Estimating the Implicit Inflation Target of the South African Reserve Bank
AbstractThis paper applies a state-space approach to estimate the implicit inflation target of the South African Reserve Bank (SARB) since the adoption of the Inflation Targeting (IT) framework. The paper's findings are two. First, although the official inflation target range is 3.6 percent, in practice, the SARB seems to have aimed for the upper segment of the band (41.2 .6 percent) for most of the period, despite the substantial variation of the output gap. Second, the estimation results show that the implicit inflation target varied over time, and in recent years it has shifted toward the upper limit of the inflation target range. This perhaps suggests that since the outbreak of the financial crisis in 2008, the SARB's tolerance for higher inflation has somewhat increased to better support economic activity.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 12/177.
Date of creation: 01 Jul 2012
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This paper has been announced in the following NEP Reports:
- NEP-AFR-2012-08-23 (Africa)
- NEP-ALL-2012-08-23 (All new papers)
- NEP-MAC-2012-08-23 (Macroeconomics)
- NEP-MON-2012-08-23 (Monetary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Inci Ã–tker & David VÃ¡vra & Francisco F. VÃ¡zquez & Luis Ignacio JÃ¡come & Karl Friedrich Habermeier & Kotaro Ishi & Alessandro Giustiniani & Turgut Kisinbay, 2009. "Inflation Pressures and Monetary Policy Options in Emerging and Developing Countries-A Cross Regional Perspective," IMF Working Papers 09/1, International Monetary Fund.
- Eliphas Ndou & Nombulelo Gumata & Mthuli Ncube & Eric Olson, 2013. "Working Paper 189 - An Empirical Investigation of the Taylor Curve in South Africa," Working Paper Series 992, African Development Bank.
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