Influence of Exchange Rate Volatility on coffee exports in Tanzania from 1996 to 2016,

Tumaini, Henry Desdery (2018) Influence of Exchange Rate Volatility on coffee exports in Tanzania from 1996 to 2016,. Masters thesis, The Open University of Tanzania.

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Abstract

This research broadly examines the influence of ERV on coffee exports in Tanzania due to the fact that the contribution of coffee to the Tanzanian economy has shown a fluctuating as well as a declining trend. The research was guided by two specific objectives: The first objective was to examine the volatility of real exchange rate of the currency of Tanzania and its influence on coffee exports between 1996 and 2016. The second objective was to determine the responsiveness of coffee exports to changes in other determinants of coffee exports apart from the exchange rate volatility. The gravity model was used to analyse the relationship. Econometric methods were used to estimate the gravity model using time series data for the period 1996-2016. The empirical results of the study in general indicate that in the long-run, variations in coffee exports are caused by variations in the ERV, nominal GDP of Tanzania, the real exchange rate and terms of trade for Tanzania. While short-run findings of this study show that, variations in coffee exports can be explained only by variations in ERV or real exchange rate or both. The study draws the following conclusion; stable exchange rate could be effective policy instrument for promoting coffee exports in Tanzania. ERV could be reduced by putting in place policies which are directed in strengthening and deepening the capital, financial and currency market. The exchange rate movements should be in line with the performance of the economy both domestically and externally. Improvement of terms of trade for Tanzania and the nominal GDP of Tanzania has a positive influence of coffee exports in the long-run. Therefore policies directed to improve the terms of trade and promote economic growth will likewise improve the quantity of coffee exports.

Item Type: Thesis (Masters)
Subjects: 300 Social Sciences > 330 Economics
Divisions: UNSPECIFIED
Depositing User: Mr. Administrator OUT
Date Deposited: 22 Nov 2019 13:26
Last Modified: 22 Nov 2019 13:26
URI: http://repository.out.ac.tz/id/eprint/2345

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