Advanced Search
MyIDEAS: Login

Fiscal and monetary policy in a commodity-based economy

Contents:

Author Info

  • Jeffrey Frankel
  • Ben Smit
  • Federico Sturzenegger

Abstract

A rough description of macroeconomic policy in South Africa would be that monetary policy concentrates on building nominal credibility through focusing on inflation, while the brunt of the responsibility for output stabilization rests on fiscal policy. This aricle discusses the convenience of such a policy mix. First, we estimate the business cycle impact of fiscal and monetary policy to find that so far fiscal policy has been mostly pro-cyclical, whereas monetary policy has been, over the last couple of years, mildly counter-cyclical. We argue that fiscal policy should be made significantly more counter-cyclical than it has been - a strategy that would deliver more macroeconomic stability and potentially higher growth. Furthermore, we believe the Central Bank has earned the credibility to operate macro policy with a more decisive output stabilization objective, and we discuss several reinterpretations of the inflation targeting regime that provide the flexibility to do so without risking the strong anti-inflationary credibility of the SARB. On exchange rate policy we recommend that the authorities take a pragmatic approach to floating, mostly allowing the currency to move freely, but intervening to avoid overvaluation. We explain why and discuss how this objective could be achieved. Copyright (c) 2008 The Authors. Journal compilation (c) 2008 The European Bank for Reconstruction and Development.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0351.2008.00339.x
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by The European Bank for Reconstruction and Development in its journal Economics of Transition.

Volume (Year): 16 (2008)
Issue (Month): 4 (October)
Pages: 679-713

as in new window
Handle: RePEc:bla:etrans:v:16:y:2008:i:4:p:679-713

Contact details of provider:
Postal: One Exchange Square, London EC2A 2JN
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0967-0750
More information through EDIRC

Order Information:
Web: http://www.blackwellpublishing.com/subs.asp?ref=0967-0750

Related research

Keywords:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Frankel, Jeffrey A., 2011. "How Can Commodity Exporters Make Fiscal and Monetary Policy Less Procyclical?," Scholarly Articles 4735392, Harvard Kennedy School of Government.
  2. Irene Yackovlev & Victor Duarte Lledo & Lucie Gadenne, 2009. "Cyclical Patterns of Government Expenditures in Sub-Saharan Africa: Facts and Factors," IMF Working Papers 09/274, International Monetary Fund.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:bla:etrans:v:16:y:2008:i:4:p:679-713. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.