IDEAS home Printed from https://ideas.repec.org/a/eee/reveco/v96y2024ipas1059056024005537.html
   My bibliography  Save this article

Inflation, exchange rate, and economic growth in Ethiopia: A time series analysis

Author

Listed:
  • Malec, Karel
  • Maitah, Mansoor
  • Rojik, Stanislav
  • Aragaw, Abebe
  • Fulnečková, Pavlína Rojík

Abstract

This study aims to investigate the dynamic relationship between inflation, exchange rate, and economic growth in Ethiopia for the period 1991–2020. This is because of rampant inflation, continuously devalued domestic currency, and the declining growth rate of the country due to violent conflicts. The study uses the ARDL model for short-run and long-run dynamics, the Bound test of co-integration to confirm if the target variables go together or not, and Granger causality tests are performed to detect dynamic effects. The ARDL model estimates suggested that inflation and exchange rate are negatively related to economic growth. This implies that an increase in the price level reduces the production of goods and services, while devaluation has a negative impact by reducing imports of intermediate goods. Thus, increasing domestic resource mobilization, improving regulatory quality, and deepening the financial sector can be viewed as solutions to decrease chronic foreign exchange shortages, lower inflation, and boost economic growth rates.

Suggested Citation

  • Malec, Karel & Maitah, Mansoor & Rojik, Stanislav & Aragaw, Abebe & Fulnečková, Pavlína Rojík, 2024. "Inflation, exchange rate, and economic growth in Ethiopia: A time series analysis," International Review of Economics & Finance, Elsevier, vol. 96(PA).
    • Handle: RePEc:eee:reveco:v:96:y:2024:i:pa:s1059056024005537
    DOI: 10.1016/j.iref.2024.103561
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1059056024005537
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.iref.2024.103561?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:reveco:v:96:y:2024:i:pa:s1059056024005537. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620165 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.