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An empirical analysis on the effects of the inflation targeting framework on monetary policy in South Africa

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  • Weiming Chen
  • Kenneth Creamer

Abstract

This article examines the impact of the adoption of an Inflation Targeting (IT) framework in 2000 on the conduct of South Africa’s monetary policy. Taylor rule analysis is used to test empirically whether the implementation of IT in South Africa can be shown to have impacted on the conduct of monetary policy. In particular, the article analyses whether the implementation of the IT framework yields the expected changes when comparing the conduct of monetary policy pre and post the adoption of the IT framework. Thereafter, an analysis of term structure of interest rates, which serve as a proxy variable for market expectations, is used to test whether South Africa’s IT framework has resulted in more predictability and transparency in monetary policy conduct. Lastly, the article analyses the impact of the global financial crisis of 2008–2009, the so‐called Great Recession, on the predictability and transparency of monetary policy in South Africa.

Suggested Citation

  • Weiming Chen & Kenneth Creamer, 2019. "An empirical analysis on the effects of the inflation targeting framework on monetary policy in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 87(4), pages 450-463, December.
    • Handle: RePEc:bla:sajeco:v:87:y:2019:i:4:p:450-463
    DOI: 10.1111/saje.12234
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    Cited by:

    1. Tumisang Loate & Ekaterina Pirozhkova & Nicola Viegi, 2021. "Sailing into the Wind evaluating the near future of Monetary Policy in South Africa," Working Papers 11006, South African Reserve Bank.
    2. Christopher Loewald & David Faulkner & Konstantin Makrelov, 2020. "Time consistency and economic growth a case study of south african macroeconomic policy," Working Papers 10421, South African Reserve Bank.

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