Business cycles in Tanzania: Mainly a monetary or real phenomenon?

No Thumbnail Available
Journal Title
Journal ISSN
Volume Title
University of Dar es Salaam
Tanzania is a poor country whose economic performance has generally not been satisfactory. Between 1965 and 1995, the average (trend) economic growth rate was only 3 percent. The situation is even worse when it is also noted that, over the period, Tanzania's annual economic growth rates have been fluctuating around the trend. For example, while the average annual growth rate in the 1960s and 1970s was about 4 percent, the average annual growth rate in the first half of 1980s was only 0.6 percent. This pattern of economic growth indicates that the economy of Tanzania has not been stable. Using the monetary and real business cycle theories, this study investigates one aspect of macroeconomic instability in Tanzania, namely the problem of macroeconomic fluctuations (or business cycles). It examines the nature, main features, and causes of the fluctuations. Decomposing Tanzania's macroeconomic time series reveals that the series have been subject to fluctuations. Measurements of volatility and co-movement of the macroeconomic series further confirm that Tanzania's macroeconomic variables have not been stable, and that the pattern of volatility and co-variation more or less resemble the `stylized facts'. The vector autoregression (VAR) results show that the contribution of monetary disturbances to fluctuations in GDP is negligible. They account for less than one percent of the fluctuations in output. Real disturbances, which include terms of trade shocks, shocks to the price level and disturbances to GDP account for most of the fluctuations. It appears that business cycles in Tanzania are more of a real than a monetary phenomenon.
Available in print form, East Africana Collection, Dr. Wilbert Chagula Library, Class mark (THS EAF HB3711.T34L89)
Business cycles, Microeconomic policy, Monetary, Tanzania
Luvanda, E. G. (2000). Business cycles in Tanzania: Mainly a monetary or real phenomenon? Master dissertation, University of Dar es Salaam.