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Reconsidering the business cycle and stabilisation policies in South Africa

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  • Stan du Plessis

Abstract

This paper applies an alternative dating algorithm - suggested by Harding and Pagan (for example, 2002a) - to identify the turning points of the South African business cycle. The characteristics of the resulting business cycle are analysed and compared with results obtained for the official cycle in recent papers on the South African business cycle (du Plessis and Smit, 2003; du Plessis, 2004). The alternative business cycle has plausible characteristics and provides supporting evidence for the thesis that monetary policy has been used more consistently to dampen the cycle of economic activity in South Africa since the early nineties.

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  • Stan du Plessis, 2005. "Reconsidering the business cycle and stabilisation policies in South Africa," Working Papers 10, Economic Research Southern Africa.
  • Handle: RePEc:rza:wpaper:10
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    References listed on IDEAS

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    1. Wesley C. Mitchell, 1923. "Introduction to "Business Cycles and Unemployment"," NBER Chapters,in: Business Cycles and Unemployment, pages 1-6 National Bureau of Economic Research, Inc.
    2. Harding, Don & Pagan, Adrian, 2003. "A comparison of two business cycle dating methods," Journal of Economic Dynamics and Control, Elsevier, vol. 27(9), pages 1681-1690, July.
    3. Moolman, Elna, 2004. "A Markov switching regime model of the South African business cycle," Economic Modelling, Elsevier, vol. 21(4), pages 631-646, July.
    4. Antonio Fatás & Ilian Mihov, 2003. "The Case for Restricting Fiscal Policy Discretion," The Quarterly Journal of Economics, Oxford University Press, vol. 118(4), pages 1419-1447.
    5. Harding, Don & Pagan, Adrian, 2002. "Dissecting the cycle: a methodological investigation," Journal of Monetary Economics, Elsevier, vol. 49(2), pages 365-381, March.
    6. Adrian Pagan & Don Harding, 2005. "A suggested framework for classifying the modes of cycle research," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(2), pages 151-159.
    7. Harding, Don, 2002. "The Australian Business Cycle: A New View," MPRA Paper 3698, University Library of Munich, Germany.
    8. Christina D. Romer, 1999. "Changes in Business Cycles: Evidence and Explanations," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 23-44, Spring.
    9. Arthur F. Burns & Wesley C. Mitchell, 1946. "Measuring Business Cycles," NBER Books, National Bureau of Economic Research, Inc, number burn46-1.
    10. Harding, Don & Pagan, Adrian, 2001. "Extracting, Using and Analysing Cyclical Information," MPRA Paper 15, University Library of Munich, Germany.
    11. Michael G. Akritas & Jouni Kuha & D. Wayne Osgood, 2002. "Rejoinder," Sociological Methods & Research, , vol. 30(3), pages 460-462, February.
    12. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, January.
    13. du Plessis, S. A., 2004. "Stretching the South African business cycle," Economic Modelling, Elsevier, vol. 21(4), pages 685-701, July.
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    Cited by:

