Browsing by Author "Yimer Ayalew"

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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 (PHD)
    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