Browsing by Author "Joachim, Godfrey"

Now showing 1 - 2 of 2
  • Thumbnail Image
    Item
    Commodity price volatility, tax revenue, and welfare: evidence from Tanzania
    (University of Dar es Salaam, 2020) Joachim, Godfrey
    Commodity prices remain inherently volatile in the global market, exerting pressure on tax revenue with the resulting change in prices and trade (export or import) volumes, as well as the adverse impact on production, consumption, resource allocation and household welfare. This study analyses the effects of commodity price changes and volatility on tax revenue and welfare using Tanzania as a case study. To accomplish this investigation, the study undertakes three tasks. First, it examined the association between commodity price change/volatility and tax revenue using time series data on Tanzania from 1980 to 2017. Second, using QUAIDS model in the compensation variation (CV) framework that accounts for static and dynamic effects, the study investigates the effects of agricultural commodity price changes on household welfare by comparing the period of high and low prices using Tanzania Panel Survey datasets from 2008 to 2015. Finally, using monthly auction coffee prices data from 1998 to 2017, the study examines the welfare consequences of reducing coffee price volatility. Different estimation techniques are employed to estimate effects of commodity price change and volatility on tax revenue and welfare. These include the dynamic Autoregressive Distributed Lag (ARDL), Three Stage Least Square, Compensating Variation (CV) and typical Lucas-like representative agent models. The findings show that, while commodity price change has a positive effect on tax to GDP ratio, commodity price volatility has negative effects. The welfare gain is associated with price increases; while the welfare losses are associated with declines in the prices of agricultural goods. Furthermore, the welfare losses are unevenly distributed depending on the net-market position and strata of the households. Finally, the finding shows that the welfare gains from reducing price volatility for coffee farmers in Tanzania are small. The study findings confirm the argument that, reliance on trade taxes is not favorable for Government's objective to optimize tax revenue because such taxes are adversely affected by commodity price volatility, hence the need to explore other opportunities for increasing tax revenue such as expanding tax bases. Clearly, the finding on welfare impact of reducing price volatility for coffee farmers imply that, measures to support farmers' productivity or value additions, and scaling up agricultural production with commercial focus could be a better strategy for improving the welfare of farmers.
  • Thumbnail Image
    Item
    Export instability and economic growth the case of Tanzania
    (University of Dar es Salaam, 2010) Joachim, Godfrey
    There has been a widely-held notion, not empirically confirmed in all cases, that exports drive growth (export-ledgrowth hypothesis) from which it is maintained that export instability would therefore be detrimental to growth. The objective of this study is to investigate the impact of overall export instability and agricultural export instability in particular, on economic growth in the case of Tanzania. Ordinary Least Squares (OLS) is used to estimate the specified equation. Time series data utilized range from 1968 to 2008 period. The empirical results show that, for total exports, the relationship between export instability and economic growth in Tanzania is not significant. However, using agriculture (rather than total) exports, the relationship is significant and negative. This finding is consistent with many other studies of LDCs where export instability is found to be detrimental to growth. This suggests that, given the importance of agriculture in Tanzania's export performance, there is a need for deliberate effort in managing instability of agricultural export earnings. Policy interventions for improving export diversification and easing of domestic supply constraints will ensure steady production. At the same time, attention has to be paid to product quality in order to strengthen the competitiveness of export products and so command good bargain in the world commodity markets. These measures will stabilize supply of agricultural exports and export earnings overtime.