    1. Mehmet Balcilar & Reneé van Eyden & Josine Uwilingiye & Rangan Gupta, 2017. "The Impact of Oil Price on South African GDP Growth: A Bayesian Markov Switching-VAR Analysis," African Development Review, African Development Bank, vol. 29(2), pages 319-336, June.
    2. Stan du Plessis & Ben Smit & Federico Sturzenegger, 2007. "Identifying aggregate supply and demand shocks in South Africa," Working Papers 11/2007, Stellenbosch University, Department of Economics.
    3. Stan du Plessis & Ben Smit & Federico Sturzenegger, 2008. "Identifying Aggregate Supply and Demand Shocks in South Africa †," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 17(5), pages 765-793, November.
    4. Leonce Ndikumana, 2008. "Can macroeconomic policy stimulate private investment in South Africa? New insights from aggregate and manufacturing sector-level evidence," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(7), pages 869-887.
    5. Jeffrey Frankel & Ben Smit & Federico Sturzenegger, 2008. "Fiscal and monetary policy in a commodity-based economy," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 679-713, October.
    6. Franz Ruch & Dirk Bester, 2011. "Towards a Measure of Core Inflation using Singular Spectrum Analysis," Working Papers 256, Economic Research Southern Africa.
    7. Adél Bosch & Franz Ruch, 2012. "An alternative business cycle dating procedure for South Africa," Working Papers 267, Economic Research Southern Africa.
    8. Ferdi Botha & Gavin Keeton, 2014. "A Note on the (Continued) Ability of the Yield Curve to Forecast Economic Downturns in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 82(3), pages 468-473, September.
    9. Fredj Jawadi & Sushanta K. Mallick & Ricardo M. Sousa, 2011. "Monetary Policy Rules in the BRICS: How Important is Nonlinearity?," NIPE Working Papers 18/2011, NIPE - Universidade do Minho.
    10. Mallick, Sushanta K. & Sousa, Ricardo M., 2012. "Real Effects Of Monetary Policy In Large Emerging Economies," Macroeconomic Dynamics, Cambridge University Press, vol. 16(S2), pages 190-212, September.
    11. Stan Du plessis & Ben Smit & Federico Sturzenegger, 2007. "The Cyclicality Of Monetary And Fiscal Policy In South Africa Since 1994," South African Journal of Economics, Economic Society of South Africa, vol. 75(3), pages 391-411, September.
    12. Jeffrey Frankel & Ben Smit & Federico Sturzenegger, 2008. "South Africa: Macroeconomic challenges after a decade of success," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 639-677, October.
    13. Aye, Goodness C. & Balcilar, Mehmet & Bosch, Adél & Gupta, Rangan, 2014. "Housing and the business cycle in South Africa," Journal of Policy Modeling, Elsevier, vol. 36(3), pages 471-491.
    14. Goodness C. Aye & Mehmet Balcilar & Rangan Gupta, 2016. "The Effectiveness of Monetary Policy in South Africa under Inflation Targeting: Evidence from a Time-Varying Factor-Augmented Vector Autoregressive Model," Working Papers 201653, University of Pretoria, Department of Economics.
    15. Funashima, Yoshito, 2016. "Governmentally amplified output volatility," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 462(C), pages 469-478.
    16. Sushanta Mallick & Ricardo Sousa, 2013. "Commodity Prices, Inflationary Pressures, and Monetary Policy: Evidence from BRICS Economies," Open Economies Review, Springer, vol. 24(4), pages 677-694, September.
    17. Jawadi, Fredj & Mallick, Sushanta K. & Sousa, Ricardo M., 2016. "Fiscal and monetary policies in the BRICS: A panel VAR approach," Economic Modelling, Elsevier, vol. 58(C), pages 535-542.
    18. Franz Ruch & Dirk Bester, 2013. "Towards a Measure of Core Inflation using Singular Spectrum Analysis," South African Journal of Economics, Economic Society of South Africa, vol. 81(3), pages 307-329, September.
    19. Stan Du Plessis & Kevin Kotze, 2012. "Trends and Structural Changes in South African Macroeconomic Volatility," Working Papers 297, Economic Research Southern Africa.
    20. Balcilar, Mehmet & Gupta, Rangan & Jooste, Charl & Ranjbar, Omid, 2016. "Characterising the South African business cycle: is GDP difference-stationary or trend-stationary in a Markov-switching setup? - Il ciclo economico del Sud Africa: il PIL è stazion ario alle differenz," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 69(1), pages 33-44.
    21. Adél Bosch & Franz Ruch, 2013. "An Alternative Business Cycle Dating Procedure for South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 81(4), pages 491-516, December.
    22. Wh Boshoff, 2005. "The Properties Of Cycles In South African Financial Variables And Their Relation To The Business Cycle," South African Journal of Economics, Economic Society of South Africa, vol. 73(4), pages 694-709, December.

    More about this item

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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