Determinants of Recent Inflation in Ethiopia

Sisay Menji
Authors registered in the RePEc Author Service: Sisay Menji Bekena ()

MPRA Paper from University Library of Munich, Germany

Abstract: 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.

Keywords: Inflation; Money Supply; Government Expenditure; GDP; Real Interest Rates (search for similar items in EconPapers)
JEL-codes: E2 (search for similar items in EconPapers)
Date: 2008-08-31
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Citations: View citations in EconPapers (1)

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