Browsing by Author "Helen Berga"

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    Exchange Rate Pass-through to Import and Consumer Prices: Evidence from Ethiopia
    (A.A.U, 2012-06) Helen Berga; Assefa Admassie
    The fact that Ethiopia adopted managed floa ting exchange rate pol icy since 1992 as wcll as various trade reform measures taken makes the country's import and consumer prices susceptible to the effects of exchange rate movements. Thus, the study invcstigates thc degree of ERPT and its asymmetry to import and consumer priccs in Ethiopia bctwcen 199 1/92 and 201011 1 using two types of VAR models (SVAR and CVAR). Based on SVAR analysis the paper found that ERPT in Ethiopia during thc period under review is moderate, significant and persistent in the case of import price and low and short livcd in the case of consumer prices. The co integration analys is shows incomplctc ERP"), to import price and absence of pass-through to consumcr price in the long run. The rcsult obtained from the asymmetric model suggests that ERPT to import prices is highcr in periods of Birr depreciation than appreciation. Also, pass-tluough to import prices is found to be higher in periods of small changes than large changes in the cxchange ratc. The study also tries to get pass-through estimates in different inflation environments jn order to test Taylor's hypothesis. However, no evidence is found wllich supports thc hypothes is in the case of Ethiopia. The fact that ERPT was found to be incomplete has use[-ul implication to policymakers, especially in thc dcsign and implementation of exchange rate and monetary policy
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    Food Insecurity Dynamics in Ethiopia: A System Dynamics Approach, Addis Ababa, Ethiopia
    (AAU, 2023-06-10) Yabtsega Desalegn; Helen Berga
    Food security is a dynamic concept that has continuously integrated new dimensions and levels of analysis over the years; this reflects the wider recognition of its complexities in research and public policy issues. Food security is achieved when all people, at all times, have physical and economic access to sufficient, safe, and nutritious food that meets their dietary needs and food preferences for an active and healthy life. Food insecurity occurs at the individual, household, or nation level for those who have neither physical nor economic access to the nourishment they need. Food insecurity is an enduring and critical challenge in Ethiopia, which is Africa’s second most populous country after Nigeria. This study has assessed the trends and status of the complex issue of food insecurity at a national level, listed out the major influencing factors that form the causal relationship using the green economy framework, and identified policy-related issues using system dynamics that have assisted in addressing and investigating this problem as it has unfolded in the various causal relationships that will be used for further analysis in the definition of future policy options and testing of these policy options. The policy test was conducted on three aspects of the green economy: social, economic, and environmental. This study finds that food insecurity and malnutrition are more sensitive to the issue of increasing human capital through the social aspect, namely access to basic health care and the educational sector, which has a reinforcing effect, and also suggests the environmental aspect of decreasing the food waste emission rate to lower GHG emissions, which has a long-term effect on yield. Overall, this study suggests that food policies go beyond casualties and require long-term policy development in order to deal with Ethiopia's highest prevalence of Food insecurity
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    Modelling the Dynamic Interaction between Production Growth and Carbon Footprint of Livestock Sector in Ethiopia
    (A.A.U., 2023-06-04) Petros Terefe Tolcha; Helen Berga
    Livestock is the largest agricultural sub sector, supporting the livelihood of many populations and the economy in Ethiopia. The sector is, however, a significant contributor to the carbon footprint in the country. Only direct emissions from the sector accounted for more than 36% of total emissions. Thus, the purpose of this study is to model and evaluate the livestock production system and its contribution to the carbon footprint. A system dynamics model that represents the livestock production system and its interaction with the environment in Ethiopia has been built. The simulated results have demonstrated that increasing meat productivity through improvement in feed quality and supply, increasing slaughter, managing land use change, and implementing price policy have a sound effect on lowering greenhouse gas emissions (GHG) while also improving the supply and value of meat. The policy scenario has achieved 15% and 11% growth in meat and livestock value, respectively, while reducing greenhouse gas emissions by 40% compared to the base case in 2040
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    Nexus Between Inflation Public Debt and Economic Growth In Ethiopia
    (A.A.U, 2023-09-09) Simenew Erkyhun; Helen Berga
    Ethiopian Economy prior to 2002/03 exhibited moderate and stable inflation, However, a continuing rise in prices and strong economic expansion have been observed since 2002/3.Based on this circumstance and growing stock of public debt, this study examined causal relationships between inflation and public debt, public debt and growth, and between inflation and economic growth in Ethiopia. The estimation has been carried out by using Autoregressive Distributed Lag (ARDL) and Error Correction Method (ECM) using time series data set spanning from 1981 to 2021. To show the directional relationship between variables, the Granger causality test was used. The results indicated the existence of a long run relationship among the variables. Inflation level from 3.5 to 20 percent is important for long run real GDP growth. In the short-run, a rise in price discourages economic growth in Ethiopia. There is a short run causality running from inflation to real Gross Domestic Product; and in the long run economic growth and inflation move together. Trade openness has both long and short run negative impact on real GDP. Domestic public debt inversely affects real GDP growth in short term; in the long run external public debt has negative impact on Real GDP growth. The short run, long run and ECM estimates all agree over significance and causation: inflation and external public debt estimates have inverse and significant relationship, while inflation and real GDP have positive and significant long run relationship. The speed, at which real GDP returns to equilibrium after changes in inflation, public debt and other control variable, as measured by ECM, is 0.23 percent, indicating the strength of the economy’s ability to accommodate shocks. The casualty results indicate that, there is a long-term unidirectional causal relationship between inflation and real GDP growth as well as a unidirectional relationship between domestic public debts to inflation. Inflation and domestic public debt were found to have a long-term one-way causal relationship with economic growth. Based on the study's findings, policies should be designed to ensure price level with in threshold level (3.5-20) percent. Additionally, policymakers should work together to improve output in order to lower prices for goods and services and promote economic growth with managed public debt.
