Economic implications of foreign exchange rationing in Ethiopia

Dorosh, Paul A.; Robinson, Sherman; Ahmed, Hashim. 2009. Economic implications of foreign exchange rationing in Ethiopia. ESSP II Research Note 3. https://hdl.handle.net/10568/162063

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.