Publication:
Aid Inflows and the Real Effective Exchange Rate in Tanzania

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dc.contributor.authorLi, Ying
dc.contributor.authorRowe, Francis
dc.date.accessioned2012-06-08T14:49:07Z
dc.date.available2012-06-08T14:49:07Z
dc.date.issued2007-12
dc.description.abstractTanzania is well placed to receive a significant increase in aid inflows in coming years. Despite the potential for the additional aid inflows to raise income levels in the country, increasing them may bring about structural changes in the economy that may be unwelcome. One such change is an appreciation of the real exchange rate that leads to a contraction of traditional export sectors and a loss of export competitiveness. This paper employs a reduced-form equilibrium real exchange rate approach to explain movements in Tanzania's real effective exchange in recent decades. Particular attention is paid to the relationship between aid inflows and the real effective exchange rate. The authors find that the long-run behavior of the real effective exchange rate is influenced by terms of trade movements, the government's trade liberalization efforts, and aid inflows. Positive terms-of-trade movements are associated with an appreciation, periods of improving trade liberalization are associated with a depreciation, and increases in aid inflows are associated with a depreciation in the real effective exchange rate. Although the last result is non-standard, it is not empirically unique and does have theoretical underpinnings. A detailed analysis of this relationship over the last decade shows that the Bank of Tanzania's response to aid inflows is likely the main reason for the finding.en
dc.identifierhttp://documents.worldbank.org/curated/en/2007/12/8894922/aid-inflows-real-effective-exchange-rate-tanzania
dc.identifier.doi10.1596/1813-9450-4456
dc.identifier.urihttps://hdl.handle.net/10986/7514
dc.languageEnglish
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper; No. 4456
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCUMULATION OF RESERVES
dc.subjectAGGREGATE DEMAND
dc.subjectBALANCE OF PAYMENTS
dc.subjectBALANCE OF PAYMENTS CRISES
dc.subjectBALANCE OF PAYMENTS CRISIS
dc.subjectBILATERAL EXCHANGE RATES
dc.subjectBILATERAL TRADE
dc.subjectBILL
dc.subjectBLACK MARKET
dc.subjectCAPITAL ACCOUNT
dc.subjectCAPITAL FLOWS
dc.subjectCAPITAL INFLOWS
dc.subjectCAPITAL MARKET
dc.subjectCASH FLOW
dc.subjectCENTRAL BANK
dc.subjectCHOW TEST
dc.subjectCOMMODITY PRICE
dc.subjectCOMMODITY PRICES
dc.subjectCOMPETITIVE DEVALUATION
dc.subjectCONSUMER PRICE INFLATION
dc.subjectCONSUMPTION EXPENDITURES
dc.subjectCORRELATION COEFFICIENT
dc.subjectCURRENT ACCOUNT
dc.subjectCURRENT ACCOUNT BALANCE
dc.subjectCURRENT ACCOUNT DEFICIT
dc.subjectCUSTOMS DUTIES
dc.subjectDEBT
dc.subjectDEBT RELIEF
dc.subjectDEBT SERVICE
dc.subjectDECLINE IN INFLATION
dc.subjectDEPRECIATION
dc.subjectDEPRECIATIONS
dc.subjectDEVALUATION
dc.subjectDEVALUATIONS
