Economic Implications of Foreign Exchange Rationing in Ethiopia

Increases in foreign transfers and capital inflows helped spur Ethiopia’s economic growth in recent years, but also contributed to a real exchange rate appreciation that reduced incentives for production of tradable goods. Then, beginning in March 2008, following major external shocks, foreign exchange for imports was restricted to avoid excessive drawdown of reserves. This paper examines the implications of these shocks and policies using a Computable General Equilibrium (CGE) model of the Ethiopian economy. The results show that there are substantial costs to both foreign exchange rationing and real exchange rate appreciation in terms of economic efficiency and income distribution.


Editor(s):
Getnet, Alemu
Alemayehu, Seyoum
Alemu, Mekonnen
Eyob, Tesfaye
Gezahegn, Ayele
Diwan, Ishak
Issue Date:
2009-08
Publication Type:
Journal Article
DOI and Other Identifiers:
ISSN 1993-3681 (Other)
PURL Identifier:
http://purl.umn.edu/249605
Published in:
Ethiopian Journal of Economics, Volume 18, Number 2
Page range:
1-30
Total Pages:
132
JEL Codes:
D58 (Computable and Other Applied General Equilibrium Models); O2 (Development Planning and Policy); F31 (Foreign Exchange); O24 (Trade Policy; Factor Movement Policy; Foreign Exchange Policy).
Series Statement:
ETHIOPIAN JOURNAL OF ECONOMICS
VOLUME XVII NUMBER 2 October 2008




 Record created 2017-04-01, last modified 2017-12-07

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