34, pp. - High royalties for the sales Do you have a 2:1 degree or higher?
1-32. The higher price of the country’s currency will discourage foreigners from purchasing its goods but will conversely encourage residents of the country to use their now more valuable currency to purchase foreign goods, so that the country’s current account will move toward a deficit (or toward a larger deficit). Over the post reform period, especially after the advent of Ethiopian millennium, government revenue showed a considerable growth and also dependence on domestic mode of financing declined. In addition, the highest overall budget deficit in modern history of Ethiopia scored in 1999/00 and 2002/03 which is 11.65 and 11.96 percent of the GDP respectively. The impact of the budget deficit on economic growth is theoretically explained through the effect of the deficit on the flow of money into the economy and through the supply side (infrastructure, education, etc).
During the imperial regime expenditure and revenue including grant is more or less balanced; inflation is also not a series problem except on uncertain occurrence of drought and war (supply side factors), furthermore, the official exchange is comparable to the parallel exchange indicates the no sign of over valuation of the real exchange rate and the foreign sector also had experienced occasional two years trade balance/Current account surplus. Economics Thus, the result is in favor of the twin deficit hypothesis therefore fiscal restraint bucked by export diversification will improve the performance of the foreign sector and status of inflation. 4-1, pp. Free resources to assist you with your university studies! Evidence from Vector Autoregressions.” Southern Economic Journal, October 1992, Vol. effects of budget deficits on private investment and private consumption in Iran for the period 1342 to 1384 using autoregressive distributed lag (ARDL) approach to estimate the long relationship between budget deficits and private investment. How the budget deficits affect the long-term economic growth and the debt that US has to contend with.
While our export only bills 50.07 percent our cost of import. Not many studies have examined the impact of the budget deficit on the value of the national currency, although there is some literature on the relationship between the current account deficit and the public budget deficit (eg, Abel, 1990). Dibooglu (1997) based on the traditional twin deficits model and the Ricardian Equivalence hypothesis, investigated the sources of the U.S. current account deficit using a several macroeconomics variables. By increasing the disposable incomes and the financial wealth of consumers, the budget deficit encourages an increase in imports. Fiscal Deficits and Growth in Developing Countries. Hence change in money supply is function of government budget deficit, debt management policy and credit expansion (loan disbursement to the private sectors). 2. As a result, there will be no net change in aggregate demand. As this happens, future budgets can place more emphasis on loan repayments and less emphasis on savings and investment. The main objective of the study is to examine the effect of budget deficit on monetary aggregates and the foreign sector of Ethiopia using the Vector Error Correction Model over the period 1970/71 to 2010/11.
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