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The Long-Run Impact of Inflation in South Africa

Author

Listed:
  • Kafayat Amusa

    (Department of Economics, University of Pretoria and South African Treasury, Pretoria, South Africa)

  • Rangan Gupta

    (Department of Economics, University of Pretoria)

  • Shaakira Karolia

    (Department of Economics, University of Pretoria and South African Treasury, Pretoria, South Africa)

  • Beatrice D. Simo Kengne

    (Department of Economics, University of Pretoria and South African Treasury, Pretoria, South Africa)

Abstract

This paper evaluates the hypothesis of long-run super-neutrality of money (LRSN) within the context of the South African economy. The long-run impact of inflation on the interest rate and subsequently, output is estimated by employing a trivariate structural vector autoregression model. The estimation results suggest that the hypothesis of LRSN cannot be rejected, thereby potentially supporting the arguments asserted by Sidrauski (1967).

Suggested Citation

  • Kafayat Amusa & Rangan Gupta & Shaakira Karolia & Beatrice D. Simo Kengne, 2010. "The Long-Run Impact of Inflation in South Africa," Working Papers 201029, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:201029
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    Cited by:

    1. Rangan Gupta & Patrick T. Kanda & Mampho P. Modise & Alessia Paccagnini, 2015. "DSGE model-based forecasting of modelled and nonmodelled inflation variables in South Africa," Applied Economics, Taylor & Francis Journals, vol. 47(3), pages 207-221, January.
    2. O. Evans, 2019. "Money, Inflation and Output in Nigeria and South Africa: Could Friedman and Schwartz Be Right?," Journal of African Business, Taylor & Francis Journals, vol. 20(3), pages 392-406, July.
    3. Dube, Smile, 2016. "Exchange Rate Pass-Through (ERPT) and Inflation-Targeting (IT): Evidence from South Africa - Exchange rate pass-through and inflation targeting: evidenze dal Sud Africa," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 69(2), pages 121-150.
    4. Nasr, Adnen Ben & Balcilar, Mehmet & Ajmi, Ahdi N. & Aye, Goodness C. & Gupta, Rangan & van Eyden, Reneé, 2015. "Causality between inflation and inflation uncertainty in South Africa: Evidence from a Markov-switching vector autoregressive model," Emerging Markets Review, Elsevier, vol. 24(C), pages 46-68.
    5. Vasilios Plakandaras & Rangan Gupta & Sayar Karmakar & Mark E. Wohar, 2022. "Is Real Interest Rate a Monetary Phenomenon in Advanced Economies? Time-Varying Evidence from Over 700 Years of Data," Working Papers 202245, University of Pretoria, Department of Economics.
    6. Sonali Das & Rangan Gupta & Patrick Kanda & Monique Reid & Christian Tipoy & Mulatu Zerihun, 2014. "Real interest rate persistence in South Africa: evidence and implications," Economic Change and Restructuring, Springer, vol. 47(1), pages 41-62, February.
    7. Eugene Msizi Buthelezi, 2023. "Impact of Inflation in Different States of Unemployment: Evidence with the Phillips Curve in South Africa from 2008 to 2022," Economies, MDPI, vol. 11(1), pages 1-12, January.
    8. repec:ipg:wpaper:2014-562 is not listed on IDEAS
    9. Lumengo Bonga-Bonga & Beatrice Desiree Simo-Kengne, 2018. "Inflation and Output Growth Dynamics in South Africa: Evidence from the Markov Switching Vector Autoregressive Model," Journal of African Business, Taylor & Francis Journals, vol. 19(1), pages 143-154, January.
    10. Rangan Gupta & Patrick T. kanda & Mampho P. Modise & Alessia Paccagnini, 2013. "DSGE Model-Based Forecasting of Modeled and Non-Modeled Inflation Variables in South Africa," Working Papers 201374, University of Pretoria, Department of Economics.

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    More about this item

    Keywords

    money neutrality; structural vector autoregression;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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