CHAPTER ONE

1. Introduction
1.1. Background of the study
Devaluation is an official change in the value of a country currency related to other currencies
under the phenomenon of fixed exchange rate. Currency devaluation is one of the most dramatic-
even traumaticmeasures of economic policy that a government may undertake. It almost always
generates cries of outrage and calls for the responsible officials to resign. For these reasons
alone, governments are reluctant to devalue their currencies. Yet under the present rules of the
international monetary system, laid down in the Articles of Agreement of the International
Monetary Fund (IMF), devaluation is encouraged whenever a country's international payments
position is in "fundamental disequilibrium," whether that disequilibrium is brought about by
factors outside the country or by indigenous developments. Because of the associated trauma,
this arises because so many economic adjustments to a discrete change in the exchange rate are
crowded into a relatively short period; currency devaluation has come to be regarded as a
measure of last resort, with countless partial substitutes adopted before devaluation is finally
undertaken. Despite this procrastination, over 200 devaluations in fact occurred between the
inauguration of the IMF in 1947 and the end of1970; to be sure, some were small and many took
place in the years of postwar readjustment, especially 1949. In addition, there were five up
valuations, or revaluations, of currencies. Two more occurred in May 197I.(RICHARD N.
COOPER, 1971)

International monetary fund (IMF) and World Bank used a term Structural Adjustment Program
(SAP) to recommends for developing countries so that they could get financial aid and loans
with certain conditionality. In implementing one of the essential components(conditions) of the
SAP, less developed countries (LDCs) facing balance of payment problems due to expansionary
financial policies, a deterioration in terms of trade, price distortions, high debt servicing or
combination of these factors have often resorted to devaluing their currencies (Nashashibi,
1983). And failing to meet their development plan has lurched from one development paradigm
to another: from industrialization to import substitution, to export promotion, to Structural
Adjustment Program (Rawlins and Praveen, 1993).

Ethiopia has one of the less developed countries (LDCs). Many factors explain the weak
economic development of the country. Even though the causes of poor economic performance
were numerous and various, poor macro-economic policies were the major ones. Thus, need for
comprehensive, compatible, timely and sequential policy restructuring was indisputable for
reliable and sustained growth and development of the country. Policies like building up
institutions, privatization of the public sector and devaluation of the currency were used in the
last 15 years in order to create a sustainable economic development andrecentlythe central bank
announced 15% of devaluation of the birr against the dollar which is effective October 11 by

1
adjusting the official exchange rate, the government participates encouraging exporters and
revive the weekend export earnings(reporter news paper, Oct. 21, 2017)

1.2. Statement of the problem

With the insistent of World Bank, IMF and the support of African Development Fund, the
structural adjustment program was introduced to the country in 1992. It was aimed partly at
transforming the country’s exchange rate policy in to market based determination so as to
improve the country’s competitiveness in the international market and the trade balance (African
development Bank group.2000). In July 2014, in its Ethiopia economic update entitled
‘strengthening export performance through improved competitiveness’ the world bank advised
the Ethiopian government to devalue its currency to speed up the growth of exports. Empirical
evidences presented in this report suggested that a10% lower areal exchange rate could increase
export growth in Ethiopia by more than five percentage points per year and increase economic
growth by more than two percentage points. The world argues that the Ethiopia currency is
unduly expensive in terms of foreign currency such as the USD. In the economic jargon we call
that over valuation of exchange rate. In layman terms, the World Bank advice says that ETB 19.6
Ethiopians are giving when somebody comes with USD 1 is too small. So, it means giving them
ETB 22(10%) or ETB 24 (20%), instead for the same dollar. If that is the case the World Bank
argues that Ethiopian importers will be discouraged because it will be expensive to them in terms
of the local currency. In addition the World Bank says, exporters will be encouraged because
they will get more money interms of birr for the same USD export item they send abroad. Not
only that the bank continues narrating investors and those who send money to Ethiopia will be
attracted by this and will send more money and invests a lot. When that happens, the country will
be able to narrow down the gap between imports and exports.

