Mulat, Teshome(Dr.)Tsegaye, Deressu2021-07-282023-11-042021-07-282023-11-041996-06http://etd.aau.edu.et/handle/123456789/27406Immediately 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.enDeterminants in EthiopiaThesis