Central Bank policy and the exchange rate under an inflation targeting regime: a case dtudy of South Africa
- Authors: Gonzo, Prosper
- Date: 2013
- Subjects: Foreign exchange rates -- Government policy -- South Africa , Inflation (Finance) -- South Africa , Monetary policy -- South Africa , Banks and banking, Central -- South Africa , South Africa -- Economic conditions , Banking industry -- Finance -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11476 , http://hdl.handle.net/10353/d1015043 , Foreign exchange rates -- Government policy -- South Africa , Inflation (Finance) -- South Africa , Monetary policy -- South Africa , Banks and banking, Central -- South Africa , South Africa -- Economic conditions , Banking industry -- Finance -- South Africa
- Description: This work examined the optimality of the inclusion of the exchange rate in the reaction function of the Central Bank in an inflation targeting framework. The study attempts to answer the question whether the exchange rate should have an independent role in an open economy Taylor-type rule. To this end, a Taylor-type rule is incorporating the exchange rate is estimated by the cointegration and vector error correction modeling (VECM) using quarterly data for the period of 1995 to 2009. The empirical studies point out the importance of the exchange rates in explaining and forecasting the behaviour of the South African Reserve Bank monetary policy control variable.
- Full Text:
- Date Issued: 2013
- Authors: Gonzo, Prosper
- Date: 2013
- Subjects: Foreign exchange rates -- Government policy -- South Africa , Inflation (Finance) -- South Africa , Monetary policy -- South Africa , Banks and banking, Central -- South Africa , South Africa -- Economic conditions , Banking industry -- Finance -- South Africa
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11476 , http://hdl.handle.net/10353/d1015043 , Foreign exchange rates -- Government policy -- South Africa , Inflation (Finance) -- South Africa , Monetary policy -- South Africa , Banks and banking, Central -- South Africa , South Africa -- Economic conditions , Banking industry -- Finance -- South Africa
- Description: This work examined the optimality of the inclusion of the exchange rate in the reaction function of the Central Bank in an inflation targeting framework. The study attempts to answer the question whether the exchange rate should have an independent role in an open economy Taylor-type rule. To this end, a Taylor-type rule is incorporating the exchange rate is estimated by the cointegration and vector error correction modeling (VECM) using quarterly data for the period of 1995 to 2009. The empirical studies point out the importance of the exchange rates in explaining and forecasting the behaviour of the South African Reserve Bank monetary policy control variable.
- Full Text:
- Date Issued: 2013
Trade liberalisation and poverty alleviation in South Africa
- Authors: Gundu, Tafadzwa Amanda
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11480 , http://hdl.handle.net/10353/d1015283
- Description: The study attempts to address, from amongst the key issues in the current debate on economic development: the effect of trade liberalization on poverty. The relationship between trade liberalization and poverty levels is investigated in both the long run and the short run for South Africa. To measure trade liberalization, trade openness is used as the standard index. Foreign Direct Investment (FDI) measures financial openness while taxation is a measure of public intervention in the country. Consumption per capita is a proxy for poverty and Real Gross Domestic Product (RGDP) controlled for economic growth. Applying the Johansen Co-integration Techniques and Error Correction Method, empirical results suggest that trade liberalization has a cumulative effect on poverty reduction in the long-run. Lower poverty level is associated with low taxation and high foreign direct investment, particularly in the short run, in South Africa. Therefore, it is recommended that the government needs to design and pursue active development strategies to benefit from openness. There is also a need to enhance the tax revenues of the state through better collection of revenues, and administrative reforms rather than expenditure cut backs, which can reduce the effectiveness of the public sector. The government needs to strengthen allocation of funds to social sectors so as to bring the issue of poverty reduction to the central stage of economic policy making.
- Full Text:
- Date Issued: 2013
- Authors: Gundu, Tafadzwa Amanda
- Date: 2013
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11480 , http://hdl.handle.net/10353/d1015283
- Description: The study attempts to address, from amongst the key issues in the current debate on economic development: the effect of trade liberalization on poverty. The relationship between trade liberalization and poverty levels is investigated in both the long run and the short run for South Africa. To measure trade liberalization, trade openness is used as the standard index. Foreign Direct Investment (FDI) measures financial openness while taxation is a measure of public intervention in the country. Consumption per capita is a proxy for poverty and Real Gross Domestic Product (RGDP) controlled for economic growth. Applying the Johansen Co-integration Techniques and Error Correction Method, empirical results suggest that trade liberalization has a cumulative effect on poverty reduction in the long-run. Lower poverty level is associated with low taxation and high foreign direct investment, particularly in the short run, in South Africa. Therefore, it is recommended that the government needs to design and pursue active development strategies to benefit from openness. There is also a need to enhance the tax revenues of the state through better collection of revenues, and administrative reforms rather than expenditure cut backs, which can reduce the effectiveness of the public sector. The government needs to strengthen allocation of funds to social sectors so as to bring the issue of poverty reduction to the central stage of economic policy making.
