Fiscal Policy and Unemployment in Ethiopia: Evidence from ARDL Model

Fiscal Policy and Unemployment in Ethiopia: Evidence from ARDL Model | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Fiscal Policy and Unemployment in Ethiopia: Evidence from ARDL Model Takele Wogari Irge This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-5641886/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract One of the main objectives of macroeconomic and fiscal policy in Ethiopia, as in many other developed and developing nations, is to reduce unemployment. This study examines the impact of fiscal policy on unemployment in Ethiopia from 1990 to 2022. The analysis employed the ARDL Model and cointegration test. The variables analyzed include real gross domestic product (RGDP), government spending, tax income, trade openness, population growth, and the unemployment rate. A stationarity test was conducted, revealing that all variables except population growth were stationary at their first difference. The cointegration test indicated a long-term relationship among the examined variables. Additionally, the ECM results showed that government spending negatively affects unemployment, while tax income has a positive impact. The Granger causality results demonstrated a one-way relationship, with causality flowing from government spending to unemployment. This method provides evidence of a long-term relationship between the unemployment rate and factors such as government spending and tax income. The study suggests that the government should restructure its spending patterns by allocating more funds to productive expenditures and enhance its revenue generation by diversifying Ethiopia's revenue streams. Macroeconomics ARDL government expenditure cointegration fiscal policy ethiopia unemployment tax revenue Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-5641886","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":390203235,"identity":"5fdeafd2-7076-4f1c-ab42-3660ffe41d63","order_by":0,"name":"Takele Wogari Irge","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAABUUlEQVRIie2PMUvDQBTHXyg0y0kdr1TsV0joaslXuSOQLs7SocZI4boEu1bU71AQOjm8EohLcQ5EMEWIi0LcCkr1rmBto+0smN/w7nH3//HeARQU/EnKAIk8KgAaJosbzVOVwHddgyiFyaYqc8hWFfKlkA2KgUtl+fS7YukhT1g7qDciG5G1j+tG3BX09cbdsyjTkhcB+1ZuCnECg00CcxQ5DNnk1hzej0V1kAaEUFYyrwQ0fizWEpSLWBvFhwZyEWrDiHcbBFEp5dqOAO7nlMpTb8bnsXV9oZR5aC2Ud3SVor9J5SSvUCcE7sV8WFOK1+FSOX0ELC2mlKTC8otFqU1Z+GEPHlL5lxDtc6lMfZR/mUy71cs7avq4puh9x8yyjtPs+8E4yTpu8yxqJThD19J79jh7Pjqo6x5sI1jpd7nK0q15ibvSV3BTqqCgoOB/8QkFMYLRnrcFEQAAAABJRU5ErkJggg==","orcid":"https://orcid.org/0009-0006-4634-0088","institution":"Wollega University","correspondingAuthor":true,"prefix":"","firstName":"Takele","middleName":"Wogari","lastName":"Irge","suffix":""}],"badges":[],"createdAt":"2024-12-14 06:39:58","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-5641886/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-5641886/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":71599474,"identity":"ee1db40d-cee5-4ee5-8a67-ff99b548ff80","added_by":"auto","created_at":"2024-12-17 05:06:24","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":323991,"visible":true,"origin":"","legend":"","description":"","filename":"TakelewogariIrgeFISCAL.pdf","url":"https://assets-eu.researchsquare.com/files/rs-5641886/v1_covered_52008d3e-6b35-4176-b602-ea90b8e55fdb.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003eFiscal Policy and Unemployment in Ethiopia: Evidence from ARDL Model\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"ARDL, government expenditure, cointegration, fiscal policy, ethiopia, unemployment, tax revenue","lastPublishedDoi":"10.21203/rs.3.rs-5641886/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-5641886/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eOne of the main objectives of macroeconomic and fiscal policy in Ethiopia, as in many other developed and developing nations, is to reduce unemployment. 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