WITHDRAWN: Inflation Nexus Economic Growth in Ethiopia

Abstract Price stability and achieving sustainable economic growth are the major goals of macroeconomic policy and the key indicators of macroeconomic stability. Pursuing of price stability is primary to long-run growth and development; it should be the concern of every economy. This study investigated the nexus of inflation and economic growth in Ethiopia, using the vector autoregressive (VAR) model by employing the data series for the period ranging from 1980 to 2021. The ADF Unit root test confirmed that the variables in the model are integrated of order I (0). The descriptive statistics concludes that the relationship between inflation and economic growth are inconclusive. From VAR regression result, the lagged value of inflation has positive and significant effect on inflation at 1% level of significance. But the lagged value of economic growth has insignificant effect on inflation in Ethiopia. On the other hand, the lagged value of economic growth has positive and significant effect on economic growth and the lagged value of inflation has positive and significant effect on economic growth at 1% level of significance. The estimated model passes diagnostic tests and the Eigen value stability condition displays all the Eigen values lie inside the unit circle. Hence, VAR satisfies stability condition. Long run sustainable development emphasis should be given to accelerate economic growth and compute the threshold inflation-growth level, so that growth rate takes care of the stability in inflation.