This paper attempts an empirical investigation of the impact of exchange rate devaluation on major east African countries trade balance using the panel co-integration and panel group fully modified least square estimation technique from 1990-2014. Whether exchange rate devaluation improves or worsens trade balance has been at the centre of literature debate over time with varying empirical evidences for developed and developing nation. The results indicate that there exist a longrun stationary relationship between trade balance and its determinant-foreign and domestic income, nominal exchange rate as employed in the study. The research major findings include; nominal exchange rate induces inelastic and significant relation on trade balance in the long run. From this, the paper concludes that the trade balance deteriorate with increasing depreciation of exchange rate (as a value effect in east African countries). Again, it found that the coefficient of domestic income is negative and significant implying that the booming of real domestic income increases the purchasing power of their household to import more resulting trade deficit in the long run. Moreover the paper found that inelastic coefficient of nominal exchange rate in line with the theoretical Marshall-Lerner condition i.e. "the demand for import and export is inelastic then devaluation would further increase the trade deficit" [21]. Therefore based on the empirical findings the researcher recommends that the policy maker of these countries should take emphasis not to devaluate exchange rate more and selecting countries with higher income to make import and export elastic and improve trade balance in the long run.

A growing consumer price is creating instability in the macroeconomic environment and hinders the consumption level of especially the poor society. This paper then explored the major causes of such increasing consumer prices using Ethiopian cases. Using data from the National Bank of Ethiopia from 1982/1983 to 2019/2020, it condensed the information of monetary sector, external sector and fiscal sector variables to a small set to estimate the causes of Ethiopian consumer price hiking using the ARDL model. The factors determining consumer price differ from food to non-food. The most important factors determining food price are price expectation and fiscal factors. On the other hand, the main determinant of non-food consumer prices is the fiscal factor. The author also found evidence of fiscal factors and price expectation effects on general consumer prices. Therefore, to contain the rise in consumer prices, it needs to exercise conservative fiscal stances, which require minimizing deficit financing, reducing the import tax rate and reducing domestic indirect tax rates such as excise tax and value added tax on basic consumer goods and services. Moreover, sound government policies are essential to address inflation anticipations (providing information for society about the future of inflation) to change public opinion.

Velocity of money is an important instrument used to measure the monetary target and quality of monetary policy. Referencing the trends in the money velocity, mainly in the short term, will have a paramount effect in determining the trends in real money growth. This study investigates the main causes of money velocity in Ethiopia using time series data for the period 1974/75 to 2015/16. A regression with Bayesian estimation and nonparametric Locally Weighted Scatterplot Smoothing (LOWESS) methods were used to analyze the data. Variables such as credit, real interest rate, real exchange rate and real per capita income were included as potential determinants of money velocity. The findings of using non-parametric LOWESS methods show an upward trends in the velocity of money since 2002 and downward trends before 2002, indicating the existence’s of prudent monetary policy in Ethiopia after 2002. The result also shows a positive effect of real exchange rate and credit, whereas income per capita and real interest rates have a negative effect on velocity of money in Ethiopia. Hence, this paper recommends that, the policy to encourage sustainable economic growth and increase in interest rate would be beneficial to reduce velocity of money.