Publication:
Monetary, Fiscal, and Structural Drivers of Inflation in Ethiopia: New Empirical Evidence from Time Series Analysis

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dc.contributor.authorNdikumana, Léonce
dc.contributor.authorNkurunziza, Janvier D.
dc.contributor.authorSanchez Martin, Miguel Eduardo
dc.contributor.authorMulugeta, Samuel
dc.contributor.authorGetachew Kelbore, Zerihun
dc.date.accessioned2021-12-16T16:27:16Z
dc.date.available2021-12-16T16:27:16Z
dc.date.issued2021-12
dc.description.abstractThis study empirically investigates the drivers of inflation in Ethiopia using monthly data from July 1998 to September 2020. It explores short-run and long-run effects of domestic and external determinants of inflation—including demand-side, supply-side, and structural factors—using the cointegration and vector error correction methodology. Four measures of inflation are considered: cereals, food, nonfood, and all items consumer price index inflation. A key contribution to the existing literature is the investigation of the role of the fiscal sector in modeling inflation, a topic that has been neglected in the existing studies on inflation in Ethiopia. The empirical results show that disequilibria in the monetary sector, grains sector, and food markets have long-run effects on inflation. In the short run, inflation is driven by structural factors (notably, cereal output gaps and imported inflation) as well as demand-side factors (notably, money growth and public sector borrowing). The results hold when the analysis is limited to the high growth period from 2005 onward, following the end of the International Monetary Fund program in the country. The evidence provides valuable insights in the context of ongoing macroeconomic policy reforms in Ethiopia.en
dc.identifierhttp://documents.worldbank.org/curated/undefined/889061639421282989/Monetary-Fiscal-and-Structural-Drivers-of-Inflation-in-Ethiopia-New-Empirical-Evidence-from-Time-Series-Analysis
dc.identifier.doi10.1596/1813-9450-9881
dc.identifier.urihttps://hdl.handle.net/10986/36739
dc.languageEnglish
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 9881
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.subjectINFLATION
dc.subjectMONETARY POLICY
dc.subjectFISCAL POLICY
dc.subjectEXCHANGE RATE
dc.subjectEXTERNAL SHOCK
dc.subjectFOOD PRICE
dc.subjectCEREAL OUTPUT GAP
dc.titleMonetary, Fiscal, and Structural Drivers of Inflation in Ethiopiaen
dc.title.subtitleNew Empirical Evidence from Time Series Analysisen
dc.typeWorking Paperen
dc.typeDocument de travailfr
dc.typeDocumento de trabajoes
dspace.entity.typePublication
okr.crossref.titleMonetary, Fiscal, and Structural Drivers of Inflation in Ethiopia: New Empirical Evidence from Time Series Analysis
okr.date.disclosure2021-12-13
okr.date.doiregistration2025-04-10T09:23:37.910808Z
okr.date.lastmodified2021-12-13T00:00:00Zen
okr.doctypePublications & Research
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://documents.worldbank.org/curated/undefined/889061639421282989/Monetary-Fiscal-and-Structural-Drivers-of-Inflation-in-Ethiopia-New-Empirical-Evidence-from-Time-Series-Analysis
okr.guid889061639421282989
okr.identifier.doi10.1596/1813-9450-9881
okr.identifier.externaldocumentum090224b088c1b9c1_1_0
okr.identifier.internaldocumentum33672570
okr.identifier.reportWPS9881
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/889061639421282989/pdf/Monetary-Fiscal-and-Structural-Drivers-of-Inflation-in-Ethiopia-New-Empirical-Evidence-from-Time-Series-Analysis.pdfen
okr.region.administrativeAfrica
okr.region.administrativeAfrica Eastern and Southern (AFE)
okr.region.countryEthiopia
okr.topicAgriculture::Food Security
okr.topicMacroeconomics and Economic Growth::Fiscal & Monetary Policy
okr.topicMacroeconomics and Economic Growth::Inflation
okr.unitMacroeconomics, Trade and Investment Global Practice
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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