The Effect of Macroeconomic Policy on Economic Growth in Tanzania (1990-2024)

Abstract

Using data from the World Bank and a quantitative technique, this study looks at how macroeconomic policy affected Tanzania's economic development between 1990 and 2024. Tanzania, which has experienced significant economic changes over the past three decades but still faces policy-related growth issues, must comprehend this link. To differentiate between long-term and short-term associations, a correlational design was used in conjunction with the Auto Regressive Distributed Lag (ARDL) bounds testing method. The study integrates the money market and the products market by applying Keynes' Aggregate Demand theory within an open economy framework. The results show that the single factor influencing economic growth over the long term is the money supply. Only two macroeconomic policy variables have a statistically significant impact on economic growth, according to regression analysis: the money supply has a positive influence at the 10% significance level, and inflation has a negative effect at the 5% significance level. The remaining macroeconomic policy factors have negligible statistical significance. Fiscal and external sector factors should be included in future studies.