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The Macroeconomic Effects of A Disaggregated Government Expenditure Shock in Ethiopia: Evidence from a Bayesian VAR Approach
Journal of Economics and Sustainable Development
This paper investigated the macroeconomic effects of government spending shocks in Ethiopia using a Bayesian Vector Auto Regression model. We examined the dynamic responses of output, inflation, interest rate and exchange rate to Government Spending shocks employing quarterly data from 2000/01Q1 to 2015/16Q4. The empirical evidence suggests that government spending shock had a positive impact on output and inflation but the effect was too small. Initially the interest rate responded negativelydoi:10.7176/jesd/10-19-03 fatcat:zy4vdgbjrvdtlh5brez3zch4fy