International Journal of Commerce and Finance (Oct 2019)

e-ISSN 2149-9608 User Username Password Remember me Article Tools Print this article Indexing metadata How to cite item Email this article (Login required) Email the author (Login required) Journal Content Search Search Scope All Authors Title Abstract Index terms Full Text Browse •By Issue •By Author •By Title Keywords Assets structure, Capital expenditures structure (CES), Cost of capital, Shareholders’ wealth, Unused resources Bank Size Business-IT Alignment, Business Agility, Banking Sector Corporate Culture, Financial Risk Management, Islamic Social Enterprises Credit collection, Portfolio at risk, Microfinance institutions Earning Management, Islamic Bank, Indonesia, Malaysia. Financial leverage, Firm size, Profitability, Firm performance Firm Performance, Organizational Ambidexterity, Family Business Gender, Entrepreneurship, Jammu and Kashmir, Sociocultural diversity Inflation Job Satisfaction, Organizational Identification, Organizational Citizenship Behavior LMX, Emotional Labor, Commitment, Performance Non Performing Financing Oil, Natural Gas, Energy, Energy Policies, EU, Russia, Turkey, Syria Profit and Loss Sharing Project team success, Organizational support, Team autonomy, Team cohesion Psychological capital, work-family balance, perceived organizational support Risk, value chain risk management, internal factors Scrum, Agile, Team Turkey, EU Countries, Custom Union, Trade Relations, Importation, Exportation, Economical Integration eBoL, document of title, negotiability, pledge, EDI Information •For Readers •For Authors •For Librarians Notifications •View •Subscribe Open Journal Systems Home About Register Archives Announcements Authors Referees Help Home > Vol 5, No 2 (2019) > Nigusse Supply and Demand Side Determinants of Inflation in Ethiopia: Auto-Regressive Distributed Lag Model (ARDL)

  • Tekeber Nigusse,
  • Tekilu Tadesse,
  • Tesfaye Melaku

Journal volume & issue
Vol. 5, no. 2
pp. 8 – 21


Read online

Inflation is defined as a persistent increase in general price level of goods and services. Even though Ethiopia has experienced a low inflation until 2008, recently, double digit inflation has become troublesome for policy makers as well as the society. So, this study tried to examine the supply and demand side determinant of inflation in Ethiopia by employing the techniques of Auto-Regressive Distributed Lag Model (ARDL) for 32 years’ data spanning from 1985 to 2016. The study included macroeconomic determinant that alter or change inflation level measured by consumer price index such as money supply, real gross domestic product, world oil price, budget deficit and real effective exchange rate. The results of bound test confirmed that the long run relationship between explanatory variables and consumer price index in Ethiopia. The empirical results implied evidence of a long-run positive impact of money supply, world oil price, budget deficit and real effective exchange rate on inflation in Ethiopia whereas as real gross domestic product insignificantly affect price level . Finally, from the finding of our study in the short run, real effective exchange rate, money supply budget deficit and world oil price are the main determinant of inflation in Ethiopia. Given these findings, the effectiveness of fiscal deficit and exchange rate as well as contractionary monetary policy as a mechanism of price stabilization in the long run and short run is recommendable for policy inference.