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Determinants of Recent Inflation in Ethiopia

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  • Menji, Sisay

Abstract

Inflation has been a rising in Ethiopia during recent years, mainly fueled by food inflation. In the study, an analysis of the determinants of inflation was made using quarterly data during 1997/98 – 2007/08. The research employed Co-integration regression after finding that the variables included in the model were cointegrated. The results from the study depicts that inflation was significantly affected by money supply growth (positively) and domestic output (negatively). Though expected to have a significant effect; fluctuations in the official exchange rate, gas oil price, and budget deficit were found to have an insignificant impact on the inflation rate. Surprisingly though expected to have an insignificant impact, lending rate was found to have a significant impact on the inflation rate. The study concludes with recommendations to avert inflation.

Suggested Citation

  • Menji, Sisay, 2008. "Determinants of Recent Inflation in Ethiopia," MPRA Paper 29668, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:29668
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    References listed on IDEAS

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    Cited by:

    1. Nazima Ellahi, 2017. "The Determinants of Inflation in Pakistan: An Econometric Analysis," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 20(64), pages 2-12, June.

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    More about this item

    Keywords

    Inflation; Money Supply; Government Expenditure; GDP; Real Interest Rates;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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