Alternative Estimators of Macroeconomic Model of Ethiopia: A Comparison

During the past 5 decades a number of econometric techniques were developed and applied to a variety of econometric relationships to deal with the problem of single equation estimation as well as simultaneous equations bias. These days, such methods have very wide applications especially in more developed countries. However, there has been very little attempt to apply these techniques to empirical relationships describing the macroeconomic sector of developing countries in general and Ethiopia in particular.The main contribution of this study lies on the application of econometric methods to identify the best estimation techniques that will produce accurate forecast using macroeconomic model of Ethiopia. The output of this research will help the relevant government institutions in designing and revising appropriate techniques for forecasting the economy of the country. Besides its use in budget preparation, policy analysis and simulation exercises, the study provides the foundation for building full-fledged macro model in Ethiopia and as a basis for other researchers.