Impacts of Monetary Factors on Employment Growth in Tanzania: 1990- 2022

Rehema Ramadhani Mhenwa; Deus D. Ngaruko; Timothy Lyanga

doi:10.37284/eajbe.7.2.2314

Rehema Ramadhani Mhenwa Mwalimu Nyerere Memorial Academy
Deus D. Ngaruko The Open University of Tanzania
Timothy Lyanga The Open University of Tanzania

DOI: https://doi.org/10.37284/eajbe.7.2.2314

Sambaza Makala:

Ikisiri

This study analysed the impact of monetary macroeconomic factors on employment growth in Tanzania, using time series data from 1990 to 2022, sourced from the Bank of Tanzania and the World Bank. Stationarity tests, co-integration bound tests, and ARDL Error Correction Models for both long and short runs were employed. The findings indicated a positive relationship between employment growth and the inflation rate (β = 0.001, p = 0.723), GDP growth (β = 0.023, p = 0.049), and total government expenditure (β = 0.003, p = 0.848). Conversely, lending interest rates (β = -0.008, p = 0.499), total government revenue (β = -0.003, p = 0.798), and foreign reserves (β = -0.033, p = 0.048) did not demonstrate a direct impact on employment growth. Short-run results presented mixed outcomes across variables. The study concludes that maintaining price stability and reducing lending interest rates are essential for enhancing domestic investment and employment. It recommends revising government lending rate policies to support local investors and establishing an exchange rate regime to effectively manage foreign reserves, thereby ensuring foreign creditworthiness, reducing inflation, and stabilising the economy

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