An Empirical Analysis of the Nexus Between Inflation, Exchange Rate, Unemployment and Economic Growth in Ethiopia: A Granger Casualty Approach.

This article examines the relationships among inflation, unemployment, exchange rate, and economic growth in Ethiopia's economy from 1980 to 2022 using descriptive statistics, Vector Autoregressive (VAR) modeling, and Granger causality tests. The study finds that Ethiopia experienced stagnant economic growth, hyperinflation, volatile exchange rates, and high unemployment, particularly after 2010. Results indicate that economic growth and currency depreciation are positively associated in the long run, while unemployment negatively impacts both inflation and economic growth; moreover, unemployment and economic growth influence exchange rate devaluation, but inflation does not significantly affect them. The study concludes that Ethiopia's macroeconomic challenges stem from supply-demand imbalances and suggests that enhancing industrial and agricultural productivity, promoting domestic commodities, and expanding exports could address these issues.