Analytical Evaluation of Fiscal and Monetary Policies in Macroeconomic Management in Tanzania
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Date
2012-07
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Publisher
ZENITH International Journal of Business Economics & Management Research
Abstract
This paper tries to analyze the relative effectiveness of monetary and fiscal policies on
macroeconomic management and how they have influenced economic growth and
development in Tanzania for the period 1990 to 2009. The essence of the study was to evaluate
the trend of narrow money (M1), broad money (M2), government revenue, government
expenditure, government budget deficits, and gross domestic product (GDP) growth rates. The
study adopted a case study design with a quantitative research approach and it represents an
econometric analysis using statistical package for social sciences (SPSS). The empirical
analysis on basis of ordinary least squares method suggests that, there is moderate (positive)
relationship between the variables (narrow money, broad money, government revenue
receipts, and gross domestic product growth rates). This means that these variables have no
big significant impact on the pattern of gross domestic product (GDP) growth rates. Also, the
analysis suggests that budget deficits have moderate (negative) relationship with gross
domestic product growth rates. Thus, the study finds no signified relationship between most of
the components and we may conclude that fiscal policy and monetary policy does not exert a
strong impact on economic activities in Tanzania.
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Keywords
Fiscal policy, monetary policy, macroeconomic management, and economic growth.