scholarly journals COVID-19 Pandemic Uncertainty Shock Impact on Macroeconomic Stability in Ethiopia

2020 ◽  
Vol 11 (2) ◽  
pp. 132
Author(s):  
Habtamu Girma DEMIESSIE
Keyword(s):  
Fiscal Policy ◽  
Aggregate Demand ◽  
Spillover Effects ◽  
Food Prices ◽  
Shock Effect ◽  
Food Transport ◽  
The Government ◽  
The Impact ◽  
Macroeconomic Stability

This study investigated the impact of COVID-19 pandemic uncertainty shock on the macroeconomic stability in Ethiopia in the short run period. The World Pandemic Uncertainty Index (WPUI) was used a proxy variable to measure COVID-19 Uncertainty shock effect. The pandemic effect on core macroeconomic variables like investment, employment, prices (both food & non-food prices), import, export and fiscal policy indicators was estimated and forecasted using Dynamic Stochastic General Equilibrium (DSGE) Model. The role of fiscal policy in mitigating the shock effect of coronavirus pandemic on macroeconomic stability is also investigated. The finding of the study reveals that the COVID-19 impact lasts at least three years to shake the economy of Ethiopia. Given that the Ethiopian economy heavily relies on import to supply the bulk of its consumption and investment goods, COVID-19 uncertainty effect starts as supply chain shock, whose effect transmitted into the domestic economy via international trade channel. The pandemic uncertainty shock effect is also expected to quickly transcend to destabilize the economy via aggregate demand, food & non-food prices, investment, employment and export shocks. The overall impact of COVID-19 pandemic uncertainty shock is interpreted into the economy by resulting under consumption at least in the next three years since 2020. Therefore, the government is expected to enact incentives/policy directions which can boost business confidence. A managed expansionary fiscal policy is found key to promote investment, employment and to stabilize food & non-food prices. A particular role of fiscal policy was identified to stabilizing food, transport and communication prices. The potency of fiscal policies in stabilizing food, transport and communication prices go in line with the prevailing reality in Ethiopia where government has strong hands to control those markets directly and/or indirectly. This suggests market failure featuring COVID-19 time, calling for managed interventions of governments to promote market stabilities. More importantly, price stabilization policies of the government can have spillover effects in boosting aggregate demand by spurring investments (and widening employment opportunities) in transport/logistics, hotel & restaurant, culture & tourism and export sectors in particular.

scholarly journals THE EFFECT OF COVID-19 PANDEMIC ON MACROECONOMIC STABILITY IN ETHIOPIA

2020 ◽  
Author(s):  
Habtamu Demiessie
Keyword(s):  
Fiscal Policy ◽  
Aggregate Demand ◽  
Food Prices ◽  
Food Price ◽  
Demand Shock ◽  
Shock Effect ◽  
Supply Shock ◽  
The Government ◽  
Macroeconomic Stability