AlemayehuGeda (Phd) is Professor of economics at Addis Ababa University argues that “the
currency devaluation would boost the price of fuel by at least 15%. The government may opt not
to increase the price of fuel immediately but the 15% devaluation would certainly increase the
cost of fuel import at least by 15% and the price of fuel would increase the transport cost and this
would have an impact on the overall inflation rate. If the price of fuel increases by 15%, the price
of both imported and domestic products would increase by 30 percent”. According to his
estimation“If you devalue your currency by one percent, inflation would deepen by two percent.
If you devalue the birr by 15 percent, inflation would increase by 30%. That is why we strongly
argue that the currency should not be devalued by this much” (Reporternews paper, Oct. 21,
2017)

In addition, Ethiopia the effects of the 15% devaluation measure, which was announced in oct.
21, 2017, are slowly dripping in to market. The announcement, economists and commentators
opine implementing the measure at this particular could have some dire impacts on the normal
functions of domestic market and found out that the effect is already felt in construction
materials, electronics and the food & beverage industries in Addis Ababa.

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Therefore, taking in to consideration of the above two extreme argument which is shown
currently devaluation of currency and its impact on domestic market in Addis Ababa the study
will attempt to narrow the statement gap supported by scientific research procedure.

1.3. Objectives of the study.

1.3.1.General objective
The general objective of the study is to analyze the impacts of currency devaluation on domestic
market in Addis Ababa.
.
1.3.2. Specific Objective
More specifically, the study attempts:
1. To assess the relationship between currency devaluation and domestic market.
2. To investigate the short run and long run impact of currency devaluation on domestic
market of Addis Ababa.
3.To determine factors which are exposed to devaluation of currency on Ethiopian
economy.
4.To recommend possible solution that reduces the negative impact of currency
devaluation.
5.To investigate the measurements undertaken by the concerned body and make
conclusions and policy implications

1.3.3. Research Questions

 What are the effects of currency devaluation on domestic market?
 What are measures undertaken by the concerned body to minimize the impact of
currency devaluation?
 What are the factors that can affect devaluation of currency on a county’s economy?
 Why the researcher initiated to study about this topic?

1.4. Significance of the study

Critical evaluation of currency devaluation on economy is crucially important for understanding

the impact of devaluation on developing countries economy as well as domestic market. The
finding of this study will enable the government to look both theoretical and empirical studies of
impact of devaluation on domestic market to predict with accuracy the impact its effect of
monetary policy program on the economy at large and thereby to use these finding for policy
input and for further detail investigation. It also helps corporate bodies and individuals to
understand the way of the government conduct its monetary policy program and to know how to
respond such program and policies. Furthermore, it helps to improve the practical knowledge and
skill of the researcher by making familiar with fact evidence on the study. Finally, the study will
have invaluable and paramount use for future researcher and academic who need to conduct a
research in the field of the study.

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 1.5. Scope of the study
The scope of the study focuses on the impact of currency devaluation on domestic market
particularly in Addis Ababa. Since it is the main and sensitive issue of the current period, to
investigate this study specific with the given time frame and financial resource it delimited to
Addis Ababa and it does not represent other territory of Ethiopia. Thus, the researcher needs to
be conducted to address the impact of currency devaluation on domestic market in Addis Ababa.

1.6. Limitations of the study

Acknowledging the limitation of the study empowers the reader to appreciate the constraints that
will be imposed on the study to understand the context to which the research claims are set.
Therefore, the study may face limitation from different dimensions. The first most and serious
will confronted from lack of well organized secondary data which is related to the impact of
currency devaluation on domestic market. The second limitation may be directly related with the
willingness of respondent when the researcher will collect primary sources like questioner and
interviews.

