Since 2014
Monetary vs. Fiscal Policy: An Empirical Investigation in Tanzania, 1966–2013
Tanzania Economic Review
View Archive Info| Field | Value | |
| Title |
Monetary vs. Fiscal Policy: An Empirical Investigation in Tanzania, 1966–2013
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| Creator |
Mkupete, Mkupete Jaah; University of Dar es Salaam
Ndanshau, Michael O. A.; University of Dar es Salaam |
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| Description |
This study examines the relative importance of fiscal and monetary policy on economicgrowth in Tanzania by using quarterly time series data for the period 1966: I to 2013: IV.The hypotheses tested are that fiscal rather than monetary policy tools exert a relativelystronger and larger influence on economic activity; and the impact of fiscal policy is morepredictable than that of monetary policy. The analysis was based on the original and amodified St. Louis equation in the form of a Distributed Lag Model estimated by usingthe Restricted Vector Autoregressive (VAR) model and Autoregressive Distributed Lag(ARDL) technique. The study finds that monetary policy tools, measured by money supply, had a relatively stronger, larger and predictable impact on economic growth thanfiscal policy, measured by government expenditure. Also, the shocks associated withchanges in money supply were larger than the shocks due to changes in fiscal policy.However, over the short-run the shock due to changes in fiscal policy on economic activitywas larger; and that of monetary policy was larger over the long-run. The estimationresults suggest that the modified St. Louis equation was more superior to its originalform. The results suggest the relative dominance of monetary over fiscal policy, implyingthat stabilization policy can be successfully pursued by the former rather than the latterpolicy. However, either of the policy should not be used exclusively because even fiscalpolicy is found to have an effect on growth, at least over the short-run period. Keywords: fiscal dominance, monetary policy, economic growth, autoregressivedistributed lag model. JEL Classification: E31, E37
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| Publisher |
Dar es Salaam University Press
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| Contributor |
—
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| Date |
2016-02-13
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion Peer-reviewed Article |
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| Format |
application/pdf
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| Identifier |
https://journals.udsm.ac.tz/index.php/ter/article/view/2470
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| Source |
Tanzania Economic Review; Vol 7, No 1&2 (2017): TER
2507-7740 0856-3373 |
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| Language |
eng
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| Relation |
https://journals.udsm.ac.tz/index.php/ter/article/view/2470/2540
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| Rights |
Copyright (c) 2016 Tanzania Economic Review
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