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Ethiopia: Updated Inflation Forecasts

Author

Listed:
  • Durevall, Dick
  • Loening, Josef

Abstract

The purpose of this section is to simulate possible policy scenarios and thus predict the CPI over June 2009 to December 2010 for illustrative purposes. The empirical models are based on Loening, Durevall and Birru (2009). Although highly tentative, our scenarios show that inflation will decrease substantially though inflation inertia may prevent a rapid stabilization of food prices. One of the main driving forces behind domestic inflation is agricultural output growth. While exchange rate and monetary policies can make a significant difference, it is crucial to take into consideration the development of the domestic cereal market. If international prices would start increasing again, they would to have a strong impact on Ethiopia, and the model predictions will not be valid.

Suggested Citation

  • Durevall, Dick & Loening, Josef, 2009. "Ethiopia: Updated Inflation Forecasts," MPRA Paper 25899, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:25899
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    References listed on IDEAS

    as
    1. Graham Elliott & Allan Timmermann, 2016. "Economic Forecasting," Economics Books, Princeton University Press, edition 1, number 10740, December.
    2. Angus Deaton, 1999. "Commodity Prices and Growth in Africa," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 23-40, Summer.
    3. Loening, Josef L. & Durevall, Dick & Birru, Yohannes A., 2009. "Inflation dynamics and food prices in an agricultural economy : the case of Ethiopia," Policy Research Working Paper Series 4969, The World Bank.
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    Keywords

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    JEL classification:

    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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