Research/academic paper

The Behaviour of Income Velocity in Tanzania 1967-1994

“This study ventures to expand the frontier of knowledge on income velocity behaviour and its main determinants. Our investigation is also important in understanding the effect of changes in money growth on income over extended periods, thus helping policy makers to predict and target the national income. For, given the ability of the central monetary authority to achieve a desired money growth, “the success in achieving a nominal income goal depends on the precision with which velocity growth can be forecast”. A theoretical discussion of income velocity is given in Section II,while Section III dwells on the existing literature and the main methodological issues. Section IV builds on these,addresses the measurement and definition problems of the main variables used in the analysis, and presents the main variables and proxies used in this study. The estimation models, the main hypotheses and the main data sources used in the analysis are given in Section V. The empirical results, based on a descriptive and econometric analysis, are presented and discussed in Section VI. A summary of the main findings, conclusions, policy implications and areas for further research are given in Section VII.”