IDEAS home Printed from https://ideas.repec.org/h/spr/sprchp/978-3-031-37755-6_7.html
   My bibliography  Save this book chapter

Inflation Targeting Band, the Government Debt, and Capital Formation Nexus in South Africa

In: Fiscal Policy Shocks and Macroeconomic Growth in South Africa

Author

Listed:
  • Eliphas Ndou

    (University of South Africa)

  • Nombulelo Gumata

    (Eldoreigne X3)

Abstract

This chapter explores whether the adoption of the 3 to 6 per cent inflation targeting band changed the structural relationship between government debt and capital formation in South Africa. Evidence shows that the magnitude of crowding-out effects is smaller when inflation is below 6 per cent and within 3 to 6 per cent, compared to above the 6 per cent threshold. The low inflation regime neutralises the crowding-out effects of positive government debt shocks on capital formation, whereas the high inflation regime amplifies the effects. These results imply that low inflation is needed to mitigate the crowding-out effects of capital formation by rising government debt. The policy implications of these findings are that price stability matters and that monetary policy has a role to play in minimising the size of the crowding-out effects.

Suggested Citation

  • Eliphas Ndou & Nombulelo Gumata, 2023. "Inflation Targeting Band, the Government Debt, and Capital Formation Nexus in South Africa," Springer Books, in: Fiscal Policy Shocks and Macroeconomic Growth in South Africa, chapter 0, pages 93-107, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-37755-6_7
    DOI: 10.1007/978-3-031-37755-6_7
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:sprchp:978-3-031-37755-6_7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.