Applied Economic Modeling And Forecasting (Fiscal Policy Analysis And Planning)

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Browsing Applied Economic Modeling And Forecasting (Fiscal Policy Analysis And Planning) by Subject "Ethiopia"

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    The Economy -wide Impact of Continental Free Trade Area (CFTA) on Ethiopia: A Recursive Dynamic Computable General Equilibrium Approach
    (2016-06) Hailemeskel, Begidu; Estiphanos, Girma (PhD)
    This study examines the economy wide impact of CFTA on Ethiopia. The analysis is made based on Ethiopian social accounting matrix (SAM) of 2009/10 constructed by EDRI. The study has utilized a recursive dynamic CGE model. The model is simulated for an import tariff reduction on different sectors using three different scenarios. The scenarios involve joining CFTA at one time, in 2016, or through phases, a 25% tariff removal each year from 2016-2019. Another scenario involves excluding strategic sectors from the CFTA. The impact of CFTA result shows, Government revenue also decreases as tariff revenue is an important source of revenue for the Ethiopian government. GDP and trade balance are, however, positively affected. The increase in GDP might be associated to the increase in disaggregated production. The larger increase in exports as compared to the increase in imports leads to an improvement in trade balance. Household consumption expenditure also increases. This might be due to the availability of cheap consumption commodities from abroad due to the removal of tariff. On the other hand, our results show a decrease in investment which might be attributed to the inability of domestic producers to compete with foreign suppliers at a lower price. Our findings also show that protection of strategic sectors benefits only producers in these sectors. Exclusion of strategic sectors from CFTA helps producers face less competition as the price of imported commodities will include tariffs. Protection of strategic sectors will also increase government revenue. The impact of protecting strategic sectors on the overall economy, however, is negative, which is it results in a decrease in GDP.
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    Economy-Wide Impacts of Export Price Changes in Ethiopia: A Recursive Dynamic Commutable General Equilibrium Analysis
    (Addis Ababa University, 2018-10) Endalkachew, Kabtamu; Sisay, Regassa (PhD)
    Ethiopia’s export is largely dominated by primary commodities characterized by a high degree of price variability. Therefore, this study investigated the economy-wide impacts of export price changes using Recursive Dynamic Computable General Equilibrium model calibrated through 2009/10 Social Accounting Matrix of Ethiopia, developed by International Food and Poverty Research Institute in collaboration with Ethiopia Development Research Institute and University of Sussex. The study reveals increase in export price appreciates domestic currency, rises import demand, but reduces export demand together that worsens Ethiopia trade balance. The increase in export price also weakens investment demand, government income and saving, the overall and sectoral economic growth. It also rises factors return and household income and welfare. Conversely, decrease in export price depreciates domestic currency, which lead to low import, but, high export demand, which in turn leads to improved trade balance. It also increases investment demand, government income and saving, and the overall economic growth. However, decrease in export price results low factors return, household income and welfare. To reduce the negative impacts of export price changes in the overall economy, it is recommended that: a) the exchange rate policy of the country should managed-floating type, b) diversification and industrialization of export sector through integrating commodity policies into the country overall development strategy, and c) harness the income gains from commodity prices to facilitate wider-economic transformations and reduction of dependence on primary commodities export.
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    The Financial Determinants of Private Sector Investment: The Case of Ethiopia
    (Addis Ababa University, 2016-06) Teklay, Brhane; Guta, Fantu (PhD)
    This study mainly emphasized on the financial determinants of private sector investment in Ethiopia using annual time series data from1975-2015. Using Johansen co integration test they have a significant relationship among variables and OLS regression analysis was undertake to estimate long run model and ECM has been used to find out the short run dynamics. In both long run and short run model the financial determinants variable like broad money supply, bank credit and availability of foreign exchange were positive relation with the private investment. The other macro variable taken was the capital expenditure, which is negatively affect in the long run and positively affect private investment in the short run. The researchers conclude based on past literature result’s capital expenditure is positively association with private investment. The short run dynamics of estimated coefficient ECM which suggests a relatively quick speed of adjustment back to the long-run equilibrium. The findings of the study provide evidence that private investment in Ethiopia, like in other developing countries is affected by important financial and macroeconomic variables. The empirical evidence however has certain important policy implications, and in view of that recommendations have also been provided, in an attempt to help increase and stimulate private investment in Ethiopia. Key words: Ethiopia, private investment, financially determinants, Johannes co-integration.