Empirical investigation on the comparative potency of monetary and fiscal policies is still dubious among two major schools of thought in economics so called classical and Keynesian. Hence, this paper investigates the relative effectiveness of monetary and fiscal policies in affecting economic growth by employing Auto-Regressive Distributive Lag Model (ARDL) for the time spanning from 1975 to 2017. The proxies used in this study for monetary and fiscal policy were Broad money supply (M2) and govern-Tekilu Tadesse, Tesfaye Melaku 88 ment consumption expenditure respectively while real GDP at constant prices in 2010 is used as proxy for economic growth in Ethiopia. Anderson and Jordan (1968) "St. Louis equation'' has been used to estimate the comparative potency of monetary and fiscal policies. The empirical results indicate that both the monetary and fiscal policies have equal statistically significant and positive impact on economic growth in Ethiopia with different significance level and magnitude. Besides of equal effectiveness, the elasticity of real output with respect to fiscal policy variable is greater than the elasticity with respect to money supply which show fiscal policy is more effective than monetary policy in influencing Real GDP in the long-run. However, in the short run, the fiscal policy is effective while that of the monetary policy proxy by money supply is ineffective in affecting output growth in Ethiopia. Therefore, to have continuous and sustainable economic growth, the coordination of monetary and fiscal policies are vital and the lack of this coordination leads to a sharp downturn of overall economic performance, even can hurt the economy.
This study investigates the patterns of global coffee trade flows and identifies the major determinants of global coffee trade by incorporating RTAs as important variable. Gravity modeling with OLS and PPML estimator was employed for the analysis using panel data on bilateral coffee trade flows of 18 major coffee exporters and 201 trading partners for the period 2001-2015. Both exporter GDP (and population) as well as importer GDP were found to be important determinants enhancing coffee trade. Of the bilateral distance variables, physical distance is found to impede coffee trade, while common border was found to enhance it. On the other hand, cultural (distance) variables like colonial link, common colonizer and common language were also found to enhance coffee trade. Other variables that were found to significantly enhance coffee trade include depreciation in exporting country's exchange rate, the amount of arable land in exporting country, infrastructure and global financial crisis. On the other hand, importing country tariff was found to significantly reduce coffee trade as expected. Surprisingly, the RTA variable had no significant impact on coffee bilateral trade.
Ethiopian economy had passed through different regimes and, hence economic policies had formulated differently. As a result, national economic policies were set in line with the respective regime's political ideology as policies are directed with the intention of achieving a wide range of macroeconomic goals. Throughout all regimes, the major financial institutions operating in Ethiopia are banks, insurance companies, and microfinance institutions and the financial sector of the country shows a slightly on the way of growth but the performance of the financial sector of Ethiopia as compared to other middle-income African countries shows the need for more improvement which show still weak financial system which manifested in high government regulation and dominance of the government-owned commercial bank in terms of holding assets, savings mobilization, and loans disbursement. Following different economic policies set by different regimes, on average, the service sector has contributed increasingly and agricultural sector decreasingly contribute to economic growth while until implementation of Growth and Transformation plan I, industry sector showed a slow trend in contribution to economic growth In line with surprising economic growth registered last one decades, the financial system in Ethiopia has also improved following rapid growth in the number of participating institutions including the scope and services rendered in which the system comprises the regulatory authorities, banks, non-bank financial institutions.
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