Original Research

The effect of a budget deficit on inflation: The case of Tanzania

M Solomon, WA de Wet
South African Journal of Economic and Management Sciences | Vol 7, No 1 | a1431 | DOI: https://doi.org/10.4102/sajems.v7i1.1431 | © 2004 M Solomon, WA de Wet | This work is licensed under CC Attribution 4.0
Submitted: 09 July 2004 | Published: 23 July 2004

About the author(s)

M Solomon, University of Pretoria
WA de Wet, University of Pretoria

Full Text:

PDF (144KB)

Abstract

The Tanzanian economy has remained one of the limited numbers of countries that has experienced a relatively high inflation rate, accompanied by high fiscal deficits for a prolonged period in the absence of any hyperinflation. This paper examines the deficit-inflation relationship in the Tanzanian economy and establishes the causal link that runs from the budget deficit to the inflation rate usingcointegration analysis over the period 1967-2001. Some dynamic simulations are done to gauge the effect of a change in the budget deficit and gross domestic product on inflation over time. Due to monetisation of the budget deficit, significant inflationary effects are found for increases in the budget deficit.

Keywords

No related keywords in the metadata.

Metrics

Total abstract views: 4750
Total article views: 14752

 

Crossref Citations

1. An Analysis of the Relative Effectiveness of Monetary and Fiscal Policies on Economic Performance in Jamaica: A Vector-Autoregression Approach
Samuel P. Indalmanie
SSRN Electronic Journal   year: 2016  
doi: 10.2139/ssrn.2805565

2. Existe relaciin alguna entre ddficit fiscal e inflaciin? El antes y el despuus de la independencia del banco de la reppblica en Colombia (Is There Any Relation between Deficit and Inflation? An Analysis Before and after Independence of the Central Bank of Colombia)
Oscar Andres Espinosa Acuua, Paola Andrea Vaca Gonzzlez
SSRN Electronic Journal  year: 2013  
doi: 10.2139/ssrn.2603004

3. The impact of budget deficit on inflation: Insights of Sri Lanka
Selvavinayagam Viththika, Jeyapiratheeba Anton Arulrajah, Gnanasubramaniam Gnanachandran
Model Assisted Statistics and Applications  vol: 19  issue: 3  first page: 239  year: 2024  
doi: 10.3233/MAS-241931

4. The Impact of Fiscal Deficit on Inflation in Namibia
Joel Hinaunye Eita, Victoria Manuel, Erwin Naimhwaka, Florette Nakusera
Journal of Central Banking Theory and Practice  vol: 10  issue: 1  first page: 141  year: 2021  
doi: 10.2478/jcbtp-2021-0007

5. The different role of governance in the fiscal deficit – inflation between developed and developing countries
Thuy Tien Ho, Van Bon Nguyen, Thi Bao Ngoc Nguyen
Macroeconomics and Finance in Emerging Market Economies  vol: 16  issue: 3  first page: 377  year: 2023  
doi: 10.1080/17520843.2021.1973787

6. Tanzi ve Patinkin Etkilerinin Türkiye’de Geçerliliğinin İncelenmesi
Elif YALÇIN
Adnan Menderes Üniversitesi Sosyal Bilimler Enstitüsü Dergisi  vol: 7  issue: 2  first page: 59  year: 2020  
doi: 10.30803/adusobed.784611

7. Fiscal Dominance and the Inflation Dynamics in Pakistan: An Empirical Analysis
Irem Batool, Khurram Ejaz Chandia, Binesh Sarwar, Muhammad Badar Iqbal
Millennial Asia  vol: 15  issue: 1  first page: 51  year: 2024  
doi: 10.1177/09763996221103003

8. Inflation Dynamics in Tanzania: An Exploratory Review of Reforms, Trends and Challenges
Deogratius Kimolo, Nicholas Odhiambo, Sheilla Nyasha
Timisoara Journal of Economics and Business  vol: 17  issue: 2  first page: 165  year: 2024  
doi: 10.2478/tjeb-2024-0008