1.7. Description of the Study Area

Addis Ababa known to local as just “Addis” is quickly evolving city whose recent economic
growth is one Africa’s greatest success stories. The economic activities in Addis Ababa are
divers. According to official statistics from the federal government some 119,197 people in the
city are engaged to in different trade activities.
It founded just over 100 years ago a capital is a multifaceted city towers 2,400 meters above sea
level on the Abyssinian plateau. There is not a cloud in the sky for about eight months out of the
year and warm sun beats down on culturally-stimulating museums, world class restaurant and hip
clubs.
According to the 2007G.C population census, the city has total population of 2,739,551
inhabitants. It also hosts the head quarter of African Union, United Nation Economic
Commission for Africa (ECA) and numerous other continental and international organizations.
Therefore, Addis Ababa is often referred to as “the political capital of Africa” for its historical,
diplomatic and political significance for the continent.
1.8. Organization of the paper
This proposal comprises of three chapters. Chapter one deals about introduction/background,
statement of the problem with research questions, general and specific objectives, significance,
scope and limitation of the study, description of the study area and organization of the paper.
The second chapter is about theoretical and empirical ground of the literature. The third chapter
deals about the research methodology part of the study that will be used by researcher.

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 CHAPTER TWO

2. LITERATURE REVIEW
2.1. Theoretical Literatures
2.1.1 Political economy of devaluation
By the mid 1970s, many developing countries were in the midst a serious economic crises,
reflected by considerable balance of payments(BOP) deficit falling foreign reserves inability to
service foreign debt. In attempt to reverse the situation and to keep open external lines of credit,
the authorities in these countries implemented a new set of economic stabilization policies. One
of these policies was frequently devaluation. Following the standard wisdom of
macroeconomictheories(cooper,1971),devaluation is an ideal, effective policy under conditions
of less than full employment of resources of persistent balance of payment deficit& under
conditions were wages &relative prices are sticky.However, since the late 1980s the world has
witnessed the arrival of spate of democratic governments in developing countries. This means
that owing to its potentially devastating (interns of inflation), devaluation has not proved an
easy decision to government facing opposition from competingpoliticalparties. Since proper
researching this interesting problem is immensely lacking, our objective in this study is twofold
first, to build &discuss theoreticalpolitical model of devaluation for developing
countries&second, to empirically test the envisaged model with panel data from selected
developing countries (IBID).

2.1.2. Currency devaluation &its effect

Devaluation is an official change in the value of a country currency related to other currencies
under the phenomenon of fixed exchange rate. Whereas, in floating exchange currency
depreciation result as changes market force.Loosening of the monetary policy results in the
selling the domestic currencies lead to domestic currency devaluation. Domestic producers &
exporters are the main beneficiaries of this action.

2.1.3. Implications of currency devaluation

Devaluation makes the export of the country cheaper for foreigners.It makes imported goods
expensive for domestic consumers. Devaluation often is criticized as an inflationary monetary
policy because it raises the domestic price of imports. Theyunder link cause of inflation are not
devaluation,however,but rather excess money creation.Nevertheless devaluation is unpopular
policy, especiallyin small countries that are extremely dependent on imports as a source of food
& necessities.

When the prices of imports are increased it results in the increase of the demand for domestic
products,devaluation results in inflation. If this is the situation the government should have to
increase the interest rate to control inflation.

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2.1.4. Advantages of Devaluation

For nations experiencing trade deficit when import exceeding export.Currency devaluation will
reduce the price of their product abroad and increase the price of foreign product in domestic
market thus discourage import &may therefore help to reduce the current account deficit,so
currency devaluation can help to achieve more desirable balance of trade for such nations
increased demand for product in other countries due to lower prices can also mean more jobs
&lower unemployment rate at home

Foreign currency: As exports increases imports fail about dollar /euro/ out flows may fail
&inflows rise. This assists the emulation of foreign exchange reserves for the government .this
strengthens the whole economy &increases its liability temporarily.