<div>This study investigated the impact of COVID-19 pandemic uncertainty shock on the macroeconomic stability in Ethiopia in the short run period. The World Pandemic Uncertainty Index (WPUI) was used a proxy variable to measure COVID-19 Uncertainty shock effect. The pandemic effect on core macroeconomic variables like investment, employment, prices (both food & non food prices), import, export and fiscal policy indicators was estimated and forecasted using Dynamic Stochastic General Equilibrium (DSGE) Model. The role of fiscal policy in mitigating the shock effect of coronavirus pandemic on macroeconomic stability is also investigated. <br></div><div>The finding of the study reveals that the COVID-19 impact lasts at least three years to shake the economy of Ethiopia. Given that the Ethiopian economy heavily relies on import to supply the bulk of its consumption and investment goods, COVID-19 uncertainty effect starts as supply chain shock, whose effect transmitted into the domestic economy via international trade channel. The pandemic uncertainty shock effect is also expected to quickly transcend to destabilize the economy via aggregate demand, food & non food prices, investment, employment and export shocks.</div><div>The VAR estimate indicates that COVID-19 uncertainty shock results a massive rise in import in the six months following the outbreak of the pandemic. The finding in this regard is expected, as the pandemic triggers massive demand in food and pharmaceuticals, for which Ethiopia is import dependent on both items. In the next two years, however, the import bill of Ethiopia shows a decline. Reduction in aggregate demand (both consumption & investment expenditures) is one explanation for decline in import size in 2013 and 2014 E.C.</div><div>The price dynamics as forecasted in the upcoming three years in Ethiopia tells the direction of impacts of COVID-19 uncertainty shock to shake the macroeconomic order. The findings in this regard revealed the structural breakups of Ethiopian economy, characterized by its inability to withstand shocks. As signaled in forecasted price dynamics on both food and non food price indices, COVID-19 was a supply shock in its first time impact, but quickly transpasses to demand shock. And in the next few years the demand shock outweighs the supply shock. </div><div>The results of estimations indicate that food prices to sky rocketed at least until the end of 2014 E.C (2021/22 E.F.Y). On the other hand, except communication & hotel & restaurant prices, other components of non food price indices show a slump. The decline in non food price level is a clear showcase of under consumption characterizes the economic order in Ethiopia in the coming three years. </div><div>COVID-19 uncertainty shock puts huge loss in the investment sector in Ethiopia at least in the coming two years 2013 and 2014 E.C (2020/21-2021/22). In this regard, the pandemic effect transmitted to shake investment expenditure via the length of the pandemic period itself and export performances, both of which are exogenous shocks. </div><div>The study identified that general under consumption features the Ethiopian economy in the next couple of years. Therefore, the government is expected to enact incentives/policy directions which can boost business confidence. A managed expansionary fiscal policy is found to be key to promote investment, employment and to stabilize food & non-food prices. A particular role of fiscal policy was identified to stabilizing food, transport and communication prices. More importantly, price stabilization policies of the government can have spillover effects in boosting aggregate demand by spurring investments (and widening employment opportunities) in transport/logistics, hotel & restaurant, culture & tourism and export sectors in particular. </div><div><br></div>

scholarly journals THE EFFECT OF COVID-19 PANDEMIC ON MACROECONOMIC STABILITY IN ETHIOPIA

2020 ◽  
Author(s):  
Habtamu Demiessie
Keyword(s):  
Fiscal Policy ◽  
Aggregate Demand ◽  
Food Prices ◽  
Food Price ◽  
Demand Shock ◽  
Shock Effect ◽  
Supply Shock ◽  
The Government ◽  
Macroeconomic Stability

<div>This study investigated the impact of COVID-19 pandemic uncertainty shock on the macroeconomic stability in Ethiopia in the short run period. The World Pandemic Uncertainty Index (WPUI) was used a proxy variable to measure COVID-19 Uncertainty shock effect. The pandemic effect on core macroeconomic variables like investment, employment, prices (both food & non food prices), import, export and fiscal policy indicators was estimated and forecasted using Dynamic Stochastic General Equilibrium (DSGE) Model. The role of fiscal policy in mitigating the shock effect of coronavirus pandemic on macroeconomic stability is also investigated. <br></div><div>The finding of the study reveals that the COVID-19 impact lasts at least three years to shake the economy of Ethiopia. Given that the Ethiopian economy heavily relies on import to supply the bulk of its consumption and investment goods, COVID-19 uncertainty effect starts as supply chain shock, whose effect transmitted into the domestic economy via international trade channel. The pandemic uncertainty shock effect is also expected to quickly transcend to destabilize the economy via aggregate demand, food & non food prices, investment, employment and export shocks.</div><div>The VAR estimate indicates that COVID-19 uncertainty shock results a massive rise in import in the six months following the outbreak of the pandemic. The finding in this regard is expected, as the pandemic triggers massive demand in food and pharmaceuticals, for which Ethiopia is import dependent on both items. In the next two years, however, the import bill of Ethiopia shows a decline. Reduction in aggregate demand (both consumption & investment expenditures) is one explanation for decline in import size in 2013 and 2014 E.C.</div><div>The price dynamics as forecasted in the upcoming three years in Ethiopia tells the direction of impacts of COVID-19 uncertainty shock to shake the macroeconomic order. The findings in this regard revealed the structural breakups of Ethiopian economy, characterized by its inability to withstand shocks. As signaled in forecasted price dynamics on both food and non food price indices, COVID-19 was a supply shock in its first time impact, but quickly transpasses to demand shock. And in the next few years the demand shock outweighs the supply shock. </div><div>The results of estimations indicate that food prices to sky rocketed at least until the end of 2014 E.C (2021/22 E.F.Y). On the other hand, except communication & hotel & restaurant prices, other components of non food price indices show a slump. The decline in non food price level is a clear showcase of under consumption characterizes the economic order in Ethiopia in the coming three years. </div><div>COVID-19 uncertainty shock puts huge loss in the investment sector in Ethiopia at least in the coming two years 2013 and 2014 E.C (2020/21-2021/22). In this regard, the pandemic effect transmitted to shake investment expenditure via the length of the pandemic period itself and export performances, both of which are exogenous shocks. </div><div>The study identified that general under consumption features the Ethiopian economy in the next couple of years. Therefore, the government is expected to enact incentives/policy directions which can boost business confidence. A managed expansionary fiscal policy is found to be key to promote investment, employment and to stabilize food & non-food prices. A particular role of fiscal policy was identified to stabilizing food, transport and communication prices. More importantly, price stabilization policies of the government can have spillover effects in boosting aggregate demand by spurring investments (and widening employment opportunities) in transport/logistics, hotel & restaurant, culture & tourism and export sectors in particular. </div><div><br></div>

