstract: This paper examines the economy wide effect of Ethiopian renaissance dam on Ethiopian economy. The model is based on an updated Social Accounting Matrix for 2014/15 that takes into account the structural changes in the economy. Given the additional electricity generation capacity of Ethiopia, the model run a policy simulation in which the additional 6000MW that scheduled to come online near the future form renaissance dam. To analysis this policy option this paper outlined a recursive dynamic computable general equilibrium approach and hence uses the change in real GDP, sectors production, investment, external sector, household income and consumption expenditures, and household’s welfare relative to the baseline, as an indicators of the economic wide effects of the renaissance dam. In opting for policy shock, the results of exercise showed that with an increment in power supply from renaissance dam the country can optimize the beneficial impacts on its economy. Specifically the simulation results show a spreading out effect in real GDP, sectors production, real investment, household income and household’s consumption expenditure. Results also showed improvement in the welfare for all the household categories. However; the shift in relative income across the household categories favors high income households. Overall, this paper suggests that Ethiopian economy will enjoy the largest improvement with additional power supply resulting from Ethiopian renaissance dam, therefore; concerned bodies should exerted maximum efforts to finalize the projects on time and resolve the age-long problems of the people so that the economy maintains its tremendous progress.
Author: Molla Dessie
Publisher:
ISBN: 9783346264510
Category :
Languages : en
Pages : 64
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Book Description
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
