We develop an econometric model of the demand for M2 in Tanzania, using quarterly data from 1998 to the present. The continuous decline in velocity since the late 1990s is associated with a transformation of economic activity that has cumulatively increased the monetary intensity of GDP. Portfolio behavior also responds to expected inflation and to exchange rate depreciation, with weaker effects from interest rates.
This report considers alternative exchange rate arrangements for EAC countries in the transition to a monetary union. This paper by Christopher S. Adam (Oxford University), Pantaleo Kessy (Bank of Tanzania and IGC), Camillus Kombe (Bank of Tanzania) and Stephen A O’Connell (Swarthmore College) is the outcome of research collaboration between staff of the Department of Economic Research and Policy at the Bank of Tanzania and the International Growth Centre.
The use of U.S dollar as unit of account, medium of exchange and store of value in Tanzania has raised concerns among policy makers and the general public. This paper attempts to shed some light on the key stylized facts of dollarization in Tanzania and the EAC region. We show that compared to other EAC countries, financial dollarization in Tanzania is high, but steadily declining.
This paper was commissioned by the Economic Affairs sub-committee of the East African Community Monetary Affairs Committee. The paper offers a template for Partner State central banks to employ in developing common operational and analytical approaches to understanding the evolution and behaviour of the money multiplier in the context of reserve money-based monetary programmes.