Applied Economic Modeling And Forecasting With (Financial Policy Analysis and Management)
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Item Sustainable Crop Production in Ethiopia: a System Dynamics Approach(A.A.U, 2023-06-05) Biruk Gebretsadik; Zerayehu Sime (PhD)This study discusses how to transform the current crop production system in Ethiopia into a sustainable way of production. Since the current production system poses a danger to the environment and failed to meet the food demand of the growing population, the issue of sustainability arose. To solve the underlying socioeconomic problem of the sector, a holistic and integrated approach is needed. To do this a system dynamics approach is selected. A stock-flow diagram is built to capture the dynamic interaction that exists among social, economic, and environmental aspects of crop production. The model proved its robustness using various model validation tests. Land acidity as well as post-harvest loss, and loss due to incidence of pests and diseases are identified as a major bottleneck of the sector. To determine the leverage point at which the sector becomes sustainable, four scenarios were tested: increasing the share of improved seed relative to local seed; switching from inorganic to organic fertilizer; increasing irrigation area; and expanding agricultural extension services. According to the findings, increasing the use of improved seed and organic fertilizer has a significant potential to promote economic efficiency, social welfare, and environmental sustainability. The simulation's outcome demonstrates that using improved seeds increases productivity and decreases the prevalence of pests and diseases, leading to high crop yields and reduces undernourishment. Furthermore, extensive use of improved seed reduces the need to extend cultivated areas by clearing forests. In addition to increasing productivity, the use of organic fertilizer can lower the amount of greenhouse gases and acidity in the soil that can result from the use of chemical fertilizers. To address the demand for more cultivated land without causing more deforestation, extending irrigation areas was found an effective way to maintain the current level of forest cover. Increasing agricultural extension services reduces reducing post-harvest loss and increases crop production.Item Modeling Inclusive Green Growth and Sustainable Finance through Ecotax: The Application of the System Dynamics Model in Ethiopia(A.A.U., 2023-06-02) Demessie Dea; Zerayehu Eshete (Dr.)Since the introduction of climate resilient and green economy strategy, Ethiopia has developed a series of policies to meet sustainable development goals. A significant portion of climate finance (90%) in Ethiopia comes from grants and loans and the country only invests less than 2% of its GDP in climate-related expenditures. This study tried to model the implications of imposing taxes on pollution emissions on aggregate data and examine its effect on reducing pollution emissions, enhancing sustainable economic growth and social welfare using a more holistic approach in system dynamics. The findings showed that though imposing E cotax can have shortterm negative effects, in the long run, it reduces pollution emissions, enhances sustainable growth, and maintains social welfare through improved per capita income.Item The Determinants of Agricultural Technology Adoption and its’ Impact on Teff Productivity in the Case of Amhara and Oromia National Regional State(Addis Ababa University, 2018-06) Etsehiwot, Semreab; Hailu, Eleas (PhD)Enhancing the productivity of agriculture sector plays a vital role for country like Ethiopia where reducing poverty and sustaining food security is government’s main agenda. In order to enhance the productivity of agriculture sector, Ethiopian government promotes adoption of multiple agriculture technology. However, in most of the rural areas of Ethiopian farmers adopt single and mix of technology rather than adopting all available practices. As a result, understanding the determinant of adoption of multiple agricultural technology and its impacts on productivity is essential to design appropriate policy options for the wider adoption process. Thus, this study analyzes farmer’s choice of single and combination choice of agricultural technologies (i.e. improved teff variety, fertilizer and row planting) and evaluates the impact of these technologies on the productivity of teff. The study used EDRIs' teff value chain data which was collected from 1200 households in Amhara and Oromia regions during 2012. Multinomial logit and endogenous switching regression models were employed to achieve the above objectives. The result of endogenus swiching model reveals that adoption of agricultural technologies has a positive and significant impact on productivity of tef. Moreover the result of the study also shows that full technology adopters’ are more productive than other alternative technology adopters. According to the multinomial logit result, technology adoption is positively related with sex, education, soil fertility, contact with an extension and DAs’ visit. But adoption of agriculture technologies have negative and significant relation with age, distance to main road, distance to the input and out market, parcel ownership and farm size. The study recommends that the government should enhance DAs’ and extension service, increase the access of infrastructure, and encourage women by giving especial service like credit access, extension service and community discussion to widespread the adoption of agricultural technologies.Item Trade Liberalization and Patterns of Trade in Sub- Saharan Africa: A Panel Data Analysis(Addis Ababa University, 2010-05) Lachisa, Gidisa; Estiphanos, Girma (PhD)This paper examines the impact of trade liberalization on sectoral export performance of Sub-Saharan Africa countries using export supply function between the periods 1980 to 2006. The underlying base of the study is the theoretical justification that trade liberalization