The impact of inflation on economic growth in Tanzania 1980-2015

This study analyzes the impact of inflation on economic growth in Tanzania during the period 1980-2015. Specifically, the study aims at assessing the effect of inflation on economic growth in Tanzania. Since economic growth is impacted upon by several other factors, the estimation model included its most important condition factors, namely private investment and human capital. The Ordinary Least Square (OLS) technique was used to estimate the model; and, the Phillips-Perron unit root test was used to test for the stationarity of the variables. Among others, the empirical results suggested that inflation had a negative impact on economic growth during the sample period. Results also suggested that human capital was a significant positive determinant of economic growth in Tanzania. The results of the study suggest that positive economic growth in the economy could be achieved by promoting human capital, through occasional training for those at work already, to develop their knowledge and offering free education and loans to enable those who are in school. Use of more comprehensive data and alternative data analysis method in future is called for, given the scope of this study.