Ethiopian Economics Association (EEA) and Ethiopian Strategy Support Program (ESSP) of IFPRI PROCEEDINGS OF THE FIFTEENTH INTERNATIONAL CONFERENCE ON THE ETHIOPIAN ECONOMY Edited by Amin Abdella Demirew Getachew Gasahw Desalegn Kumadebis Tamiru Samuel Gebreselassie Volume I i Published: June 2018 © Ethiopian Economics Association (EEA) All rights reserved ISBN – 978-99944-54-64-8 Partners of all activities of EEA are the African Capacity Building Foundation (ACBF), the Friedrich Ebert Stiftung of Germany (FES), Think Tank Initiative of the International Development Research Center (IDRC) of Canada, and Civil Society Support Program (CSSP). The 15th International Conference was Co-organized by the Ethiopian Strategy Support Program (ESSP) of the International Food Policy Research Institute (IFPRI). The 15th International Conference Sponsored by Sponsored by IFPRI, EDRI, Friedrich Ebert Stiftung of Germany, UNECA, UNDP, International Growth Center (IGC), USAID, AKLDP Ethiopia, The World Bank, European Union, PRB, ILRI, CGIAR UF/IFAS. ii FOREWORD The Ethiopian Economics Association (EEA) is happy to issue two volumes of the proceedings of the 15th International Conference (the 26th Annual Conference) on the Ethiopian Economy that was held from July 20 – 22, 2017 at EEA Multi-purpose Building Conference Hall. EEA has been organizing annual conferences on the Ethiopian Economy every year as part of its overall objectives of promoting the development of economics profession in Ethiopia and contributing to the policy formulation and implementation process of our country through research, training, public dialogue forums and publications and dissemination activities. EEA had launched its international conference series in June 2003, after organizing 11 annual national conferences. This series has proved to be an excellent forum at which not only resident Ethiopian researchers, but also Ethiopian researchers based abroad as well as non-Ethiopian researchers throughout the world conducting research on Ethiopia, or more widely, present and discuss research findings. This year’s conference, as was last seven years, is co-organized by the Ethiopian Strategy Support Program (ESSP) – the collaborative program of the International food Policy Research Institute (IFPRI) and the Ethiopian Development Research Institute (EDRI). It was also co- sponsored by IFPRI, EDRI, Friedrich Ebert Stiftung of Germany, UNECA, UNDP, International Growth Center (IGC), USAID, AKLDP Ethiopia, the World Bank, Population Reference Bureau (PRB), and European Union (EU). The contribution of EEA’s partners that includes the African Capacity Building Foundation (ACBF), Think Tank Initiative of the International Development Research Center (IDRC) of Canada and the Friedrich Ebert Stiftung of Germany is also critical for the organization of this important conference and other activities of the Association. At the conference about 80 presentations were made in five plenary and five parallel sessions with the attendance of about 956 persons in three iii days. That is the conference attracted about 486, 250 and 220 participants during the first, second and third days of the conference, respectively. Out of the total 80 presentations, about 44 were presented by partner institutions like (IFPRI-ESSP), International Growth Centre (IGC), United Nation Economic Commotion for Africa (UNECA), the World Bank, EDRI, AKLDP Ethiopia/Tufts University, UNDP, Young Live Ethiopia, Addis Ababa University and Population Reference Bureau (PRP) and etc. The rest 36 papers were presented by individual researchers. The conference was opened by H.E. Ato Hailemariam Desalegn, X/Prime Minster of the Federal Democratic Republic of Ethiopia at the presence of higher dignitaries and invited guests. The presence of H.E. Ato Hailemariam Desalegn, demonstrates the value of the conference to the economic policy making process of the country. The year also marked as Silver Jubilee of the Ethiopian Economics Association. The editorial committee reviewed papers that were presented for the publication of the proceedings of the conference and communicated its comments and suggestions including editorial comments to authors. After passing all these process and language editing, the editorial committed selected 18 papers to be included in the proceedings. All these papers are organized into two volumes. Volume I consists of Macroeconomics, Industry and social Sectors issues while Volume II consists of Agricultural and Natural Resources related topics. At this juncture, on behalf of the Ethiopian Economics Association, I would like to thank the Ethiopian Strategic Support Program (ESSP) of the International Food Policy Research Institute (IFPRI), for being a regular co-organizer of the EEA’s