The Relative Effectiveness of Monetary and Fiscal Policy on Output in Ethiopia

Mengesha Manedo

doi:doi:10.11648/j.ijfbr.20220804.11

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The Relative Effectiveness of Monetary and Fiscal Policy on Output in Ethiopia

Mengesha Manedo

Published in International Journal of Finance and Banking Research (Volume 8, Issue 4)

Received: 3 May 2022 Accepted: 1 July 2022 Published: 28 July 2022

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Abstract

Ethiopia had been taking number of Monetary and Fiscal policy actions in order to stabilize the macro economy like output since long time, however their relative effectiveness on output in Ethiopia has not yet clearly identified, therefore the objective of this study was to see the relative effectiveness of fiscal and monetary policy on Output in Ethiopia using quarterly data from 2001Q1-2021Q4 by using Structural vector autoregressive (SVAR) model. The monetary policy measured by Broad money (M2) and private sector credit, the government expenditure and budget deficit used as indicators for fiscal policy variables other variables such as Real effective exchange rate and Consumer Price Index are used as control variables. To see the contemporaneous effects of the variables and to analyze the data and draw conclusions and policy inferences the structural vector autoregressive model was employed. The empirical result showed that, the effect of monetary policy is much stronger than fiscal policy even though both policies are significant in affecting output. The findings are consistent with previous empirical findings. The implication of this is that, there should be more focus and confidence on both monetary and fiscal policy for the purpose affecting output and economic stabilization in Ethiopia. Hence, both fiscal and monetary policies should be used in a coordination to get better output.

Published in	International Journal of Finance and Banking Research (Volume 8, Issue 4)
DOI	10.11648/j.ijfbr.20220804.11
Page(s)	105-123
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Monetary Policy, Fiscal Policy, Output, SVAR, Ethiopia

References

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APA Style

Mengesha Manedo. (2022). The Relative Effectiveness of Monetary and Fiscal Policy on Output in Ethiopia. International Journal of Finance and Banking Research, 8(4), 105-123. https://doi.org/10.11648/j.ijfbr.20220804.11

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ACS Style

Mengesha Manedo. The Relative Effectiveness of Monetary and Fiscal Policy on Output in Ethiopia. Int. J. Finance Bank. Res. 2022, 8(4), 105-123. doi: 10.11648/j.ijfbr.20220804.11

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AMA Style

Mengesha Manedo. The Relative Effectiveness of Monetary and Fiscal Policy on Output in Ethiopia. Int J Finance Bank Res. 2022;8(4):105-123. doi: 10.11648/j.ijfbr.20220804.11

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@article{10.11648/j.ijfbr.20220804.11,
  author = {Mengesha Manedo},
  title = {The Relative Effectiveness of Monetary and Fiscal Policy on Output in Ethiopia},
  journal = {International Journal of Finance and Banking Research},
  volume = {8},
  number = {4},
  pages = {105-123},
  doi = {10.11648/j.ijfbr.20220804.11},
  url = {https://doi.org/10.11648/j.ijfbr.20220804.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20220804.11},
  abstract = {Ethiopia had been taking number of Monetary and Fiscal policy actions in order to stabilize the macro economy like output since long time, however their relative effectiveness on output in Ethiopia has not yet clearly identified, therefore the objective of this study was to see the relative effectiveness of fiscal and monetary policy on Output in Ethiopia using quarterly data from 2001Q1-2021Q4 by using Structural vector autoregressive (SVAR) model. The monetary policy measured by Broad money (M2) and private sector credit, the government expenditure and budget deficit used as indicators for fiscal policy variables other variables such as Real effective exchange rate and Consumer Price Index are used as control variables. To see the contemporaneous effects of the variables and to analyze the data and draw conclusions and policy inferences the structural vector autoregressive model was employed. The empirical result showed that, the effect of monetary policy is much stronger than fiscal policy even though both policies are significant in affecting output. The findings are consistent with previous empirical findings. The implication of this is that, there should be more focus and confidence on both monetary and fiscal policy for the purpose affecting output and economic stabilization in Ethiopia. Hence, both fiscal and monetary policies should be used in a coordination to get better output.},
 year = {2022}
}

