The long-run impact of inflation in South Africa

Kafayat Amusa; Rangan Gupta; Shaakira Karolia; Beatrice D. Simo-Kengne

doi:10.1016/j.jpolmod.2011.05.001

The long-run impact of inflation in South Africa

Kafayat Amusa, Rangan Gupta, Shaakira Karolia, Beatrice D. Simo-Kengne

University of Pretoria

Research output: Contribution to journal › Article › peer-review

7 Citations (Scopus)

Abstract

This paper evaluates the hypothesis of long-run super-neutrality of money (LRSN) within the context of the South African economy. The long-run impact of inflation on the interest rate and subsequently, output is estimated by employing a trivariate structural vector autoregression model, using quarterly data for the period of 1960:1 to 2010:1. The estimation results suggest that the hypothesis of LRSN cannot be rejected, thereby suggesting that monetary policy in South Africa cannot be used to solve the large and persistent unemployment problem in South Africa, which is understandable, since unemployment is inherently structural and is due to skills-shortage. This is further supported by our one of our other results which shows that significant long-run impact on output is obtained from technological improvements.

Original language	English
Pages (from-to)	798-812
Number of pages	15
Journal	Journal of Policy Modeling
Volume	35
Issue number	5
DOIs	https://doi.org/10.1016/j.jpolmod.2011.05.001
Publication status	Published - Sept 2013
Externally published	Yes

Keywords

Money superneutrality
Structural vector autoregression

ASJC Scopus subject areas

Economics and Econometrics

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.jpolmod.2011.05.001

Cite this

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AB - This paper evaluates the hypothesis of long-run super-neutrality of money (LRSN) within the context of the South African economy. The long-run impact of inflation on the interest rate and subsequently, output is estimated by employing a trivariate structural vector autoregression model, using quarterly data for the period of 1960:1 to 2010:1. The estimation results suggest that the hypothesis of LRSN cannot be rejected, thereby suggesting that monetary policy in South Africa cannot be used to solve the large and persistent unemployment problem in South Africa, which is understandable, since unemployment is inherently structural and is due to skills-shortage. This is further supported by our one of our other results which shows that significant long-run impact on output is obtained from technological improvements.

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The long-run impact of inflation in South Africa

Abstract

Keywords

ASJC Scopus subject areas

UN SDGs

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