Trade Balance and Exchange Rate: Ethiopian Case

The book "Trade Balance and Exchange Rate: Ethiopian Case" by Lulit Assefa Wondimu offers a comprehensive analysis of the impact of exchange rates on Ethiopia's trade balance. It highlights the challenges arising from a trade balance deficit and discusses the role of currency devaluation as a potential solution. By applying traditional economic models as well as a modified version that considers additional income sources such as official development assistance (ODA) and remittances, the complexity of the topic becomes evident. The study employs the ordinary least squares (OLS) method for data analysis and concludes that currency devaluation does not lead to an improvement in the trade balance. This finding is particularly relevant for countries with similar economic structures and challenges.