9. Towards Price Stability in Tanzania During Economic Reforms: Does Fiscal Discipline Matter?
Michael O. A. Ndanshau, Flaviana P. Nyasebwa
SSRN Electronic Journal  year: 2012  
doi: 10.2139/ssrn.2142410

10. Enflasyon, Bütçe Açığı ve Vergi Gelirleri İlişkisi: Türkiye Örneği
Muhammed Cam, Yusuf Temur
Journal of Applied And Theoretical Social Sciences  vol: 3  issue: 1  first page: 50  year: 2021  
doi: 10.37241/jatss.2021.24

11. The Effects of Inflation on Fiscal Performance: A Panel Threshold Approach for Advanced Economies
Nazmiye Tekdemir
Balkan Sosyal Bilimler Dergisi  vol: 14  issue: 28  first page: 28  year: 2025  
doi: 10.55589/bsbd.1817505

12. The Non-Linear Relationship Between Fiscal Deficits And Inflation: Evidence From Africa
Nurudeen Abu, Mohd Zaini Abd Karim
South East European Journal of Economics and Business  vol: 10  issue: 2  first page: 102  year: 2015  
doi: 10.1515/jeb-2015-0013

13. Meta-Analysis of Inflation Studies in Iran's Economy
vahid shaghaghi shahri
quarterly journal of fiscal and Economic policies  vol: 11  issue: 44  first page: 117  year: 2024  
doi: 10.61186/qjfep.11.44.117

14. Budget Deficits, Money Supply and Inflation in Tanzania: A Multivariate Granger Causality Test, 1967–2010
Michael O. A. Ndanshau
SSRN Electronic Journal  year: 2012  
doi: 10.2139/ssrn.2142328

15. Tanzi ve Patinkin Etkisinin Panel Veri Analizi: Euro Bölgesi Ülkeleri
Sevinç YARAŞIR TÜLÜMCE, Fatih AKÇAY, Ersin YAVUZ
Ekonomi, Politika & Finans Araştırmaları Dergisi  vol: 6  issue: IERFM Özel Sayısı  first page: 97  year: 2021  
doi: 10.30784/epfad.1020804

16. Budget deficit and inflation nexus in Uganda 1980–2016: a cointegration and error correction modeling approach
Kurayish Ssebulime, Bbaale Edward
Journal of Economic Structures  vol: 8  issue: 1  year: 2019  
doi: 10.1186/s40008-019-0136-4

17. Budget Deficit Financing and Macroeconomic Outcomes: New Evidence from a VARX Model for the Iranian Economy
Saeed Bayat, Wahhab Qelich, Hossein Amiri
Vision: The Journal of Business Perspective  year: 2023  
doi: 10.1177/09722629231214077

18. The inflationary effect of the budget deficit: does financial sector development matter?
Abebe Aragaw
Journal of Innovation and Entrepreneurship  vol: 13  issue: 1  year: 2024  
doi: 10.1186/s13731-024-00394-4

19. The effect of energy subsidies on the sustainability of economy, society and environment: A case study of Iran
Alireza Ghadertootoonchi, Maryam Fani, Masoume Bararzadeh
ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT  issue: 2  first page: 93  year: 2021  
doi: 10.3280/EFE2020-002005

20. Correlation and Causality between Inflation and Selected Macroeconomic Variables: Empirical Evidence from Pakistan (1990-2012)
Mehwish Nawaz, Muhammad Naeem, Sami Ullah, Salim Ullah Khan
iBusiness  vol: 09  issue: 04  first page: 149  year: 2017  
doi: 10.4236/ib.2017.94011

21. Impact of fiscal and monetary policy on inflation in Vietnam
Trong Tai Nguyen, Thuy Duong Phan, Ngoc Anh Tran
Investment Management and Financial Innovations  vol: 19  issue: 1  first page: 201  year: 2022  
doi: 10.21511/imfi.19(1).2022.15

22. A review of accounting research in internationalising journals in the South African region
Charl J. De Villiers, Pei-Chi K. Hsiao
South African Journal of Economic and Management Sciences  vol: 20  issue: 1  year: 2017  
doi: 10.4102/sajems.v20i1.1729