Economic Implications of Foreign Exchange Rationing in Ethiopia

Paul Dorosh (), Sherman Robinson and Ahmed Hashim

Ethiopian Journal of Economics, 2009, vol. 18, issue 2, 132

Abstract: Increases in foreign transfers and capital inflows helped spur Ethiopia’s economic growth in recent years, but also contributed to a real exchange rate appreciation that reduced incentives for production of tradable goods. Then, beginning in March 2008, following major external shocks, foreign exchange for imports was restricted to avoid excessive drawdown of reserves. This paper examines the implications of these shocks and policies using a Computable General Equilibrium (CGE) model of the Ethiopian economy. The results show that there are substantial costs to both foreign exchange rationing and real exchange rate appreciation in terms of economic efficiency and income distribution.

Keywords: Financial; Economics (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Economic implications of foreign exchange rationing in Ethiopia (2009)
Working Paper: Economic implications of foreign exchange rationing in Ethiopia (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eeaeje:249605

DOI: 10.22004/ag.econ.249605

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