 A Fisher's equation of exchange analysis of money supply and inflation in TanzaniaFulgence Dominick Waryoba
Romanian Journal of Economics, 2023, vol. 56, issue 1(65), 167-184 Abstract: Objective:The current study analyzed how Tanzania’s inflation is affected by the money supply.Fisher's equation of exchange was the subject of the current study.Methods:Before estimating the equation, the study tested for unit root problem in the series.Money was differenced stationary, while inflation was trend stationary.This allowed for co-integration test which confirmed long run relationship in two out of five approaches.Vector error correction (VEC) followed by vector auto regressive (VAR) model, paved way for Granger-causality test.Nevertheless, the study also pursued stability test after VEC and VAR estimation.Results:The VEC analysis proved a short run positive effect of money supply on inflation.However, under VAR, the positive relationship lasted for one year and reversed two years later.The Granger-causality test proved a unidirectional causality with broad money causing consumer price index.Originality:This is the only study that employed a pure Fisher’s equation of exchange to uncover the effect of broad money on inflation in Tanzania which was verified though not in the long run. Keywords: inflation; demand for money (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ine:journl:v:56:y:2023:i:65:p:167-184 Access Statistics for this article Romanian Journal of Economics is currently edited by Institute of National Economy More articles in Romanian Journal of Economics from Institute of National Economy Contact information at EDIRC. |
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