scholarly journals The Impact of Fiscal Policy on Foreign Direct Investment Inflows: A Study of India and Select Asian Economies

2014 ◽  
Vol 1 (1) ◽  
Author(s):  
Niti Bhasin
Keyword(s):  
Fiscal Policy ◽  
Fixed Effects ◽  
Fixed Effects Model ◽  
Fdi Inflows ◽  
Dummy Variables ◽  
Principle Component Regression ◽  
The Government ◽  
The Impact ◽  
Model Approach

While the role of taxation in influencing FDI has received considerable attention in literature, there has been very less work on examining the role of fiscal policy as a whole on FDI inflows. The dimension of fiscal policy that relates to the expenditure of the government has not received much attention in terms of its impact on FDI. This study would attempt to bridge the gap in literature by examining the impact of both the revenue and expenditure side of fiscal policy on FDI inflows in India and other select economies of the Asian region. The paper identifies the determinants of FDI flows with special reference to fiscal policy variables, namely tax treaties and developmental expenditure of the government. With the help of principle component regression, we have estimated a panel equation with the Least Squared Dummy Variables (fixed effects model) approach. The determinants which have emerged as significant are FDI openness and infrastructure. Our variables of interest, that is, the fiscal policy variables turn out to be insignificant. Thus while a competitive fiscal policy may facilitate operations of business, it is still not a prime consideration in investment decisions.

scholarly journals Fiscal Response to Terrorism in Pakistan: The Role of Institutions

2021 ◽  
Vol 5 (1) ◽  
pp. 154-192
Author(s):  
Tahir Mukhtar ◽  
Zainab Jehan
Keyword(s):  
Fiscal Policy ◽  
Time Series Data ◽  
Institutional Quality ◽  
Jel Classification ◽  
Defense Spending ◽  
Series Data ◽  
Tax Revenue ◽  
The Government ◽  
The Impact

This study empirically estimates the fiscal consequences of terrorism in Pakistan by using annual time series data from 1984 to 2016. By employing the autoregressive distributed lag (ARDL) technique, the study has gauged the impact of terrorist incidents on two important facets of fiscal policy, namely, tax revenue and defense spending. The results reveal that terrorism has detrimental ramifications for fiscal policy in Pakistan. Specifically, on the one hand, an increase in terrorist incidents tends to bring a fall in tax revenue while on the other hand, they induce a rise in defense outlays, thus deteriorating both fronts of the fiscal position. Notably, the moderating role of institutional quality appears significant and indicates that institutional quality has not only a significant direct impact on fiscal policy, but it also helps in completely mitigating (reducing) the harmful impact of terrorism on defense spending (tax revenue) in Pakistan. These findings suggest that there is a need to take appropriate steps for strengthening institutional setup to control the fallouts of terrorism on fiscal behavior of the government of Pakistan. Keywords: Terrorism; Tax Revenue; Institutional Quality; ARDL JEL Classification: E62; H2; E02; H5; F35

scholarly journals The effects of income distribution and fiscal policy on aggregate demand, investment and the budget balance: the case of Europe1

