College of Business and Economics

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Browsing College of Business and Economics by Author ". Kebret, Haile (Dr)"

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    The Causes of Low Inflation in Ethiopia
    (A.A.U, 2000-06) Denboba, Habtamu; . Kebret, Haile (Dr)
    This paper tries to identify the determinants of Inflation in general the causes of low . inflation in particular in Ethiopia with a time series data covering the period 1962 to 1997 The analytic technique used involves estimations of a model that incorporates both monetarist and structuralist variables of inflation. The findings of the study suggests that, expectation of inflation, real income, per capita food production and money supply are found to be significant with their theoretically postulated sign. out of the variables included in the model, expectation of inflation and real income have substantial impact on the inflationGlY process of the country. Money supply is the next important variable, though its coefficient does not add up to unity as it argued by monetarist. The study further allempted to look at the relation between inflation and degree of monetization of the economy (which could roughly be measured by broad money over GDP) . According to the investigation of the study, the degree of monetization has no any role to play in the inflation spiral of the country since the economy is not well monetized Rather it more likely appear that the extent of degree of monetization of the economy has partly contributed to the prevalent of low inflation in the country. if the government has a low inflation target it should adopt a policy that can avoid the structural rigidities prevailing in the economy.