- Full Text:
- Date Issued: 2013
The impact of private capital flows on economic growth in South Africa
- Authors: Dzangare, Gillian
- Date: 2012
- Subjects: Economic development -- South Africa , Capital movements -- South Africa , Investments, Foreign -- South Africa , Development economics -- South Africa , Interest rates -- South Africa , Free trade -- South Africa , Cointegration -- South Africa , South Africa -- Commercial policy
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11472 , http://hdl.handle.net/10353/d1007134 , Economic development -- South Africa , Capital movements -- South Africa , Investments, Foreign -- South Africa , Development economics -- South Africa , Interest rates -- South Africa , Free trade -- South Africa , Cointegration -- South Africa , South Africa -- Commercial policy
- Description: In this study an analysis of the long-term equilibrium relationship between economic growth measured as real GDP growth and private capital inflows is explored. The link between private capital inflows and economic growth is well-documented in the literature. However, a void in the literature relates to examining the cointegrating relationship between private capital inflows and economic growth particularly for South Africa. It is widely claimed that private capital inflows foster economic growth by closing the savings/investment gap. However, clarity on this point is necessary because of the seemingly unclear nature of the relationship in the literature. The exact form of this relationship as well as the nature of capital flows that could impact on real growth requires further investigation. Moreover, what exactly happens to this relationship in an economic crisis such as recently recorded in the global financial crisis is not clear. The analysis is undertaken by employing cointegration and vector error correction modeling approach using quarterly data for the period 1989q4-2009q4. This study employs the Johansen (1998) cointegration test. This technique distinguishes itself since it establishes the long run relationship between variables. Thereafter, residual diagnostic checks are performed on the variables. Our results show among others, that private capital inflows have impacted positively on the growth of the South African economy. The areas for further research that emerge from this study include the effect of some government policies on economic growth that should also receive more attention in the future since political instability slows down investment.
- Full Text:
- Date Issued: 2012
- Authors: Dzangare, Gillian
- Date: 2012
- Subjects: Economic development -- South Africa , Capital movements -- South Africa , Investments, Foreign -- South Africa , Development economics -- South Africa , Interest rates -- South Africa , Free trade -- South Africa , Cointegration -- South Africa , South Africa -- Commercial policy
- Language: English
- Type: Thesis , Masters , M Com
- Identifier: vital:11472 , http://hdl.handle.net/10353/d1007134 , Economic development -- South Africa , Capital movements -- South Africa , Investments, Foreign -- South Africa , Development economics -- South Africa , Interest rates -- South Africa , Free trade -- South Africa , Cointegration -- South Africa , South Africa -- Commercial policy
- Description: In this study an analysis of the long-term equilibrium relationship between economic growth measured as real GDP growth and private capital inflows is explored. The link between private capital inflows and economic growth is well-documented in the literature. However, a void in the literature relates to examining the cointegrating relationship between private capital inflows and economic growth particularly for South Africa. It is widely claimed that private capital inflows foster economic growth by closing the savings/investment gap. However, clarity on this point is necessary because of the seemingly unclear nature of the relationship in the literature. The exact form of this relationship as well as the nature of capital flows that could impact on real growth requires further investigation. Moreover, what exactly happens to this relationship in an economic crisis such as recently recorded in the global financial crisis is not clear. The analysis is undertaken by employing cointegration and vector error correction modeling approach using quarterly data for the period 1989q4-2009q4. This study employs the Johansen (1998) cointegration test. This technique distinguishes itself since it establishes the long run relationship between variables. Thereafter, residual diagnostic checks are performed on the variables. Our results show among others, that private capital inflows have impacted positively on the growth of the South African economy. The areas for further research that emerge from this study include the effect of some government policies on economic growth that should also receive more attention in the future since political instability slows down investment.
- Full Text:
- Date Issued: 2012
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