2020 ◽  
Vol 44 (6) ◽  
pp. 1221-1243 ◽  
Author(s):  
Thomas Obst ◽  
Özlem Onaran ◽  
Maria Nikolaidi
Keyword(s):  
Fiscal Policy ◽  
Income Distribution ◽  
Aggregate Demand ◽  
Economic Effects ◽  
Simultaneous Increase ◽  
Budget Balance ◽  
Wage Share ◽  
The Government ◽  
Role Of The Government

Abstract This paper develops a multi-country post-Kaleckian model that incorporates the role of the government. One key novelty of the model is that it integrates cross-country effects of changes in both income distribution and fiscal policy. The model is used to estimate econometrically the effects of income distribution and fiscal policy on the components of aggregate demand and the budget balance in EU15 countries. The results show that a simultaneous increase in the wage share in all EU15 countries would increase demand and the primary budget balance in all countries. A simultaneous increase in government spending turns out to boost economic activity in all the EU15 countries, indicating the positive economic effects of expansionary fiscal policy. Moreover, a progressive tax policy that would be implemented simultaneously at the EU level would lead to an increase in output in all countries.

scholarly journals Impact of Public Policy Shocks on Components of Aggregate Demand in Pakistan

2020 ◽  
pp. 95-111
Author(s):  
Saima Shafique ◽  
Muhammad Mansoor Ali ◽  
Saif Mujahid Shah
Keyword(s):  
Fiscal Policy ◽  
Aggregate Demand ◽  
Government Expenditure ◽  
Tax Revenue ◽  
Impulse Response Functions ◽  
Tax Rates ◽  
Policy Shocks ◽  
The Government ◽  
Tax Changes ◽  
The Impact

Fiscal policy has strong distributional effects as the alteration in tax rates and spending decisions cause different sectors of the economy to respond differently. Correct information about this reaction and understanding transmission mechanism is essential to create policies that can have development and growth effects. The study analyzed the impact of fiscal policy on disaggregated data of Pakistan in a SVAR setting. The analysis reveals an uneven distribution of fiscal policy shocks across different sectors of Pakistan with varying degrees of responsiveness. There is heterogeneity in the response of different sectors as well as components of aggregate demand in Pakistan to fiscal policy shocks as revealed in impulse response functions. It is results reveal that tax revenue shock generated a higher response in different sectors than the government expenditure shock conforming to the theoretical expectation that tax changes impact the agents faster than the expenditure decisions. This regressive behavior in Pakistan seems mostly due to higher spending on debt servicing and maintaining a large public sector with huge spending on pensions and social security networks.

scholarly journals The Role of Taxes in Economic Development of Kosovo

2016 ◽  
Vol 4 (1) ◽  
pp. 79
Author(s):  
Artan Nimani
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Fiscal Policy ◽  
Political Stability ◽  
The Government ◽  
High Level ◽  
National Governments ◽  
Sustainable Economic Growth ◽  
The Impact

To achieve prosperity and political stability, national governments aimed at achieving economic equilibrium. The government uses various instruments to stimulate economic growth, reduce unemployment and to achieve macroeconomic objectives. In the context of slow economic growth in recent years and fiscal pressures, Kosovo faces the complex challenge of economic development. Unemployment remains at a high level. Demand for labor is still very low and create an environment that will favor the formation of stable work places is a challenging task that requires a multidimensional reforms in the economy. This paper addresses the impact of fiscal policy on reducing unemployment, increasing investment and consumption to generate sustainable economic growth.

scholarly journals Exploring the independent prescribing role of the community pharmacists in Wales

2021 ◽  
Vol 29 (Supplement_1) ◽  
pp. i35-i35
Author(s):  
S S Alghamdi ◽  
R Deslandes ◽  
S White ◽  
K Hodson ◽  
A Mackridge ◽  
...  
Keyword(s):  
Community Pharmacy ◽  
Community Pharmacists ◽  
Community Pharmacies ◽  
Committee Report ◽  
Independent Prescribing ◽  
General Practices ◽  
The Government ◽  
Clinical Records ◽  
The Impact

