Monetary and Fiscal Actions: A Test of Their Relative Importance in Economic Stabilization in Tanzania

“This study has assessed the potency of monetary and fiscal actions in economic
stabilisation in the Tanzanian Economy. The analysis used both statistical and
econometric procedures. It has been found from statistical analysis that monetary
and fiscal actions are closely related bringing about an identification problem on
whether which of them is actually in operation. This has been seen to arise from
the money supply process where by claims on government on the central bank play a major role. This again is a result of an underdeveloped financial system forcing the absence of open market operations and therefore reliance on banks as a source of filling the government budget deficit.”