Decrease in imports &increases in exports: devaluation leads to high import prices .hence
imports are reduced devaluation increases exports b/c due to devaluation the price of exports
fail.

Industrial growth & economic development: high exports as a result of devaluation leads to
industrial growth export earnings enable the producers to use improve means of production.
More&more resources are explored &put in to production process. Income,profits&wages may
rise &make the society betteroff&improving its leaving standards. It is evident that countries
that are good exports are also prosperous &rich nations in fact export are a key to
success&development. So if devaluation gives boosts to exports it can also open doors of long
term prosperity growth &development.

2.1.5. Disadvantages of devaluation:

A successful devaluation that is seen in Ethiopia for instance trading partners may become
concerned that devaluation might negatively affect their own export industries.
Thereforeneighboring countries might devalue their own currencies to offset the effects of their
trading partner’s devaluation. Such a retaliation polices may tend to exacerbate economic
difficulties by creating instability in broader financial market

Devaluation can result in high profit for firms that are exposed to the market. But sometimes
this high profit will make firms idle if there is less competition, favorable situation and finally
result in no change in the long run. According to the theory of transformation firms will
increase their productivity and become more creative when there is high competition, sudden
fall in thedemand of products or an increase production cost and result in a low profit (Erixon,
2007).

The increase in price of goods as a result of devaluation may decrease the total moneyin
circulation (real money). Devaluation will push the interest rate up wards and decrease
theaggregate demand ceteris paribus. Domestic firms that use bank loan for production will also
be affected as a result of the increase in the interest rate. For countries that borrow money and
are highly in debt, the increase in interest rate together with devaluation of currency will make

6
situations even worse as the amount will increase.(Bird &Rajan, 2003). Countries that use
devaluation as one strategy for growth and provide low price in the foreign market may at the
end get a zero profit in the long run. This is true for developing countries specially those who
are new comers to the world market and devalue their currency with respect to the developed
ones, are usually highly in debt. So the gain through lower price will be offset by the increase in
the amount of debt in foreign currency which will be more expensive if the country devaluate its
currency and will result in stagnancy in the economy. (Blecker&Razmi, 2007).

2.2. Empirical Literature Review

2.2.1. Economic Growth in Developing Countries

Temporary and has zero result in the long run Devaluation of currency has ambiguous result
towards growth. Many countries, specially developing ones, use currency devaluation as a
strategy to achieve short and long run growth. A study by (Ratha, 2010) of India confirmed the
Keynesian positive view of devaluations and the multiplier effect on the increase in export, one
component of GDP and growth. The result showed a contradictory effect in the short run but
changed to expansionary effect in the long run.

(P. K. Narayan & S. Narayan, 2007) supported the IMF strategy that encourages the devaluation
of domestic currency to increase economic growth. Their study on Fiji indicated that
devaluation of currency increased output with “2.3% and 3.3% in the short and long run”
respectively.

However (Agénor, 1991) envisaged about the negative side of devaluation in his study of
sample 23 developing countries. The main emphasis was the effect of expected and sudden
depreciation in the exchange rate. The result showed that expected devaluation has
contradictory effect. The one year lagged expected devaluation has also the same result where
as the unexpected devaluation has an expansionary effect. Furthermore various empirical
studies have tested the effect of devaluation in the short and long run growth. Most of the results
confirmed that devaluation has contradictoryeffect in the short run and zero or no effect in the
long run growth. (Edwards, 1986) studied 12 developing countries based on a hypothesis about
a negative effect of devaluation. He used the lagged variable to differentiate the effect of
exchange rate in the short and long run. The result showed devaluation of the exchange rate in
the same year has a negative effect in the short run. But after one year the effect was reversed
and resulted in a positive relation. In the long run according to the author this conflicting effects
will cancel each other and result in zero effect in the long run.

