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Measuring The Real Exchange Misalignment Of Ethiopia

Abstract: 

This paper tries to develop a model for the real exchange rate of Ethiopia .More specifically, the study attempts to examine whether Ethiopia 's real exchange rate is misaligned with respect to its /ong-run equilibrium level and answers such question as: (1) what are the constituent parts of the /ong-run equilibrium RER? (2) Which variables set the movement of the equilibrium real exchange rate? (3) Based on the
findings calculate the degree of misalignment and (4) what policy measures could be taken to rea/ign the real exchange rate with its equilibrium level. The empirical estimation results conclude that, terms of trade (TOT), external aid inflows (ODA), commercial policy stance (CPS), central bank reserve (CBR) and investment to GDP ratio were found to influence the /ong-run real exchange rate in the case of Ethiopia. However, variables such as nominal devaluation and real money supply are found to have no effect on the real exchange rate.

Corporate Author: 
Getnet Alemu and Getachew Yoseph (Editor) & Ethiopian Economic Association/Ethiopian Economic Policy Research Institute
Publisher: 
Ethiopian Economic Association (EEA)
ISBN/ISSN: 
978-9994-54-03-7
Primary Descriptors: 

<p>Real Exchange</p>

Secondary Descriptor: 

Geographic Descriptors: 
Ethiopia
Cataloge Date: 
02/27/2013
Broad Subject heading: 
GROWTH AND DEVELOPMENT
Call Number: 
330.963 PRO 2007
Serial Key Title: 
Proceedings of the Fourth International Conference on the Ethiopian Economy
Publication catagory: 
Content type: 
Volume: 
I
Publication date: 
2013-05-27 00:00:00
Forum or Discussion date: 
2013-02-27 00:00:00
Place of publication: 
Addis Ababa, Ethiopia
Type of material: 
Book
Current frequency: 
Annualy