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Inflation targeting and exchange rate pass-through to domestic prices: evidence from South Africa

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  • Oluwasheyi Oladipo

    (SUNY College at Old Westbury, United States)

Abstract

Inflation targeting is increasingly seen as a crucial monetary policy by many economies in their quest for economic growth. The choice of an appropriate exchange rate regime, continue to be crucial in macroeconomic policy. Using data from 1970q1 to 2015q4, the paper examines the effects of inflation targeting on exchange rate pass-through. Applying a VAR model, the results show that inflation targeting has significant impacts on the movements of inflation, output and the exchange rate. The pass-through to consumer prices decreased and there was a reduction in the influence of foreign producer costs on imports prices after adopting inflation targeting Classification JEL: B22; F41; N00

Suggested Citation

  • Oluwasheyi Oladipo, 2017. "Inflation targeting and exchange rate pass-through to domestic prices: evidence from South Africa," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 5(5), pages 1-11, October.
    • Handle: RePEc:lrc:lareco:v:5:y:2017:i:5:p:1-11
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    2. Taguchi, Hiroyuki, 2019. "Inflation targeting and the pass-through effect: The case of Mongolia," MPRA Paper 92988, University Library of Munich, Germany.

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    More about this item

    Keywords

    Inflation targeting; Pass-throughPrices; Exchange rate.;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • N00 - Economic History - - General - - - General

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