Applied Economic Modeling And Forecasting With (Financial Policy Analysis and Management)

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Browsing Applied Economic Modeling And Forecasting With (Financial Policy Analysis and Management) by Author "Mekonnen, Alemu (PhD)"

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    The Impact of Foreign Direct Investment on Economic Growth: The Case of Ethiopia
    (2016-06) Dessie, Betelhem; Mekonnen, Alemu (PhD)
    This paper analyses the impact of foreign direct investment on the economic growth of Ethiopia using Vector Error Correction Model over the period 1981 to 2015. First the study examined the individual growth impact of foreign direct investment. The empirical finding revealed that foreign direct investment has negative significant effect on economic growth in the long run but insignificant effect in the short run. The study examined the causal relationship between foreign direct investment and per capita gross domestic product by using Pairwise Granger causality test. The Pairwise Granger causality test showsthe existence of causal unidirectional relationship from foreign direct investment to per capita gross domestic product. The study also investigates the impact of other macroeconomic variables on per capita gross domestic product. External debt and real effective exchange rate are found to have negative significant effect on per capita gross domestic product in the short run. In the short run, the impact of gross domestic saving on per capita gross domestic product is found to be positive. As that of the first model here also foreign direct investment has negative significant impact on economic growth. The tax incentives provided to foreign investors and the misuse of tax incentives by the investors can be the possible reasons for the negative relationship between foreign direct investment and gross domestic product.
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    The Impact of Government Sectoral Expenditure on Economic Growth in Ethiopia: With a Particular focus on Agriculture, Defense, Education and Health Sectors
    (Addis Ababa University, 2014-06) Berihun, Bazezew; Mekonnen, Alemu (PhD)
    This paper investigates the growth impact of government sectoral expenditure in Ethiopia over the period from 1975 to 2013, with a particular focus on sectoral expenditures on education, health, agriculture and defense, by estimating a multivariate co-integration and error correction model to examine the marginal effect of expenditure on each sector on economic growth. The study finds that government spending on education has a positive impact on economic growth in the long-run but an insignificant impact in the short-run. Spending on defense has a negative and significant impact on economic growth both in the long-run and in the short-run. Government spending on agriculture is negatively correlated to growth in the long-run but is insignificant in the short-run. Spending on health and the effect of consumer price index is found to be insignificant both in the long-run and the short-run. Thus, the results suggest that the allocation of government expenditure towards the education sector should be favored in order to enhance sustainable economic growth