Browsing by Author "Balele, Nguling'wa Philip"

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    The relative effectiveness of monetary and fiscal policies on economic growth in Tanzania: an econometric approach.
    (University of Dar es Salaam, 1998) Balele, Nguling'wa Philip
    This study examines the relative effectiveness of monetary and fiscal policies in Tanzania on real economic growth. The main hypothesis of the study is that the impact of monetary policy on economic growth is more effective than that of fiscal policy. The analysis is undertaken using annual data from 1970 to 1996, also supplemented by phase period analysis to analyse policy changes. Empirical investigation is carried out by estimating a modified version of the St. Louis model in which real economic growth is taken to be the dependent variable. The explanatory variables are real money stock (for monetary policy), real government expenditure (for fiscal policy) and real exports. Single Equation Error Correction method is used to explore the short- and long run impact of the explanatory variables on real GDP growth. The study finds that fiscal policy was more effective and more predictable than monetary policy for the 1992-1996 sub-period whereas neither monetary nor fiscal policy was significant in explaining economic growth during 1970-1991. Also growth rates in real money stock, real government expenditure and real exports are positively related with the growth rate in real GDP. Test on parameter stability indicates that the mid-1980s economic reforms did not cause statistically significant shifts in the real economic growth. In the light of these findings, the study recommends that discretionary stabilisation policy can be pursued more successfully by fiscal rather than monetary policy measures.