dc.subjectDIRECTION OF TRADE
dc.subjectDISCOUNT RATE
dc.subjectDOMESTIC CREDIT
dc.subjectDOMESTIC CURRENCY
dc.subjectDOMESTIC CURRENCY PRICE
dc.subjectDOMESTIC DEMAND
dc.subjectDOMESTIC ECONOMY
dc.subjectDOMESTIC GOODS
dc.subjectDOMESTIC INTEREST RATES
dc.subjectDOMESTIC PRICES
dc.subjectDUTCH DISEASE
dc.subjectECONOMIC POLICY
dc.subjectEQUILIBRIUM
dc.subjectEQUILIBRIUM LEVEL
dc.subjectERROR CORRECTION MODEL
dc.subjectERROR CORRECTION TERM
dc.subjectERROR TERM
dc.subjectEXCHANGE RATE MISALIGNMENT
dc.subjectEXCHANGE RATE POLICY
dc.subjectEXCHANGE RATE REGIME
dc.subjectEXCHANGE RATE REGIMES
dc.subjectEXCHANGE RATES
dc.subjectEXPLANATORY VARIABLE
dc.subjectEXPLANATORY VARIABLES
dc.subjectEXPORT COMPETITIVENESS
dc.subjectEXPORT EARNINGS
dc.subjectEXPORT MARKETS
dc.subjectEXPORT PERFORMANCE
dc.subjectEXPORT REVENUES
dc.subjectEXPORTER
dc.subjectEXTERNAL BALANCE
dc.subjectEXTERNAL COMPETITIVENESS
dc.subjectEXTERNAL EQUILIBRIUM
dc.subjectEXTERNAL FACTORS
dc.subjectFISCAL DEFICIT
dc.subjectFISCAL IMBALANCES
dc.subjectFISCAL POLICY
dc.subjectFIXED EXCHANGE RATE
dc.subjectFIXED EXCHANGE RATE REGIME
dc.subjectFIXED RATE
dc.subjectFIXED RATE REGIME
dc.subjectFLEXIBLE EXCHANGE RATE
dc.subjectFLEXIBLE EXCHANGE RATE REGIME
dc.subjectFOREIGN CURRENCY
dc.subjectFOREIGN EXCHANGE
dc.subjectFOREIGN EXCHANGE MARKET
dc.subjectFOREIGN EXCHANGE MARKETS
dc.subjectFOREIGN PRICE LEVELS
dc.subjectFRANC ZONE
dc.subjectFUNDAMENTAL DETERMINANT
dc.subjectFUTURES
dc.subjectGENERAL EQUILIBRIUM
dc.subjectGLOBALIZATION
dc.subjectGOLD
dc.subjectGOVERNMENT BORROWING
dc.subjectGROWTH RATE
dc.subjectGROWTH RATES
dc.subjectIMBALANCES
dc.subjectIMPORT
dc.subjectIMPORT CONTENT
dc.subjectIMPORT LIBERALIZATION
dc.subjectIMPORT LICENSING
dc.subjectIMPORT PRICES
dc.subjectIMPORT TARIFFS
dc.subjectIMPORTS
dc.subjectINCOME LEVELS
dc.subjectINSTRUMENTAL VARIABLE
dc.subjectINTERNATIONAL BANK
dc.subjectINTERNATIONAL CAPITAL FLOWS
dc.subjectINTERNATIONAL COMPETITIVENESS
dc.subjectINTERNATIONAL MARKET
dc.subjectINTERNATIONAL PRICE
dc.subjectINTERNATIONAL PRICES
dc.subjectINTERNATIONAL RESERVES
dc.subjectINTERNATIONAL TRADE
dc.subjectINVESTMENT RATE
dc.subjectINVESTMENT RATES
dc.subjectINVESTMENT SPENDING
dc.subjectLIQUIDITY
dc.subjectLOCAL CURRENCY
dc.subjectLONG ­RUN EQUILIBRIUM
dc.subjectLONG-RUN EQUILIBRIUM
dc.subjectLONG-TERM EQUILIBRIUM
dc.subjectLOSS OF COMPETITIVENESS
dc.subjectLOW-INCOME COUNTRIES
dc.subjectLOW-INCOME COUNTRY
dc.subjectMACROECONOMIC CONDITIONS
dc.subjectMACROECONOMIC MODELS
dc.subjectMACROECONOMIC REFORMS
dc.subjectMACROECONOMIC STABILITY
dc.subjectMACROECONOMIC STABILIZATION
dc.subjectMACROECONOMIC VARIABLES
dc.subjectMARKET SHARE
dc.subjectMISALIGNMENT
dc.subjectMISALIGNMENTS
dc.subjectMONETARY DETERMINANTS
dc.subjectMONETARY POLICY
dc.subjectMONEY SUPPLY
dc.subjectNOMINAL DEPRECIATION
dc.subjectNOMINAL EXCHANGE RATE
dc.subjectNOMINAL EXCHANGE RATES
dc.subjectOIL PRICES
dc.subjectOPEN ECONOMY
dc.subjectOUTPUT GAP
dc.subjectOVERVALUATION
dc.subjectPARALLEL EXCHANGE RATE
