|
Advanced search
Previous page
|
Title
Modelling monetary policy in South Africa: focus on inflation targeting era using a simple learning rule |
Full text
http://hdl.handle.net/2263/9116 |
Date
2009 |
Author(s)
Naraidoo, Ruthira; Gupta, Rangan |
Contributor(s)
ruthira.naraidoo@up.ac.za |
Abstract
A simple empirical nonlinear framework is used to analyse monetary policy between 1983 and 2007 in South Africa, focusing on the policy of inflation targeting introduced in Feb 2000, more precisely when the South African Reserve Bank (SARB) announced that an inflation zone targeting regime of 3-6% would be in place. We find that a model specification embodying a simple inflation learning rule for the future inflation rate seems to provide a better understanding of the decision process made by the SARB in its interest rate setting policy. The main findings are that the adoption of inflation targeting led to significant changes in monetary policy, secondly, post-2000 monetary policy is asymmetric as policy-makers respond more to downward deviation of inflation away from the target, thirdly, post-2000 policy-makers may be attempting to keep inflation within the 4.5%-6.9% range rather than pursuing a target zone of 3-6% as generally pre-announced and fourthly, the response of monetary policy to inflation is nonlinear as interest rates respond more when inflation is further from the target. |
Subject(s)
Monetary policy; Inflation targeting; Inflation learning rule; Nonlinear smooth transition model; Monetary policy -- South Africa; Inflation (Finance) -- South Africa |
Language
en |
Publisher
University of Pretoria, Department of Economics |
Relation
Working Paper (University of Pretoria, Department of Economics); 2009-04 |
Type of publication
Working Paper |
Rights
University of Pretoria, Department of Economics |
Identifier
Naraidoo, R & Gupta, R 2009, 'Modelling monetary policy in South Africa: focus on inflation targeting era using a simple learning rule', University of Pretoria, Department of Economics, Working paper series, no. 2009-04. [http://web.up.ac.za/default.asp?ipkCategoryID=736&sub=1&parentid=677&subid=729&ipklookid=3] |
Repository
Pretoria - University of Pretoria, UPSpace
|
Added to C-A: 2009-06-22;10:14:20 |
© Connecting-Africa 2004-2024 | Last update: Friday, March 8, 2024 |
Webmaster
|