Record Details

Fiscal Policy and Debt Dynamic: Evidence from Tanzania

African Journal of Economic Review

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Field Value
 
Title Fiscal Policy and Debt Dynamic: Evidence from Tanzania
 
Creator Kayandabila, Y
Manyama, MK
 
Subject Ponzi game, Inter-temporal budget constraint, Transversality condition, Fiscal reaction function.
 
Description This paper investigates fiscal policy and debt dynamics in Tanzania by using time series data for the period 1970 to 2011. The methodologies adopted include unit root tests, cointegration tests and fiscal reaction function. The three approach employed validate similar results that fiscal policy for Tanzania has not been sustainable for the annual sample period 1970-2011. The unit root tests report that the data generating process of debt follow non-stationary process. Alternatively, in testing the null  hypothesis of no-cointegration, our results show that there is weak  cointegration between government expenditure and revenue which make fiscal policy to be unsustainable. In supporting the ensuing findings, the fiscal reaction function provides evidence that there is negative linear relationship between primary balance and debt relative to GDP. This is additional evidence that fiscal policy has not been sustainable, and the government is advised to take corrective measures to counteract the accumulation of debt.Keywords: -Ponzi game, Inter-temporal budget constraint, Transversality condition, Fiscal reaction function.
 
Publisher Centre for Economics and Community Economic Development
 
Contributor —
 
Date 2015-04-28
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier https://www.ajol.info/index.php/ajer/article/view/116293
 
Source African Journal of Economic Review; Vol 1, No 2 (2013); 30-46
1821-8148
 
Language eng
 
Relation https://www.ajol.info/index.php/ajer/article/view/116293/105811
 
Rights The copyright belongs to: African Journal of Economic Review, Centre for Economics and Community Economic Development, The Open University of Tanzania, P.O.Box 23409, Dar es salaam, Tanzania