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Global shocks and their impact on the Tanzanian economy

Listed author(s):
  • Haile, Fiseha
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    Plummeting commodity prices, China's economic slowdown and rebalancing, and global financial market turbulence have recently raised concerns about their effects on African economies. This paper investigates whether, and to what extent, these intertwined shocks spillover into the Tanzanian economy. The author finds that a 1 percentage point (ppts) drop in China's investment growth is associated with a decline in Tanzania's export growth of roughly 0.60 ppts. A 1 percent fall in commodity prices leads to 0.65 percent lower exports value. The results suggest that a hard landing of the Chinese economy to its 'new normal' would doubtless send shock waves through the Tanzanian economy by further driving down commodity demand and prices as well as lowering development finance. In contrast, financial market volatility has a fairly negligible impact on economic growth. The main results stand up well to a wide-array of robustness checks.

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    File URL: http://dx.doi.org/10.5018/economics-ejournal.ja.2017-9
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    File URL: https://www.econstor.eu/bitstream/10419/157237/1/884528103.pdf
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    Article provided by Kiel Institute for the World Economy (IfW) in its journal Economics: The Open-Access, Open-Assessment E-Journal.

    Volume (Year): 11 (2017)
    Issue (Month): ()
    Pages: 1-38

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    Handle: RePEc:zbw:ifweej:20179
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    1. Benjamin F. Jones & Benjamin A. Olken, 2008. "The Anatomy of Start-Stop Growth," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 582-587, August.
    2. Lakatos,Csilla & Maliszewska,Maryla & Osorio-Rodarte,Israel & Go,Delfin Sia, 2016. "China's slowdown and rebalancing: potential growth and poverty impacts on Sub-Saharan Africa," Policy Research Working Paper Series 7666, The World Bank.
    3. Johansen, Soren & Juselius, Katarina, 1994. "Identification of the long-run and the short-run structure an application to the ISLM model," Journal of Econometrics, Elsevier, vol. 63(1), pages 7-36, July.
    4. David Hendry & Jurgen A. Doornik & Felix Pretis, 2013. "Step-indicator Saturation," Economics Series Working Papers 658, University of Oxford, Department of Economics.
    5. Jushan Bai & Robin L. Lumsdaine & James H. Stock, 1998. "Testing For and Dating Common Breaks in Multivariate Time Series," Review of Economic Studies, Oxford University Press, vol. 65(3), pages 395-432.
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