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Economic implications of foreign exchange rationing in Ethiopia

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This paper examines macro-economic developments in Ethiopia between 2004/05 and 2008/09, focusing on the external accounts and the real exchange rate. Simulations using a Computable General Equilibrium (CGE) model of Ethiopia's economy show that, compared to a policy of foreign exchange rationing, a...

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Main Authors: Dorosh, Paul A., Robinson, Sherman, Ahmed, Hashim A.
Format: Brief
Language:Inglés
Published: International Food Policy Research Institute 2009
Subjects:
currencies
computable general equilibrium models
prices
economic growth
import controls
agriculture
welfare economics
development policies
globalization
markets
Online Access:https://hdl.handle.net/10568/162063
Summary:This paper examines macro-economic developments in Ethiopia between 2004/05 and 2008/09, focusing on the external accounts and the real exchange rate. Simulations using a Computable General Equilibrium (CGE) model of Ethiopia's economy show that, compared to a policy of foreign exchange rationing, a policy of real exchange rate depreciation and no rationing improves economic efficiency and welfare of all households except those who receive the rents (excess profits) arising from rationing.

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