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Impact of fiscal policy on the real exchange rate: anecdotal evidence from Tanzania
Mugoya, Partric K.D / 1999


Abstract:

In macroeconomic theory of open econimies, it is argued that an adverse fiscal imbalance results into a higher real interest rate. In turn the higher real interest rate reduces net foreign investment and that this leads to an appreciation of the domestic currency. This study is a preliminary empirical investigation of the extent to which the budget deficit inTanzania has had any relationship with the real interest rate and the real exchange rate.


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