Monetary policy credibility and exchange rate pass-through in south africa

Free Preview. Table 4 is based on the estimation of equation 9. Istrefi and Piloiu show how monetary policy uncertainty affects both short- and long-term inflation expectations. Ball, L. In so doing, the policy rate is smooth and less volatile. PAGE 1.

This is a preview of subscription content, log in to check access. Parsley , D. They argue that for inflation expectations to be well-anchored, their cross-sectional dispersion—disagreement among forecasters—needs to be reduced or disappear. Are fiscal deficits inflationary? Siklos, P. Lin, H.

Credibility and monetary transmission channels under inflation targeting: An econometric analysis from a developing country. He finds that CBT reduces both inflation and its volatility, and that CBT has a declining impact on volatility the lower the level of inflation. A semi-structural approach to estimate South Africas potential output. Cattaneo, To do this, it first documents the factors that explain monetary policy credibility. Istrefi, K. Assessing sustainability.

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Siklos , P. Schaling , and M. These findings are consistent with the gradualist approach of monetary policy. Karoro , T. IMF eLibrary. Kabundi , A.
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This last upward trend coincides with stability observed in inflation expectations, as depicted in Figure 5. Publishing With Us. Short-term inflation declines following a rise in monetary policy uncertainty, whereas long-term expectations tend to increase. Show Summary Details I. PAGE 1. Since macroeconomic variables are released with delay, policymakers do not have all information concerning the state of the economy when they make decisions. That said, it is uncertain whether improving monetary policy credibility alone would lower inflation expectations, or there is something more structural in nature.
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JEL: F31 , G A proper understanding of exchange rate pass-through to inflation in an emerging market country like South Africa is important for policy makers. Like Figures 9 and 10 , the two-series rally again from to the end of the sample. Journal of Economic Studies, 41 3 , — Kabundi, A. Table 4 is based on the estimation of equation 9.
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In the literature, following a seminal paper by Cukierman, Webb and Neyapti , CBI is typically presented as a multidimensional phenomenon. It follows that the import prices in 10 enter the second-stage expression as an independent variable. It should be noted that the s and early s were marked by high domestically-driven inflation mainly due to a weak monetary stance characterized by high growth in broad money supply, rather than imported inflation from major trading partners who experienced a disinflation during the same period Figure A3. Economic Modelling, 30, — Gruss , N. Figure 8 illustrates the countercyclicality of disagreement about inflation.
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IMF eLibrary. Chan , J. Section II discusses the literature review. Print Citation Alert off. Fiscal policy via fuel levies, administered prices and public transport inflation channel impacts the responses of monetary policy to inflation shocks.
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