will lead countries to specialize and export commodities of their comparative advantage. A static panel data analysis based on fixed effect and random effect model was adopted. The main findings are while trade liberalization has a significant positive impact on manufactured export performance; its impact on primary commodity export performance is not worth mentioning. Production capacity of countries in SSA is important factor for the export performance of countries both at aggregate and disaggregate levels. The other explanatory variables are more important in explaining the manufactured export performance.Item The Determinants of Banking System Stability in Ethiopia: A Panel Regression Analysis(Addis Ababa University, 2014-06) Mihretie, Edimealem;This study examines the various bank specific and macroeconomic variables that affect the banking system stability in Ethiopia during the study period ranging from 2000 to 2013. Arellano-Bond estimation technique had been employed to estimate the various determinants. From the Empirical result of this paper it was concluded that previous year banking system stability, economic growth and lending growth to the private sector were amongst determinants that affect the banking system stability positively; whereas total bank’s asset, inflation and real interest rate were found to negatively affect the banking system stability; whilst government budget deficit, exchange rate volatility and treasury bills were found not having any impact on the banking system stability in Ethiopia. The policy implications of these results is so vital to the banking industry in Ethiopia, incase that most of the variables can be maintained and controlled by the National Bank of Ethiopia. The researcher thus finally puts the policy implications based on these results. To maintain the banking system stability in Ethiopia the researcher recommends to uphold: the economic growth of the country, previous year’s banking system stability, bank lending growth and increasing the management’s aptitude especially to lessen the diseconomies of scale in the banking industry; on the contrary the researcher recommends to dwindle the inflation rate and interest rate.Item Analysis of Tax Revenue Forecasting In Ethiopia: An Auto-regressive Distributed Lag Approach(Addis Ababa University, 2013-09) Abate, Demeke; Ferede, Tadele (PhD)This study focuses on the investigation of the causal long‐term relationship between tax revenue and nominal gross domestic product in Ethiopia. In this research the analysis of short term relationship also under taken. Using an error correction model (ECM) model with annual data over the last 32 years from 1980/81 to 2012/13, the study found a close relationship between tax revenue and nominal gross domestic product. The size of the long‐term parameters looks acceptable. The estimation technique employed in this research was auto regressive distributed lag integration approach with one period lag length and the result shows GDP and tax revenue own two period lags affects the tax revenue. These variables have also short term causal relationships and their granger causality is statistically significant.Item The Impact of Foreign Direct Investment on Economic Growth: The Case of Ethiopia(2016-06) Dessie, Betelhem; Mekonnen, Alemu (PhD)This paper analyses the impact of foreign direct investment on the economic growth of Ethiopia using Vector Error Correction Model over the period 1981 to 2015. First the study examined the individual growth impact of foreign direct investment. The empirical finding revealed that foreign direct investment has negative significant effect on economic growth in the long run but insignificant effect in the short run. The study examined the causal relationship between foreign direct investment and per capita gross domestic product by using Pairwise Granger causality test. The Pairwise Granger causality test showsthe existence of causal unidirectional relationship from foreign direct investment to per capita gross domestic product. The study also investigates the impact of other macroeconomic variables on per capita gross domestic product. External debt and real effective exchange rate are found to have negative significant effect on per capita gross domestic product in the short run. In the short run, the impact of gross domestic saving on per capita gross domestic product is found to be positive. As that of the first model here also foreign direct investment has negative significant impact on economic growth. The tax incentives provided to foreign investors and the misuse of tax incentives by the investors can be the possible reasons for the negative relationship between foreign direct investment and gross domestic product.Item The Impact of Government Sectoral Expenditure on Economic Growth in Ethiopia: With a Particular focus on Agriculture, Defense, Education and Health Sectors(Addis Ababa University, 2014-06) Berihun, Bazezew; Mekonnen, Alemu (PhD)This paper investigates the growth impact of government sectoral expenditure in Ethiopia over the period from 1975 to 2013, with a particular focus on sectoral expenditures on education, health, agriculture and defense, by estimating a multivariate co-integration and error correction model to examine the marginal effect of expenditure on each sector on economic growth. The study finds that government spending on education has a positive impact on economic growth in the long-run but an insignificant impact in the short-run. Spending on defense has a negative and significant impact on economic growth both in the long-run and in the short-run. Government spending on agriculture is negatively correlated to growth in the long-run but is insignificant in the short-run. Spending on health and the effect of consumer price index is found to be insignificant both in the long-run and the short-run. Thus, the results suggest that the allocation of government expenditure towards the education sector should be favored in order to enhance sustainable economic growth