International conferences since 2010. My appreciation also goes to the authors of the papers and the conference participants whose active participations made the conference meaningful and dynamic. The many professionals who dedicated their time to the conference and served as chairpersons deserve due thanks for their special contributions. iv I would like also to thank IFPRI, EDRI, Friedrich Ebert Stiftung of Germany, UNECA, UNDP, International Growth Center (IGC), USAID, AKLDP Ethiopia, the World Bank, Population Reference Bureau (PRP), and European Union (EU). The contribution of EEA’s partners that includes the African Capacity Building Foundation (ACBF), Think Tank Initiative of the International Development Research Center (IDRC) of Canada. The organizing committee and staffs of the EEA deserve a special recognition for their enthusiasm and perseverance in managing the conference from inception to completion. I also want to extend my personal gratitude to the members of the Executive Committee of the Ethiopian Economics Association for the dedicated services and the leadership they provided to the Association. Our special thanks go to our partners who have shared our vision and provided us with generous financial support to operationalize the activities of EEA. These include; the African Capacity Building Foundation (ACBF), Think Tank Initiative of the International Development Research Center (IDRC) of Canada and the Friedrich Ebert Stiftung of Germany. I would like also to extend my sincere gratitude to H.E. Ato Hailemariam Desalegn, former Prime Minster of the Federal Democratic Republic of Ethiopia for his an insightful opening address; and other senior government officials who spared their busy schedule and participated in the conference. Finally, I would like to convey the message that our Association is willing to seek new ways of addressing the economic problems and to be of better service and to meet the expectations of its members and the public at large. Tadele Ferede (PhD) President Ethiopian Economics Association v TABLE OF CONTENTS Volume I Macroeconomics, Industry and Social Sector Related Topics External shock and Monetary Policy in Ethiopia: Evidenced from a narrative approach ......................................................................................... 1 Esubalew Asmare Sahilea Access to Finance and Barriers to Financial inclusion in Ethiopia.......... 39 Gebe Yemataw and Gashaw Desalegn Financial Inclusion in Ethiopia: Using ESS Data ...................................... 63 Gashaw Desalegn and Gebe Yemataw Residential Pricing in Ethiopia: Do Urban Green Amenities Influence House Buyers’ Decision? .............................................................................. 81 Tsegaye Ginbo and Dawit W. Mulatu Intergenerational Transmission of Poverty and Child Well - Being in Ethiopia: Early Childhood Health, Nutrition and Cognitive Development ................................................................................................ 105 Habtamu Demilew and Assefa Admassie Determinants of Fo od Insecurity among Rural Households in East Wollega Zone: The Case of Diga Woreda................................................. 145 Dinkisa Kumsa, Amsalu Bedemo and Kidus Markos Is Public Investment on Rural Road Transport Sector in Ethiopia Pro-poor? Evidence from the Ethiopian Rural Socio-Economic– Living Standard Measurement Survey Panel Data (LSMS)................... 175 Naod Mekonnen Anega and Bamlaku Alamirew vi Households’ Preferences and Willingness to Pay for Improved Solid Waste Management Interventions using Choice Experiment Approach: Debre Tabor Town, Northwest Ethiopia............................... 215 Eshetie Woretaw, Dawit Woubishet and Workineh Asmare Productive Technical Efficiency of Ethiopian Basic Metals and Engineering Industries: A Stochastic Frontier Approach ...................... 257 Yibeltal Gelaye Information Communications Technology and Economic Growth in Sub-Saharan Africa: A Panel Data Approach ......................................... 295 Haftu Girmay Giday vii Macroeconomics, Industry and Social Sector Related viii External shock and Monetary Policy in Ethiopia: Evidenced from a narrative approach Esubalew Asmare Sahilea1 Abstract This study investigates the effects of the recent oil and food price shocks on the main macroeconomic variables and analyzes the responses conducted by the National Bank of Ethiopia. Due to problems of identification in the statistical approach, the study uses the Narrative approach of analysis (developed by Romer C. and Romer D. (1989)). The study found that oil and food price shock of 2006-2009 is highly correlated to movements in price of energy and food in Ethiopia. Both consumer price index and pump price for diesel