The impact of oil price volatility on inflation and economic growth in Tanzania
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Date
2023
Authors
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Publisher
The University of Dodoma
Abstract
The government of Tanzania is current experienced the uneven growth rate of GDP and sometimes leads to failure of attaining the national target this motivate this study conducted to address this problem. Therefore, the study examines the impact of Oil Price Volatility on inflation and economic growth in Tanzania. The research study was guided with the specific objectives as follows: to determine the impact of oil price volatility on economic growth in Tanzania; to examine the impact of Oil Price volatility on inflation in Tanzania; and to determine the causality of oil price volatility between inflation and economic growth in Tanzania. This study employed secondary data from Bank of Tanzania and National Bureau of Statistics. The modelling of time series data was done by using Auto regressive distributed lag model (ARDL). The study found that after controlling the effect of export and import, the oil price volatility has negative impact on economic growth. Furthermore, after controlling the effect of Exchange rate and Interest rate on the inflation rate it was found that the oil price volatility has positive impact on inflation in long run. whenever the oil price volatility increases by one percent the inflation rate increase by the rate of 1.340 percentage. Furthermore, the study found that there is no causality between the oil price volatility and economic growth, also there is a two-way direction of causality between economic growth and inflation rate and Last there is a one-way direction of the causality from the oil price volatility on inflation that is the oil price volatility enhanced the inflation rate. It is now the time of the Government through the Bank of Tanzania to manage the oil price volatility, exchange rate, export and import in order to curb those effects on inflation and economic growth. This study merely recommend that future studies may use quarterly data in order to obtain a larger number of observations that can be analyzed to see their impact on Tanzania's growth domestic product.
Description
Dissertation (Ma in economics)
Keywords
Oil price, Price volatility, Inflation, Economic growth, Tanzania
Citation
Sabayo, G. (2023). The impact of oil price volatility on inflation and economic growth in Tanzania (Master dissertation). The University of Dodoma.