The Dynamics of Foreign Public Debt and Foreign Exchange Reserve of Ethiopia: Autoregressive Distributed Lag Model Approach

External public debt and foreign exchange reserve (FER) are performing a crucial role in the growth development of countries. To examine short-run long-run dynamics among external (EPD) FER Ethiopia, study used 39 years data (1981 to 2019) from National bank Ethiopia (NBE) World Bank sets. The Autoregressive Distributed Lag (ARDL) model with error correction (ECM) was employed after checking possible assumptions economic series. results ADF test statistics confirms our series stationary mixture level form first difference form. Bounds co-integration suggests existence variables. According descriptive method analysis, on average, trend for service sector indicated that an ever improvement throughout periods supplementing notion change agriculture base sector. On other hand, according ARDL short -run average trade tariff rate, share manufacturing GDP, lagged value EPD itself predicts significantly at least less than 10% significance . Moreover, ECM revealed long-run, financial indicator, payment, rate were predicting stock Ethiopian economy. Finally, concerned body, government should limit or reduce amount (ED) inflows, recheck budget sources financing different projects especially industries rather highly basing EPD, others.