An analysis of the links between output, capital formation and money in Tanzania, 1966-1980
| dc.contributor.author | Ndanshau, Michael Onesmo Angasrin | |
| dc.date.accessioned | 2019-09-23T17:35:00Z | |
| dc.date.accessioned | 2020-01-07T15:55:05Z | |
| dc.date.available | 2019-09-23T17:35:00Z | |
| dc.date.available | 2020-01-07T15:55:05Z | |
| dc.date.issued | 1982 | |
| dc.description | Available in print form | en_US |
| dc.description.abstract | In the Arusha Declaration of 3967, Tanzania emphasized the need to achieve higher and rapid rates of economic growth. however, from 1967 to 1970s the rate of economic growth remained virtually stagnant or declined. The observed stagnation or decline in the rate of output was accompanied with sharp growth in money supply, defined broadly, and a near stagnation in the rate of capital formation. Our objective in this study has been to establish theoretic and empirical links between output, capital formation and real money balances in Tanzania from 1966-to 1980. In addition, other factors related to these variables are considered. This study also constitutes an improvement on the study by J:K. Onoh which investigates the link between output, capital formation and money in four African countries, Tanzania inclusive, from 1960 to 1968. In this study bath qualitative and quantitative methods of analysis were used, The qualitative analysis involved a brief theoretical and empirical survey on the links between output, capital formation and money. As regards the quantitative analysis, statistical and econometric techniques were used, for the statistical exercise, tabulated and graphed trends in absolute values and growth in output, capital formation and money from 1966 to 1980 were used. In the econometric analysis, the Ordinary Least Squares (OLS) and Two Stage Least Squares (2SLS) techniques were employed. In the statistical analysis, the links between output (real income), capital formation and money were not clear cut. This was due to the fact that trends in these macro-economic variables were relatively stochastic. Nonetheless, in the econometric analysis, output and financial intermediation were found to be significant determinants of real money balances and investment rate, respectively, In addition, real money balances were found to be a significant determinant of output, The output elasticity of real money balances was found to be greater than unity, 2.36. This revealed real balances in Tanzania as highly elastic to output. In contradistinction, output was found to be inelastic to real balances. The real balances elasticity of output was less than unity, 0.04. Further, investment rate was found to be inelastic to financial intermediation because the obtained elasticity was 0.09. In the light of the above findings, the main policy implications drawn in this work are two-fold. First, the fact that money balances determine output is undesirable if at all conditions conducive for economic growth and development are to be maintained. The above observation is made on the basis that output in Tanzania was virtually stagnating or declining from 1966 to 1980. As such the effect of money on output is more of nominal than real terms. In this regard, inflation and its possible consequences the economy cannot be abated. Hence, the need for a proper check on the use of the instruments of monetary policy cannot be overemphasized. Second, the fact that financial intermediation determines the investment rate in Tanzania, calls for its aggressive use. Its expansion in terms of services and facilities would constitute one of the lubricating tools for a rapid economic growth and development. | en_US |
| dc.identifier.citation | Ndanshau, M. O. A (1982) An analysis of the links between output, capital formation and money in Tanzania, 1966-1980,Masters dissertation, University of Dar es Salaam. Available at (http://41.86.178.3/internetserver3.1.2/detail.aspx?parentpriref=) | en_US |
| dc.identifier.uri | http://localhost:8080/xmlui/handle/123456789/2616 | |
| dc.language.iso | en | en_US |
| dc.publisher | University of Dar es Salaam | en_US |
| dc.subject | Finance | en_US |
| dc.subject | Research | en_US |
| dc.subject | Finance | en_US |
| dc.subject | Public | en_US |
| dc.subject | Tanzania | en_US |
| dc.title | An analysis of the links between output, capital formation and money in Tanzania, 1966-1980 | en_US |
| dc.type | Thesis | en_US |