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    The Effect of Exchange Rate Devaluation on Domestic Inflation in Ethiopia
    (A.A.U, 2025-09-19) Yimer Ayalew; Helen Berga
    Exchange rate devaluation has been used as a policy tool by Ethiopia, a small open economy, particularly during this period. It is unclear if this policy has had a beneficial or negative impact on inflation in particular and the economy as a whole. The focus of this study was to assess the effects of devaluation on inflation from 2010Q1 to 2024Q4 using ARDL model. The finding of this study shows that REER is statistically insignificant effects on CPI; devaluation leads to increase the inflation of a country. Therefore, the researcher for this finding recommended NBE and government of Ethiopia to communicate transparently with the public regarding the reasons for devaluation and its expected impact on inflation and promote policies that encourage domestic production of goods and services to reduce reliance on imports. Keywords: Devaluation, Consumer Price Index Real Effective Exchange Rate, Money supply
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    The Effect of Exchange Rate, Interest Rate, & Inflation on Economic Growth: Evidence from the Ethiopian Economy
    (A.A.U., 2023-07-05) Kiros Seyoum Abreham; Helen Berga
    The research investigated the effect of exchange rate, lending interest rate, and inflation on the economic growth of Ethiopia, using data from 1982 to 2021. The independent variables included exchange rate, lending interest rate, inflation rate, government expenditure, gross capital formation, and foreign direct investment, with economic growth functioning as the dependent variable. Integration levels in the time series were determined through the Philips-Perron (PP) and Augmented Dickey-Fuller (ADF) unit root tests. The Auto regressive Distributed Lag (ARDL) and its Error Correction Model (ECM) were applied to discern long run and short-run relationships. The study identified both long run and short-run relationships within the assessed model. It revealed that over time, the exchange rate has a considerably positive influence on economic growth. In contrast, to initial years in the short run, the exchange rate exhibits a negative and significant effect at both lag 1 and lag 2. Regarding inflation, its effect on economic growth is not significant in the long run. However, in the short run, it has a significant and negative effect, particularly with a one-period time delay (lag1). Lastly, lending interest rates have a negative and significant effect on economic growth in both the short and long run. In addition, the research investigated whether there is a statistically significant threshold level of inflation that influences growth in Ethiopia differently, based on whether it falls below or above this level. The study used time series data from 1982 to 2021 and the Ordinary Least Squares (OLS) technique to analyze this. The findings confirmed a maximum threshold of 7 percent for a positive relationship between the two variables. However, when inflation rates exceed 7 percent, the relationship turns negative. The research findings indicate that for promoting economic growth in Ethiopia, it is essential for the Ministry of Finance (MOF) and National Bank of Ethiopia (NBE) the to adopt policy suggestions such as ensuring a stable exchange rate, controlling lending interest rates, and targeting inflation rates below 7%. It is advised that monetary and fiscal policy creators pay attention to the insights offered, which would assist them in formulating efficient strategies to manage these microeconomic indicators effectively, ultimately contributing to the country's economic growth. By adopting a coordinated strategy that integrates these policies, Ethiopia can attain sustainable growth. To ensure the effectiveness of these measures, continual evaluation and adjustments are essential.
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    The Impact of External Debt, Unemployment, and Inflation on Economic Growth: Evidence from Sub-Saharan African Countries
    (A.A.U, 2022-06-08) Astaraki Animut; Helen Berga
    Achieving a high rate of economic growth, full employment, and price stability is key to macroeconomic policy objectives and a top priority for all countries worldwide. As a result, if these fundamental macroeconomic policy goals are to be realized, understanding the influence of external debt, unemployment, and inflation on economic growth is crucial. This study aims to examine the impact of external debt, unemployment, and inflation on economic growth in Sub-Saharan African countries. The study used panel data from thirty Sub-Saharan African countries from 2005 to 2019. The data were processed using STATA 15 software for the windows econometrics package. The researcher employed a dynamic panel regression model, the system generalized method of moments (system GMM) estimation strategy, and the Granger causality test. The study found that the three primary factors, external debt, unemployment, and inflation, have a significant negative relationship with economic growth in Sub-Saharan Africa. As external debt, unemployment, and inflation increased, all three variables had a detrimental influence on growth. Our results indicate that foreign debt, as a result of debt servicing, has a detrimental influence on growth by crowding out both private and governmental investment. This supports the debt-overhang hypothesis' applicability in the SSA African region. According to the findings, economic growth had no causal relationship with inflation, but it had a one-way causal relationship with unemployment and external debt which flowed from unemployment to economic growth and from economic growth to external debt.