Browsing by Author "Tsegaye, Deressu"

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    Analysis of Budget Deficit and its Structural Determinants in Ethiopia
    (Addis Ababa University, 1996-06) Tsegaye, Deressu; Mulat, Teshome (Prof.)
    Immediately following he ecl r ion of socialism in he coun try in 1975 , b o th governmen revenue an ex en i ure inc r eased substantially . Nevertheless , the grow h of government expendi ture was not matched by growth of revenue hence persistent and large budget deficits b ecame the feature of Ethi opian economy . In the face o f growing budget deficits the military government made no attempt to control its expenditure but relied up on continuous increase in tax rates, introduction of new taxes and manipulation of t h e ceilings imposed on government borrowing from domesti c sources . Th i s study examined whether the structural factors hypoth e si sed by Morrison (1982) are responsible f or the growing b udget d e fi ci t . The es t imated regression results show that in the l on g r un government budget deficits is likely to increase the higher i s t h e degree of government involvement in the economy the l ess exercise control over expendi ture, the hi gher i s revenue instabili ty and the lower is growt h in government revenue. However, the hypothesis that budget deficit decrea ses as economy grows is not supported . In the short run i t ~ s only growth in governmen t revenue tha t is found to explain the deficits . Al though the recent p oli cy of the Transi tional Government of Ethi opia planned to decrease the b udget defi ci ts , this objecti ve was not attained due to the reduction in tax rates . \ Moreover , the introduction of the regional adminstration led to the duplicati ons of government bureaucracy thereby pushing up the expenditure level.
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    Analysis of Budget Deficit and its Structural Determinants in Ethiopia
    (A.A.U, 1996-06) Tsegaye, Deressu; Mulat, Teshome(Dr.)
    Immediately following the declaration of socialism in the country in 1975, both government revenue and expenditure increased substantially . Nevertheless, the growth of government expenditure was not matched by growth of revenue hence persistent and large budget deficits became the feature of Ethiopian economy. In the face of growing budget deficits the military government made no attempt to control its expenditure but relied up on continuous increase in tax rates, introduction of new taxes and manipulation of the ceilings imposed on Government borrowing from domestic sources . This study examined whether the structural factors hypothesised by Morrison (1982) are responsible f or the growing budget deficit. The estimated regression results show that in the long run government budget deficits is likely to increase the higher is the degree of government involvement in the economy, the less exercise control over expenditure, the higher is revenue instability and the lower is growth in government revenue. However, the hypothesis that budget deficit decreases as economy grows is not supported . In the short run it is only growth in government revenue that is found to explain the deficits. Al though the recent policy of the Transitional Government of Ethiopia planned to decrease the budget deficits, this Objective was not attained due to the reduction in tax rates. Moreover, the introduction of the regional administration led to the duplication of government bureaucracy thereby pushing up the expenditure level.