(Acar, 2000) also used the lagged variable as additional variable to test the relation between
growth and devaluation. He took sample of 18 LDC‟s with different export performance. His
result however showed a negative relation between devaluation of currency and output
onlyduring the first year, a positive effect the next year and zero growth in the long run as the
twoeffects cancel out in the future. Even though (Edwards, 1986) and (Acar, 2000) got the
same result the countries used in the sample as well as the functional form of the dependent

7
andindependent variables used in their study is different. (Acharya, 2010) provided evidence
that devaluation will increase the price of import leading to high production export products by
the agricultural and industrial sector by studying Nepalese currency. According to Acharya‟s
study the expansion of the industrial sector will decrease the service sector and so does the
agricultural sector. But the overall GDP will grow due to the increase in the production of the
industrial sector as well as the consistent increase in the export of agricultural products.

(Nunnenkamp&Schweickert, 1990) tested the hypothesis of contradictory effect of devaluation

on growth by using data for 48 developing countries. They made a pooled time series cross
country analysis of different income groups of developing countries to test the relation between
GDP growth per capita and exchange rate 3 they included other explanatory variables such as
government expenditure, terms of trade etc. Their result rejected the hypothesis that countries
that exported manufactured goods mainly faced contradictoryeffect inthe short run but these
effects were offset by the positive effects. And for exporters of agricultural product devaluation
has an expansionary effect on the short runand in the long run. At the end they added low
economic growth and the effect of devaluation shouldn’t always be related because the low
economic growth of some countries might be related to problem in poor economic policies. The
ambiguity of the result for the studies using econometric approach of various countries might be
due to the difference in the country’s economic growth. Having this in mind, the sample
countries in the study were categorized as low, lower middle and upper income countries based
on their income from the World Bank data. 1997 tried to study the hypothesis of contradictory
effect of devaluation (both anticipated and unanticipated) on growth by taking the case of
Turkey The empirical result showed that unexpected devaluation has expansionary effects
where as expected devaluation has a contradictory but statistically insignificant effect. This
contradictory effect according to the author might be due to the multiplier effect of the negative
trade balance that arises from the decrease in export by foreigners future expectations of an
appreciation of the currency. The result in price competition can help the growth rate at the
expense of other country and become misleading. Taking these in mind (Blecker&Razmi, 2007)
tested a hypothesis on devaluation of currency with respect to competing developing country as
well as developed country. They focused on price competition as a result of devaluation in
developing countries involved in the export of manufactured goods to the developed countries.
Their result suggested that devaluation of currency with respect to market competing
developing country will result in short run growth and decrease the growth of the competing
country. On the other hand devaluation of currency with respect to the developed country where
the final goods are exported will lead to a contradictory growth especially in those developing
countries with high dept rate and high import dependant countries.

2.2.1. Economic growth in Ethiopia

Economic growth of the o country has shown various in different political regimes. These
change in government structure created a problem of inconsistency in implementing the policies
by previous regimes as well as natural disaster like famine and drought had a depressing effect
on the history of economic growth of the country. Thus in my study I have tried to compare the

8
present and the last two regimes.

During the Imperial Regime (1930- 1974), the county had an experience for modern technology
,developments in infrastructure and industries that showed an increase in the rate of GDP in the
late 1960 and beginning of 1970‟s compared to the previous periods. But during the last years
of the Imperial regime the GDP growth rate started to fall mainly due to famine in some parts of
the country. In addition the rise of opposition parties and political disorder in the country has
enormous role for the decrease in GDP (Geda&Befekadu, 2005) Under the Derg regime (1975-
1991), known for its socialist policy, Ethiopia’s GDP growth became lower. These was related
to the takeover of the private sector by the government, high pressure from different opposition
parties within the country as well as war with Somalia within the first three years were some of
the major effects behind the fall in output growth in the country during the Derg Regime. The
severe drought that took place in 1984/85 was also additional fact

