The Parallel Exchange Rate and the Premium in Ethiopia
| dc.contributor.advisor | Abadi, Taddesse(Dr.) | |
| dc.contributor.author | Degefa, Derrese | |
| dc.date.accessioned | 2021-07-26T13:44:29Z | |
| dc.date.accessioned | 2023-11-04T10:30:14Z | |
| dc.date.available | 2021-07-26T13:44:29Z | |
| dc.date.available | 2023-11-04T10:30:14Z | |
| dc.date.issued | 1996-06 | |
| dc.description.abstract | In response to excess demand for foreign exchange in the official market, parallel markets for foreign exchange develop . The emergence and existence of active parallel foreign exchange market creates several complications to policy makers in their attempt to regulate the external balance. That is, variation in the parallel exchange rate and the premium affect the level of international reserves. Ethiopia had high parallel premium for foreign exchange for 1973-1993 period and moderate premium in 1972, 1994 and 1995. As to what determines the movement in the behavior of the parallel exchange rate and the premium in Ethiopia is the objective of this study to investigate. Accordingly, stock-flow model is adopted to find out the determinants of the variation in the parallel premium while simultaneous equation smuggling model is used to investigate the determinants of the parallel exchange rate in Ethiopia. By employing the above models, the study came out with the result that real official exchange rate, real money balance, import tariff rate, real output and one year lagged level of the premium are the determinants of the variation in the spread between the parallel and the official exchange rates in the long-run while its short-run determinants are found to be real official exchange rate, import tariff rate, and one period lagged level of the premium. On the other hand, the movement in the parallel exchange rate is found to be determined by desired imports, trade restrictions and enforcement of exchange control, and trade and exchange rate policy reforms. Hence, policy makers should take into account the found determinants of the parallel exchange rate and the premium so as to formulate sound exchange rate policy, i. e., in order to reduce the parallel premium to insignificant level or to unify the official and the parallel exchange rates of Ethiopia. | en_US |
| dc.identifier.uri | http://etd.aau.edu.et/handle/123456789/27352 | |
| dc.language.iso | en | en_US |
| dc.publisher | A.A.U | en_US |
| dc.subject | Exchange Rate and the Premium in Ethiopia | en_US |
| dc.title | The Parallel Exchange Rate and the Premium in Ethiopia | en_US |
| dc.type | Thesis | en_US |