Ethiopia: Updated Inflation Forecasts
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.
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- Elliott, Graham & Timmermann, Allan G, 2007.
CEPR Discussion Papers
6158, C.E.P.R. Discussion Papers.
- Deaton, A., 1999.
"Commodity Prices and Growth in Aftica,"
186, Princeton, Woodrow Wilson School - Development Studies.
- 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.
- Loening, Josef L. & Durevall, Dick & Ayalew Birru, Yohannes, 2009. "Inflation Dynamics and Food Prices in an Agricultural Economy: The Case of Ethiopia," Working Papers in Economics 347, University of Gothenburg, Department of Economics.
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