Computer Science
4 years ago

Real interest rates and exchange rates drive inflation in Ethiopia.

Journal of World Economic Research
Macro-economic Determinants of Recent Inflation in Ethiopia
Tadesse Wudu Abate

Paper Summary

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The study looked at what causes inflation in Ethiopia from 1985 to 2018. They found that real interest rates and exchange rates affect inflation in both the short and long term. Money supply only affects inflation in the long term, not the short term. This means that increasing the amount of money in the economy doesn't immediately lead to higher prices. Policymakers need to carefully balance how much money is in circulation to control inflation.