Browsing by Author "Fekadu, Tizazu"

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    Prospect and Retrospect of Exchange Rate Shocks on Manufacturing and Exports of Ethiopia: CGE Model Analysis
    (Addis Ababa University, 2011-06) Fekadu, Tizazu; Ferede, Tadele (PhD)
    In this study, the positive and negative consequences of deliberate shocks to Ethiopian Birr have been examined. The focus areas of the analysis includes: domestic production, real consumption, welfare, export, import, trade balance, and current account. It also addresses impacts on employment, investment, government revenue and economic growth. A static CGE model is employed so as to observe the multi sectors and multi activities effects of the shocks. The outcomes of the simulations are checked for their robustness through sensitivity test. They have been also interpreted counterfactually for the short run to medium term effects. The findings of the analysis reveal that the productions of agricultural and service sectors expand where as that of the industrial sector shrinks. Particularly, exportable agricultural products and non tradable service sector derive more returns. Even if the light and some heavy manufacturing are benefited, the significant and adverse effect on construction sub sectors largely outweighs. Besides, exports grow faster than imports. On the other hand, trade balance continuous to increase negatively whereas current account partly improves and partly deteriorates under different shock levels. By and large, real consumption, welfare, GDP, investment and government revenue are all adversely affected. And, thus, the economy of the country would have been restrained in the short run had the exchange rate been shocked in line with the scenarios. Key words: Exchange rate shocks, exports, manufacturing, Ethiopia, and CGE model