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Inflation targeting bands and the short-run output-inflation trade-off in a new Keynesian economics perspective: evidence from South Africa

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  • Eliphas Ndou
  • Nombulelo Gumata

Abstract

The paper determines the effects of the 3–6% inflation targeting band (IT) band on short-run output-inflation trade-off in South Africa compared to inflation above 6%. In addition, we determine the region with the highest trade-off within the target band relative to its midpoint. The threshold model indicates that output-inflation tradeoff is higher within the existing IT band than above it. Within the 3–6% IT band, a higher output-inflation tradeoff is achieved when inflation is within the 3–4.5% IT band than in the 4.5–6% IT band. A 3–4.5% band will lead to bigger real effects.

Suggested Citation

  • Eliphas Ndou & Nombulelo Gumata, 2026. "Inflation targeting bands and the short-run output-inflation trade-off in a new Keynesian economics perspective: evidence from South Africa," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 19(1), pages 125-148, January.
    • Handle: RePEc:taf:macfem:v:19:y:2026:i:1:p:125-148
    DOI: 10.1080/17520843.2024.2365004
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