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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Exchange rate movements, monetary policy and the macroeconomy of Tanzania, 1933-99
Author:Mugoya, Patrick K.D.ISNI
Year:1997
Periodical:Tanzanian Economic Trends (ISSN 0856-3373)
Volume:11
Issue:1-2
Period:December-June 1998
Pages:4-16
Language:English
Notes:biblio. refs., ills.
Geographic terms:Tanzania
East Africa
Subjects:monetary policy
foreign exchange
Economics, Commerce
Foreign exchange rates
Macroeconomics
economic policy
Abstract:Since July 1993, foreign exchange policy has been used in Tanzania as an indirect tool for achieving monetary policy goals. This paper analyses empirical evidence for the period 1993-1999 to determine the effectiveness of foreign exchange policy in the implementation of monetary policy. In particular, it examines FEMO (foreign exchange market operations), one of the means through which the Bank of Tanzania intervenes in the economy to achieve specified macroeconomic goals. It also tests the existence of any correlation between exchange rate movements and movements in selected non-monetary (i.e. real) macroeconomic variables hypothesized to be correlated with exchange rate movements. Contrary to international finance theory, the paper finds no evidence to support the supposed theoretical link. It concludes that foreign exchange policy in Tanzania between 1993 and 1999 has not been an effective instrument for the conduct of monetary policy. The remarkable success achieved in monetary policy during this period cannot therefore be attributed to foreign exchnage policy. Bibliogr., notes, ref., sum. [ASC Leiden abstract]