Browsing by Author "Belete, Zewdu"

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    The Dynamics of Inflationary Process in Ethiopia
    (A.A.U, 1997-06) Belete, Zewdu; Abadi, Taddesse (Dr)
    This paper made an attempt to explain, among other things, the dynamics of inflationary process and, hence, give insights as to how to manage the inflationary process in the country. To investigate this issue we employ both statistical as well as econometric methods. To look at the specific determinants of inflation we model the country's inflation process from the monetarist as well as the structuralist view. Moreover, to capture the relative sectoral differences in response to changes in some of the important macroeconomic variables, we classify the economy into the agricultural and non agricultural sectors and model the respective sectors accordingly. Based on this procedures we found out that inflation in the country is generally a supply rather than a demand side phenomenon. In addition to this, we notice that the monetarist argument that inflation has a one- to c one correspondence to changes in broad money supply does not hold in our case. What we notice is that even under steady state equilibrium situation, the impact of broad money supply on the inflationary process in the country is very minimal. We proceed and apply the structuralist model and found out that the lion's share of the variation in the inflationary process in the country is explained by this model. Here, we found out that, on top of the monetarist variables, especially income, the variation in inflation is influenced by structural as well as institutional factors. Specifically, we observe that the long run inflationary process is found to be determined by real income, import prices and government deficit level. In the short run, on the other hand, in addition to the above variations in broad money supply and rain fall play an important role in the inflationary process of the country. in line with the structuralists' argument we also found out that there are, indeed, sectoral differences in response to changes in some of the macro economic variables.