Abstract Introduction Since 2019, the role of independent pharmacist prescribers (IPPs) in primary care has extended to community pharmacies in Wales [1]. This was in response to a Welsh Pharmaceutical Committee report in 2019 that outlined a plan to include an IPP in each community pharmacy in Wales by 2030. This aimed to relieve pressure on general practices, enhance patient care and reduce referral and admission rates to secondary care [2]. As funding was provided by the Government, the number of community pharmacists completing the independent prescribing course increased and many have implemented their prescribing role. Aim To explore the views of community IPPs regarding their prescribing role within community pharmacies in Wales. Methods Semi-structured face-to-face and telephone interviews were conducted with community IPPs from all seven health boards (HBs) in Wales. Ethical approval was obtained from the School of Pharmacy and Pharmaceutical Sciences at Cardiff University and the School of Pharmacy and Bioengineering at Keele University. Purposive sampling was used to identify potential participants. Gatekeepers (HB community pharmacy leads and directors of IPP courses in Wales) sent invitation emails, participant information sheet and consent form to potential participants. Written consent was obtained. Interviews were audio-recorded and transcribed ad verbatim. Thematic analysis was used to analyse the data. Results Thirteen community IPPs across Wales participated. Six themes were identified, including the utilisation of their role as community IPPs, their experiences with their independent prescribing training, motivation to obtain their prescribing qualification and utilise it, the impact, barriers and facilitators to implement and utilise their role. Participants practised as IPPs in the management of minor ailments and some other conditions, such as respiratory and sexual health. The course and training for community IPPs was helpful, but there was a need to focus more on therapeutic and clinical examination skills. The main impact of the role was that it helped to improve communication between community pharmacies and general practices and relieved some pressure on general practices. The main barriers were the lack of appropriate funding by the Government to develop the role, lack of access to patients’ medical records, lack of support and high workload. “One of the areas identified as high risk is for pharmacy prescribers is the lack of access to clinical records. How can you [as community IPPs] make any sensible decisions with half the information?” IPP6 Facilitators included that some services were already in place and the drive from the 2030 vision. Conclusion This is the first study that explored the views of community IPPs regarding their prescribing role in community pharmacies in Wales. It provided an insight into this new role that can be considered by the Welsh Government to achieve the 2030 vision for this role. A limitation to this study was that the role is still new in community pharmacies, which may affect the views of the community IPPs. Many of them have obtained their prescribing qualification but have not started to utilise it yet. Further work is needed to explore a wider population of community IPPs’ experiences as the role develops. References 1. Wickware, C. 2019. All community pharmacies in Wales to have an independent prescriber as part of long-term plan for Welsh pharmacy. Available at: https://www.pharmaceutical-journal.com/news-and-analysis/news/all-community-pharmacies. 2. Welsh Pharmaceutical Committee. 2019. Pharmacy: Delivering a Healthier Wales. Available at: https://www.rpharms.com/Portals/0/RPS%2.

scholarly journals Interlinkages between Urbanization and Climate Change: Identifying and Understanding the Challenges and the Prospects

2020 ◽  
Vol 31 (3) ◽  
pp. 285-300
Author(s):  
Abhinav Alakshendra ◽  
Arjun Kumar ◽  
Simi Mehta
Keyword(s):  
Climate Change ◽  
Urban Governance ◽  
Institutional Reforms ◽  
Rapid Urbanization ◽  
Role Of Government ◽  
Government Organizations ◽  
Urban Service ◽  
The Government ◽  
The Impact