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TY  - JOUR
T1  - The Relative Effectiveness of Monetary and Fiscal Policy on Output in Ethiopia
AU  - Mengesha Manedo
Y1  - 2022/07/28
PY  - 2022
N1  - https://doi.org/10.11648/j.ijfbr.20220804.11
DO  - 10.11648/j.ijfbr.20220804.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 105
EP  - 123
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20220804.11
AB  - Ethiopia had been taking number of Monetary and Fiscal policy actions in order to stabilize the macro economy like output since long time, however their relative effectiveness on output in Ethiopia has not yet clearly identified, therefore the objective of this study was to see the relative effectiveness of fiscal and monetary policy on Output in Ethiopia using quarterly data from 2001Q1-2021Q4 by using Structural vector autoregressive (SVAR) model. The monetary policy measured by Broad money (M2) and private sector credit, the government expenditure and budget deficit used as indicators for fiscal policy variables other variables such as Real effective exchange rate and Consumer Price Index are used as control variables. To see the contemporaneous effects of the variables and to analyze the data and draw conclusions and policy inferences the structural vector autoregressive model was employed. The empirical result showed that, the effect of monetary policy is much stronger than fiscal policy even though both policies are significant in affecting output. The findings are consistent with previous empirical findings. The implication of this is that, there should be more focus and confidence on both monetary and fiscal policy for the purpose affecting output and economic stabilization in Ethiopia. Hence, both fiscal and monetary policies should be used in a coordination to get better output.
VL  - 8
IS  - 4
ER  -

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Author Information

Mengesha Manedo

National Bank of Ethiopia, Addis Ababa, Ethiopia

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Plain Text BibTeX RIS

APA Style

Mengesha Manedo. (2022). The Relative Effectiveness of Monetary and Fiscal Policy on Output in Ethiopia. International Journal of Finance and Banking Research, 8(4), 105-123. https://doi.org/10.11648/j.ijfbr.20220804.11

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ACS Style

Mengesha Manedo. The Relative Effectiveness of Monetary and Fiscal Policy on Output in Ethiopia. Int. J. Finance Bank. Res. 2022, 8(4), 105-123. doi: 10.11648/j.ijfbr.20220804.11

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AMA Style

Mengesha Manedo. The Relative Effectiveness of Monetary and Fiscal Policy on Output in Ethiopia. Int J Finance Bank Res. 2022;8(4):105-123. doi: 10.11648/j.ijfbr.20220804.11

Copy | Download

@article{10.11648/j.ijfbr.20220804.11,
  author = {Mengesha Manedo},
  title = {The Relative Effectiveness of Monetary and Fiscal Policy on Output in Ethiopia},
  journal = {International Journal of Finance and Banking Research},
  volume = {8},
  number = {4},
  pages = {105-123},
  doi = {10.11648/j.ijfbr.20220804.11},
  url = {https://doi.org/10.11648/j.ijfbr.20220804.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20220804.11},
  abstract = {Ethiopia had been taking number of Monetary and Fiscal policy actions in order to stabilize the macro economy like output since long time, however their relative effectiveness on output in Ethiopia has not yet clearly identified, therefore the objective of this study was to see the relative effectiveness of fiscal and monetary policy on Output in Ethiopia using quarterly data from 2001Q1-2021Q4 by using Structural vector autoregressive (SVAR) model. The monetary policy measured by Broad money (M2) and private sector credit, the government expenditure and budget deficit used as indicators for fiscal policy variables other variables such as Real effective exchange rate and Consumer Price Index are used as control variables. To see the contemporaneous effects of the variables and to analyze the data and draw conclusions and policy inferences the structural vector autoregressive model was employed. The empirical result showed that, the effect of monetary policy is much stronger than fiscal policy even though both policies are significant in affecting output. The findings are consistent with previous empirical findings. The implication of this is that, there should be more focus and confidence on both monetary and fiscal policy for the purpose affecting output and economic stabilization in Ethiopia. Hence, both fiscal and monetary policies should be used in a coordination to get better output.},
 year = {2022}
}

Copy | Download

TY  - JOUR
T1  - The Relative Effectiveness of Monetary and Fiscal Policy on Output in Ethiopia
AU  - Mengesha Manedo
Y1  - 2022/07/28
PY  - 2022
N1  - https://doi.org/10.11648/j.ijfbr.20220804.11
DO  - 10.11648/j.ijfbr.20220804.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 105
EP  - 123
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20220804.11
AB  - Ethiopia had been taking number of Monetary and Fiscal policy actions in order to stabilize the macro economy like output since long time, however their relative effectiveness on output in Ethiopia has not yet clearly identified, therefore the objective of this study was to see the relative effectiveness of fiscal and monetary policy on Output in Ethiopia using quarterly data from 2001Q1-2021Q4 by using Structural vector autoregressive (SVAR) model. The monetary policy measured by Broad money (M2) and private sector credit, the government expenditure and budget deficit used as indicators for fiscal policy variables other variables such as Real effective exchange rate and Consumer Price Index are used as control variables. To see the contemporaneous effects of the variables and to analyze the data and draw conclusions and policy inferences the structural vector autoregressive model was employed. The empirical result showed that, the effect of monetary policy is much stronger than fiscal policy even though both policies are significant in affecting output. The findings are consistent with previous empirical findings. The implication of this is that, there should be more focus and confidence on both monetary and fiscal policy for the purpose affecting output and economic stabilization in Ethiopia. Hence, both fiscal and monetary policies should be used in a coordination to get better output.
VL  - 8
IS  - 4
ER  -

Copy | Download