dc.subjectPARALLEL EXCHANGE RATES
dc.subjectPARALLEL MARKET
dc.subjectPARALLEL MARKET RATE
dc.subjectPARALLEL MARKETS
dc.subjectPARALLEL NOMINAL EXCHANGE RATE
dc.subjectPOST-CRISIS PERIOD
dc.subjectPOVERTY REDUCTION
dc.subjectPRICE COMPETITIVENESS
dc.subjectPRICE INDEX
dc.subjectPRICE INDICES
dc.subjectPRIMARY COMMODITIES
dc.subjectPRIMARY COMMODITY
dc.subjectPRIVATE CAPITAL
dc.subjectPUBLIC EXPENDITURE
dc.subjectPUBLIC EXPENDITURES
dc.subjectPUBLIC INVESTMENT
dc.subjectPUBLIC SPENDING
dc.subjectPURCHASING POWER PARITY
dc.subjectREAL APPRECIATION
dc.subjectREAL DEPRECIATION
dc.subjectREAL EFFECTIVE EXCHANGE RATE
dc.subjectREAL EFFECTIVE EXCHANGE RATES
dc.subjectREAL EXCHANGE RATE
dc.subjectREAL EXCHANGE RATE APPRECIATION
dc.subjectREAL EXCHANGE RATE BEHAVIOR
dc.subjectREAL EXCHANGE RATES
dc.subjectREGIME CHANGES
dc.subjectRELATIVE DOMESTIC PRICE
dc.subjectRELATIVE PRICE
dc.subjectRELATIVE PRICES
dc.subjectRESERVE ACCUMULATION
dc.subjectRESERVE BANK
dc.subjectROBUSTNESS CHECKS
dc.subjectSHORTFALLS
dc.subjectSPEED OF ADJUSTMENT
dc.subjectSTRUCTURAL REFORM
dc.subjectSTRUCTURAL REFORMS
dc.subjectSUM OF IMPORTS
dc.subjectSUPPLY RESPONSE
dc.subjectSUPPLY SIDE
dc.subjectSUPPLY-SIDE
dc.subjectSUSTAINABLE CAPITAL
dc.subjectT-BILLS
dc.subjectTAX
dc.subjectTAX INCREASES
dc.subjectTRADABLE GOODS
dc.subjectTRADE DEFICIT
dc.subjectTRADE LIBERALIZATION
dc.subjectTRADE MOVEMENTS
dc.subjectTRADE REGIME
dc.subjectTRADE SHARES
dc.subjectTRADE STATISTICS
dc.subjectTRADING
dc.subjectTRADING PARTNERS
dc.subjectTREASURY BILLS
dc.subjectUNCERTAINTY
dc.subjectUPWARD PRESSURE
dc.subjectWEIGHTS
dc.subjectWHOLESALE PRICE INDICES
dc.subjectWORLD MARKETS
dc.subjectWORLD PRICE
dc.titleAid Inflows and the Real Effective Exchange Rate in Tanzaniaen
dspace.entity.typePublication
okr.crossref.titleAid Inflows And The Real Effective Exchange Rate In Tanzania
okr.date.doiregistration2025-04-10T07:16:47.708473Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2007/12/8894922/aid-inflows-real-effective-exchange-rate-tanzania
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeFinance and Markets
okr.globalpracticeTrade and Competitiveness
okr.guid475991468118489579
okr.identifier.doi10.1596/1813-9450-4456
okr.identifier.externaldocumentum000158349_20071219141944
okr.identifier.internaldocumentum8894922
okr.identifier.reportWPS4456
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2007/12/19/000158349_20071219141944/Rendered/PDF/wps4456.pdfen
okr.region.administrativeAfrica
okr.region.countryTanzania
okr.topicFinance and Financial Sector Development::Currencies and Exchange Rates
okr.topicEconomic Theory and Research
okr.topicPrivate Sector Development::Emerging Markets
okr.topicFinance and Financial Sector Development::Debt Markets
okr.topicMacroeconomics and Economic Growth::Economic Stabilization
okr.unitDevelopment Research Group (DECRG)
okr.volume1 of 1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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