India is urbanizing at an alarming rate and the impact of climate change is becoming more visible each passing day. The rapid urbanization and climate change have severe direct and indirect consequences, such as increasing poverty, inequality, massive displacement, public health concerns, and challenges of urban governance, among others. This paper identifies some of the most pressing issues faced by urban India in the context of climate change. It also details the interventions undertaken at the local, national, and international levels to counter the effect of the climate change. In addition, it critically evaluates the role of government organizations, especially in terms of undertaking regulatory and planning functions. The paper argues that the implementation of institutional reforms would enable the government to reach out to the private sector to improve urban service delivery. It also provides examples of best practices from India and the world in combating climate change through adaptation and mitigation approaches.Abstrak. India mengalami urbanisasi pada tingkat yang mengkhawatirkan dan dampak perubahan iklim menjadi terlihat setiap hari. Urbanisasi yang cepat dan perubahan iklim memiliki konsekuensi langsung dan tidak langsung yang parah, seperti antara lain meningkatnya kemiskinan, ketimpangan, pengungsian besar-besaran, masalah kesehatan masyarakat, dan tantangan tata kelola kota. Makalah ini mengidentifikasi beberapa masalah paling mendesak yang dihadapi oleh perkotaan India dalam konteks perubahan iklim. Makalah ini juga merinci intervensi yang dilakukan di tingkat lokal, nasional, dan internasional untuk melawan dampak perubahan iklim. Selain itu, secara kritis makalah ini mengevaluasi peran organisasi pemerintah, terutama dalam menjalankan fungsi pengaturan dan perencanaan. Makalah ini berpendapat bahwa pelaksanaan reformasi kelembagaan akan memungkinkan pemerintah menjangkau sektor swasta untuk membantu meningkatkan pelayanan perkotaan. Makalah ini juga memberikan contoh praktik terbaik dari India dan dunia dalam memerangi perubahan iklim melalui pendekatan adaptasi dan mitigasi.Kata kunci. Urbanisasi, perubahan iklim, keterkaitan, tata kelola kota, mitigasi.

scholarly journals BUDGETARY PROJECTION IN THE SYSTEM OF FINANCIAL AND ECONOMIC REGULATION OF SOCIAL PROCESSES

2020 ◽  
Vol 6 (1) ◽  
pp. 130
Author(s):  
Igor Chugunov ◽  
Valentina Makohon
Keyword(s):  
Time Series ◽  
Fiscal Policy ◽  
Dynamic Balance ◽  
Social Processes ◽  
System Stability ◽  
Policy Outcomes ◽  
Institutional Changes ◽  
Economic Regulation ◽  
Macroeconomic Stability

The purpose of the article is to reveal the role of budgetary projection in the system of financial and economic regulation of social processes within the framework of improving the efficiency of fiscal policy intended to macroeconomic stability maintenance in both countries with transformational and advanced economies. The comparative and factorial methods allowed to developthe features of the institutional environment of the budgetary progection methodology, to identify approaches for its improvement. Methodology. Substantiation of the role of budget forecasting in the system of financial and economic regulation of social processes, determination of provisions for improving its methodology is based on generalized and systematic approaches that are applied in both developed and transformational economies. An analysis of the stages of the process and the budgetary projection methods evaluation, that are used in different countries, have been carried out. Results showed that the efficient budgetary projection methodology is the basis for sound fiscal policy. The development of realistic budgetary projections facilitates justified management decisions aimed at ensuring the country financial firmness. Devia-tions from budget revenues from the projected indicators do not make it possible to achieve certain fiscal policy outcomes and, accordingly, cause a budget cut. In order to develop realistic budgetary projections, a welldesigned and coherent database is needed for all time series, necessary to analyze and project budget revenues. Time series of key determinants affecting the budget revenues level should be available at different frequencies (monthly, quarterly, annually). Where data reflecting similar economic processes by different revenue sources are available, any differences between them shall be determined by reference to their coverage and methodology. Practical implications. Budgetary projections are the basis for the formation of effective fiscal policy and the benchmark of the reproduction process. Adequate level of justification for budget projection will help to provide a dynamic balance of budgetary indicators and the budgetary system stability. Institutional changes to the budgetary projection methodology should be made on the basis of taking into account the dynamic interrelation of budgetary and macroeconomic indicators. The remarkable task here is the development of an economic and mathematical model based on the assessment of the national economy capabilities by reference to the assessment of macroeconomic proportions and the corresponding social and economic conditions of social production. Value/ originality. Developing the budgetary projection approaches in the context of improvement of the fiscal policy efficiency is an important precondition for ensuring macroeconomic stability. In order to increase the budget projection justifiability, it is advisable to make institutional changes to its methodology. Based on the methioned above, the article reveals the essence and role of the budgetary projection in the system of financial and economic regulation of social processes in the context of improving the fiscal policy effectiveness aimed at macroeconomic stability maintenance; approaches to improving the budgetary projection methodology have been identified, and it has been determined that the soundness and feasibility of budgetary projection are the basis for effective fiscal policy. The predictability of budgetary criteria, budgetary architectonics contribute to improving the efficiency of transformations in the public finance system.

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