The devaluation of the Ethiopian Birr (ETB) per US dollar officially began during the EPRDF
regime. Previously the country used to have a fixed exchange rate with a rate of 2.07 Birr per
US dollar. Some researchers held during the 1970 and 1980 the birr was overvalued leading to a
trade and also public budget deficit. (Kidane, 1994) said that the overvaluation of currency was
the result of the problem in the management. This overvaluation of currency highly discouraged
the export as well as domestic production by making the price of imported goods cheap. In
addition there was shortage of exchange rate and only few people had the chance to enter the
market. As a result of the overvaluation and scarcity of the foreign currency the unofficial or
parallel exchange rate began to spread in the country. In mid 1980 the unofficial rate reached 6
or 7 birr per US where the official rate was still 2.07 birr per US dollar. Taking this into account
the transitional government of Ethiopia decided to devaluate the currency to 5 birr per US dollar
in 1992. The devaluation of exchange rate was expected to increase output by encouraging
the export sector as well as increase domestic production.(Taye, 1999) After the devaluation in
1992 the exchange rate is changed from fixed to flexible rate in order to control overvaluation
through a gradual depreciation of domestic currency every year. The gap between the unofficial
and official rate also decreased compared to the period when the exchange rate was fixed.
However during the fiscal year 2007/08 the rate of depreciation against other foreign increased
compared to the previous years.1 In the 2009/10 and September 2010/2011 the Ethiopian Birr
was depreciated to 23.7% and 16.5% respectively against the US dollar. This huge devaluation
was expected to “decrease overvaluation and increase competiveness” (IMF, 2010; MOFED,
2009).

The increase in depreciation rate was expected to encourage the export sector. The higher
increase in export rate, the better the rate of growth of the economy. The export of goods and
services was 11% of the GDP in 2009 and yet the trade balance is negative. Devaluation has an
expansionary effect through “expenditure switching and reducing effect” can help shift the
demand from foreign goods to domestically produced goods (Taye, 1999). In addition when
there is devaluation in a country the price of imported goods will increase whereas the price of
domestic goods will decrease which in turn will increase the export of goods. And if the

9
Marshall- Lerner condition is satisfied devaluation of currency can improve the trade balance as
well as GDP in the long run. (Paul, 2006) provided a support for the positive effects of
devaluation on economic growth on firms that produce both in the local and foreign market.
When a currency is devaluated the amount of profit gained by a firm producing in the foreign
market increases when converted to the local currency. This increase in profit can be used for
the development of the R& D as well as innovations of new technologies. Finally the
improvement and introduction of new technologies through profit will decrease their previous
cost used which in turn increase output.

Generally, these mixed results clearly indicate that both empirical and theoretical study will
help to identify different variables which are able to address statement of the problem based on
scientific procedure.

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 CHAPTER THREE

3. RESEARCH METHODOLOGY
3.1. Research design

Research design is a means to systematically answer the research problem. If may be understood
as science of studying how research is done scientifically. This section provides research design
including research approach data analysis and interpretation. In the study the various steps that
are generally adopted by a researcher studying the research problem along with logic behind
them. A research approach brings to light the fact there are two basic approaches to research i.e.
quantitative and qualitative approach. A quantitative approach helps the researcher to generate
data in quantitative analysis in a formal rigid fashion. On the other hand, a quantitative approach
helps the researcher for subjective assessment of attitude, opinions and behavior of the data/the
research. Furthermore, the data that were used in this research comprised both primary and
secondary data. Those primary and secondary were collected from various sources and review of
literature was used to further understanding of the problem and that also helped the study as
descriptive survey (Kothari,2004). In this study the researcher will be undertake both quantitative
and qualitative type of research.

3.2. Source and Instruments of Data Collection

The study will focuses on the effect of foreign currency devaluation on domestic market. More
over the data for this study will be obtained from primary and secondary sources. Specifically,
primary data will be collected through structured questionnaires, unstructured interview and
personal observation. Secondary data will be gathered from different literatures, news paper,
journals, government reports, TV news, library, internet and thesis done on related to the selected
issue and other necessary documents.

