Modeling the Growth of Ethiopian Inflation and its Dynamic Behavior over Time

Habtamu Getnet Altasseb

Modeling the Growth of Ethiopian Inflation and its Dynamic Behavior over Time

Habtamu Getnet Altasseb * §

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Erasmus University Rotterdam

Modeling the Growth of Ethiopian Inflation and its Dynamic Behavior over Time

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Abstract

Since 2004, Ethiopian economy had been continually facing unprecedented and double digit inflation growth. Using annual data over the past three decades (1980 to 2012), the study identified short run and long run dynamic interactions among key macroeconomic indicators involving structural and or domestic, monetary and external factors. The empirical strategy combines two separate estimations: the VECM and a multi factor single-equation model. The study found that the effect of supply side, monetary and external factors are highly significant to explain price inflation through their long run co-integrating (equilibriums) relationships. In the short run, changes in inflation are highly sensitive to the change in money growth, the cost of capital, exchange rate and inertia. Policies that geared towards concurrently maximizing agricultural growth, and flourishing structural rigidities on the one hand and pursuing monetary tightening and stable exchange rate polices on the other hand would enable to ensure stable inflation.

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

Habtamu Getnet Altasseb. 2015. "Modeling the Growth of Ethiopian Inflation and its Dynamic Behavior over Time". Global Journal of Human-Social Science - H: Interdisciplinary GJHSS-H Volume 15 (GJHSS Volume 15 Issue H7).

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GJHSS Volume 15 Issue H7

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Journal Specifications

Crossref Journal DOI 10.17406/GJHSS

Print ISSN 0975-587X

e-ISSN 2249-460X

Keywords

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Classification

GJHSS-H Classification FOR Code: 160808

Submission ReceivedFebruary 12, 2015
Peer Review Double Blind
Handling Editor
Accepted March 1, 2015
Published March 15, 2015

Version of record

v1.2

Issue date

October 7, 2015

Language

English

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Article Matrices

Total Score: 71

Country: Ethiopia

Subject: Global Journal of Human-Social Science

Authors: Habtamu Getnet Altasseb (PhD/Dr. count: 0)

View Count (all-time): 362

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Publish Date: 2015 03, Sun

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