A closer look at the data evidence on Ethiopia shows that both actual and equilibrium real effective exchange rates have been depreciating from the first quarter of 1993 to the fourth quarter of 2004. After 2004, while the actual value started to significantly appreciate, the equilibrium value has followed a fairly constant trend. An econometric analysis (Vector Autoregression) reveals that government consumption spending and growth in net domestic credit depreciates the real effective exchange rate both in the short run and the long run; while the ratio of fiscal deficit to high powered...
A closer look at the data evidence on Ethiopia shows that both actual and equilibrium real effective exchange rates have been depreciating from the fi...