3.3. Sample and Sampling Techniques

In order to address the stated research questions and objectives both primary and secondary data
will collected on the relationships between foreign currency and domestic market. Because of
this the researchers 5conduct the study by using clusterprobability sampling techniques because
the study area of the population is very large and it is difficult to identified sampling frame.
Hence, in order to address overall population of the study area based on sample representation
the researcher will obligated to use cluster sampling method.

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n= N
1+N (e) 2

Where, n = number of sample size

N = Total number of the study population
e = level of confidence
N=2,000,000

E=3%

n=?

n = 2,000,000 =1,111
1+(2,000,000)(0.03)2

Sample proportion (%) = 2000000 *1= 18%

1111 100

Population: all residents of Addis Ababa. The sampling frame of the research will listed in sub-
cities, Woredas, Kebeles, and residents based on random selection.

3.5. Method of data analysis and interpretationThe data that to be gathered from both primary
and secondary source of data will be analyze and interpret using descriptive methods of analysis
i.e. tabulation, figures, percentages,histogram, graphs, pie charts and other statistical tools are the
major items to analyze the data.

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References;
Acar, M., 2000. Devaluation in Developing Countries : Expansionary or Contractionary ? Journal of
Economic and Social Research, 2(1), pp.59-83.

Acharya, S., 2010. Potential impacts of the devaluation of Nepalese currency: A general equilibrium
approach. Economic Systems, 34(4), pp.413-436.

African development Bank group.2000

Agénor, P.-R., 1991. Output, devaluation and the real exchange rate in developing countries.
WeltwirtschaftlichesArchiv, 127(1), pp.18-41.

Bird, G. &Rajan, R.S., 2003. Does devaluation lead to economic recovery or economic contraction? Theory
and policy with reference to Thailand.

Blecker, R. a &Razmi, A., 2007. The fallacy of composition and contractionary devaluations: output effects
of real exchange rate shocks in semi-industrialised countries. Cambridge Journal of Economics, 32(1),
pp.83-109. Cooper,1971

Edwards, S., 1986. Devaluation and Aggregate Economic Activity: An empirical Analysis of the
contractionary devaluation issue.

Erixon, L., 2007. Even the bad times are good: a behavioural theory of transformation pressure.
Cambridge Journal of Economics, 31(3), pp.327-348.

Geda, A. &Befekadu, D., 2005. Explaining African Growth Performance : The Case of Ethiopia.

IMF, 2010. The Federal Democratic Republic of Ethiopia : Second Review of the Arrangement under the
Exogenous Shocks Facility.

Kidane, A., 1994. Indices of Effective Exchange rates:A Comparative study of Ethiopia, Kenya and The
Sudan. African Economic Research consortium, (November).

MOFED, 2009. Minsitry of Finance and economic development Annual Report.

Nashashibi, (1983), Do Devaluations Improve the Trade Balance? The Evidence Revisited.

Nunnenkamp, P. &Schweickert, R., 1990. Adjustment policies and economic growth in developing
countries — Is devaluation contractionary? WeltwirtschaftlichesArchiv, 126(3), pp.474-493.

P. K. Narayan & S. Narayan, 2007. Is devaluation expansionary or contractionary? Empirical evidence from
Fiji. Applied Economics, 39(20), pp.2589-2598.

Ratha, A., 2010. Does Devaluation work for India? Economics Bulletin, 30(1), pp.247-264.

Rawlins and Praveen (2000), Effects of Exchange Rate Volatility and changes inMacroeconomic
Fundamentals on Economic Growth in Ghana.
Reporternews paper, Oct. 21, 2017

Richard N. Cooper, 1971Currency Devaluation in Developing Countries, Essays in international finance,

pp. 3.

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Taye, H., 1999. The Impact of Devaluation on Macroeconomic Performance The Case of Ethiopia. Journal
of Policy Modeling, 21(4), pp.481-496.

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