This study examined the effect of fiscal policy on capital flight in Ethiopia using time series data from 1970 to 2012 by employing ARDL model. The results establish that past capital flight, change in debt, and government expenditure have no significant impact on capital flight in Ethiopia. However, external debt, taxation, and expenditure practices under different political regimes have significant effects on capital flight. The study provided policy implications emerging from the empirical results.
Keywords: Capital Flight, Ethiopia, Fiscal Policy, autoregressive distribute lag model
