Inflation and Money Growth in Ethiopia: is there a Threshold Effect?

This study analyses money growth - inflation nexus in Ethiopia using annual datasets covering the period 1970-2009. This period was considered due to data limitations. A significant aspect of the study is that it tries to identify the optimal level of money growth using Two Regime Threshold Model. The result from the two-regime threshold model reveals that there is indeed a threshold effect in the relationship between money growth and inflation and the optimal level of money growth is estimated to be 17% which has an important policy implication. Here, money supply creates inflationary pressures only when it exceeds 17%. A percentage increase in money supply above this threshold value is expected to cause 1.47 percent increase in annual inflation indicating that monetary factors are valid sources of inflation in Ethiopia. The results imply keep the money growth below 17%. Hence, a specific monetary policy measures that could be envisaged is controlling broad money supply (M2).Inflation; money growth; two regime threshold model; Ethiopi

Urban Fuel Demand in Ethiopia: An Almost-Ideal Demand System Approach

This paper investigates the opportunities for reducing the pressure of urban centers on rural forest areas, using a dataset of 350 urban households in Tigrai in northern Ethiopia. We applied an almost-ideal demand system to fuels. Because the same fuels were not always used by households, the analysis started with a probit model of fuel use. The inverse Mills ratios derived from it were inserted into the estimation of the fuel demand system to obtain a full set of price and income elasticities. The results suggest that reducing the pressure of urban centers on local forests cannot be seen in isolation from broader development policies aimed at raising the level of education and income of the population. Higher income also stimulates the demand for fuel.price elasticities, income elasticities, almost-ideal fuel demand system, reducing deforestation, Ethiopia

Participation in Off-Farm Employment, Rainfall Patterns, and Rate of Time Preferences: The Case of Ethiopia

Devoting time to off-farm activities, while complementing agricultural incomes, may be constrained by labor availability and financial capacity. This paper assesses the importance of rainfall patterns, which condition the availability of agricultural labor, and financial constraints on off-farm employment decisions. Using panel data from Ethiopia, which include experimental rate-of-time preference measures, we found that these and rainfall are significant determinants off-farm employment. Rural development policies should take into account the financial capacity of households and the role of off-farm opportunities as safety nets in the face of weather uncertainty.off-farm employment, rainfall variability, reduced availability of water, rate-of time-preferences, multinomial logit, Ethiopia

Urban Energy Transition and Technology Adoption: The Case of Tigrai, Northern Ethiopia

Dependency of urban Ethiopian households on rural areas for about 85 percent of their fuel needs is a significant cause of deforestation and forest degradation, resulting in growing fuel scarcity and higher firewood prices. One response to reducing the pressure on rural lands is for urban households to switch fuel sources (from fuelwood to electricity, for example) to slow deforestation and forest degradation and reduce indoor air pollution. However, such an energy transition is conditioned on the adoption of appropriate cooking appliances or stove technologies by the majority of users. This paper investigates urban energy transition and technology adoption conditions using a dataset of 350 urban households in Tigrai, in northern Ethiopia. Results suggest that the transition to electricity is affected by households adopting the electric mitad cooking appliance, which in turn is influenced by the level of education and income, among other things.urban energy transition, electric mitad cooking appliance, technology adoption, bivariate probit, Tigrai, Ethiopia

Participation in Off-Farm Employment, Risk Preferences, and Weather Variability: The Case of Ethiopia

This article assesses the relative importance of risk preferences and rainfall availability on households’ decision to engage in off-farm employment. Devoting time for off-farm activities, while it helps households earn additional incomes, involves a number of uncertainties. Unique panel data from Ethiopia which includes experimentally generated risk preference measures combined with longitudinal rainfall data is used in the analysis. An off farm participation decision and activity choice showed that both variability and reduced availability of rainfall as well as neutral risk preferences increase the likelihood of off-farm participation. From policy perspective, the results imply that expanding off farm opportunities could act as safety nets in the face of weather uncertainty. In addition, policy initiatives geared towards encouraging income diversification through off farm employment need to address underlying factor that condition risk bearing ability of households.Off-farm employment, labor supply, rainfall variability/reduced availability, risk preferences, GLLAMM, Ethiopia, Labor and Human Capital, Q13, D81, C35, C93,

Household Tree Planting in Tigrai, Northern Ethiopia: Tree Species, Purposes, and Determinants

