Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/65429
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dc.contributor.authorMartins, Pedro M. G.en_US
dc.date.accessioned2011-03-16en_US
dc.date.accessioned2012-10-24T12:00:44Z-
dc.date.available2012-10-24T12:00:44Z-
dc.date.issued2010en_US
dc.identifier.urihttp://hdl.handle.net/10419/65429-
dc.description.abstractThis paper investigates the determinants of the real exchange rate (RER) in Ethiopia. In particular, it assesses whether large capital inflows (e.g. foreign aid and remittances) have an impact on the RER. This empirical exercise tries to improve the current literature in a number of ways: (i) the use of quarterly data provides a larger sample size and enables the modelling of important intra-year dynamics, which should lead to better model specifications; (ii) the use of several cointegration approaches allows interesting methodological comparisons; and (iii) the use of a time series model (Unobserved Components) provides a new empirical approach and a robustness check on the econometric models. The results suggest two main (long-run) determinants of the RER in Ethiopia: trade openness is found to be correlated with RER depreciations, while a positive shock to the terms of trade tends to appreciate the RER. Foreign aid is not found to have a statistically significant impact, while there is only weak evidence that workers' remittances could be associated with RER appreciations. The lack of empirical support for the Dutch disease hypothesis suggests that Ethiopia has been able to effectively manage large capital inflows, thus avoiding major episodes of macroeconomic instability.en_US
dc.language.isoengen_US
dc.publisher|aCentre for Research in Economic Development and International Trade, Univ. of Nottingham |cNottinghamen_US
dc.relation.ispartofseries|aCREDIT Research Paper |x10/07en_US
dc.subject.jelC22en_US
dc.subject.jelF35en_US
dc.subject.jelO24en_US
dc.subject.jelO55en_US
dc.subject.ddc330en_US
dc.subject.keywordReal Exchange Rateen_US
dc.subject.keywordForeign Aiden_US
dc.subject.keywordTime Series Modelsen_US
dc.subject.keywordAfricaen_US
dc.subject.stwKapitalimporten_US
dc.subject.stwWettbewerben_US
dc.subject.stwWechselkursen_US
dc.subject.stw√Ąthiopienen_US
dc.titleDo capital inflows hinder competitiveness? The real exchange rate in Ethiopiaen_US
dc.typeWorking Paperen_US
dc.identifier.ppn654202680en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US

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