Trees have multiple purposes in rural Ethiopia, providing significant economic and ecological benefits. Planting trees supplies rural households with wood products for their own consumption, as well for sale, and decreases soil degradation. We used cross-sectional household-level data to analyze the determinants of household tree planting and explored the most important tree attributes or purpose(s) that enhance the propensity to plant trees. We set up a sample selection framework that simultaneously took into account the two decisions of tree growers (whether or not to plant trees and how many) to analyze the determinants of tree planting. We used logistic regression to analyze the most important tree attributes that contribute to households’ tree-planting decisions. We found that land size, age, gender, tenure security, education, exogenous income, and agro-ecology increased both the propensity to plant trees and the amount of tree planting, while increased livestock holding impacted both decisions negatively. Our findings also suggested that households consider a number of attributes in making the decision to plant trees. These results can be used by policymakers to promote tree planting in the study area by trengthening tenure security and considering households’ selection of specific tree species for their attributes.tree plantin, tree species, tree attributes or purposes, sample selection, Tigrai, Ethiopia

Single versus multiple objective(s) decision making: an application to subsistence farms in Northern Ethiopia

Single objective approach is most widely used whereas consideration of multiple objectives is the rule rather than an exception in many real life decision-making circumstances. This paper, therefore, investigates whether or not single and multiple criteria/objective approaches necessarily lead to differing conclusions. The central questions are could the single objective approach be a reasonable approximation for subsistence farm settings or does the multiple objectives approach has anything to add? Does the pattern of resource allocation change when priorities attached to the different objectives/ goals change? The study employs linear and goal programming techniques on a dataset from a stratified sample of 200 farm households drawn from Tigrai regional state, Northern Ethiopia, for 2001 and 2002 production years. Findings reveal that the two approaches might not necessarily lead to differing conclusions.Keywords: Single versus Multiple Criteria/Objectives; Linear Programming, Goal Programming; Subsistence Farms; Northern Ethiopi

Land degradation in Ethiopia: What do stoves have to do with it?

Land degradation is a particularly vexing problem in developing countries; as forests are depleted, crop residues and dung are used for fuel, which degrades cropland. In Ethiopia, the government encourages tree planting and adoption of energy efficient stove technologies to mitigate land degradation. We use data from 200 households in Tigrai, Ethiopia to examine the adoption of new stove technologies. Adoption is an economic decision, related to savings in time spent collecting fuel and cooking, and cattle required for everyday purposes. Results indicate adopters of efficient stoves reduce respective wood and dung use by 68 and 316 kg per month.land degradation, technology adoption, Africa, Ethiopia

Land Degradation in Ethiopia: What Do Stoves Have To Do With It?

In Ethiopia deforestation is a major problem and many peasants have switched from fuelwood to dung for cooking and heating purposes, thereby damaging the agricultural productivity of cropland. The Ethiopian government has embarked on a two-pronged policy in an effort to stem deforestation and the degradation of agricultural lands: (i) tree planting or afforestation; (ii) dissemination of more efficient stove technologies. The motivation in here is, therefore, to examine the potential of the strategy of disseminating improved stoves in the rehabilitation of agricultural and forests lands. For empirical analysis we used a dataset on cross-section of 200 farm households from the highlands of Tigrai, northern Ethiopia. We used a two-step procedure reminiscent of hedonic pricing. Results in this paper indicate that farm households in Tigrai/ Ethiopia are willing to adopt new/improved stove innovations if these result in economic savings. Moreover, results suggest a significant positive impact in slowing the degradation of agricultural and forested lands. On a per household basis, we found that adopters will collect 68.3 kg less wood each month, while more dung in the form of manure becomes available as 19.899 kg less dung is collected each month. In terms of wood alone, assuming an average of 79 t of biomass per ha, we found the potential reduction in deforestation amounts to some 1,794 ha per year, not an inconsequential savings.land degradation, technology adoption, fuel-savings efficiency, stoves, Ethiopia, Land Economics/Use, Q12, Q16, Q24,

Profitability of bioethanol production: the case of Ethiopia

This research investigates the profitability of bioethanol production in Africa, taking Ethiopia as a case in point, and suggests an oil price threshold beyond which biofuels may be profitable. Specifically, the study analyzes the viability of producing bioethanol from molasses in the context of Ethiopia, using data from a biofuels investment survey by EEPFE/EDRI in 2010. We draw on investment theory as our underlying conceptual framework and we employ unit cost analysis for our empirical analysis. Findings reveal that bioethanol production (from molasses) in Africa/Ethiopia can be quite viable and the biofuels industry can be viewed as a way out of poverty. This is a case study involving a few observations because of the small size of the universe of producers studied; hence the need for further analysis as the sector expands.Key words: profitability; bioethanol; oil price threshold; Ethiopia; AfricaJEL Codes: Q56, Q4