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Exchange Rate, Second Round Effects and Inflation Processes

Evidence From South Africa

  • Eliphas Ndou
  • Nombulelo Gumata
  • Mthokozisi Mncedisi Tshuma

Table of contents

  1. Front Matter
    Pages i-xxviii
  2. The Changing Size of Second-Round Effects

    1. Front Matter
      Pages 1-1
    2. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 3-18
    3. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 19-35
  3. Monetary Policy Credibility and Time-Varying Exchange Rate Pass-Through

    1. Front Matter
      Pages 81-81
    2. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 83-95
    3. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 97-110
    4. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 111-119
    5. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 121-129
    6. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 131-138
    7. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 139-148
  4. Trade Openness, Consumer and Business Confidence and the Exchange Rate Pass-Through

    1. Front Matter
      Pages 149-149
    2. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 151-162
    3. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 163-176
    4. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 199-214
  5. Fiscal Policy Credibility and Time-Varying Exchange Rate Pass-Through

  6. Regulated Prices, Inflation Process and the Influence on Monetary Policy

    1. Front Matter
      Pages 253-253
    2. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 271-281
    3. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 297-305
  7. Asymmetric Interest Rate Pass-Through

    1. Front Matter
      Pages 307-307
    2. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 309-326
    3. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 327-337
    4. Eliphas Ndou, Nombulelo Gumata, Mthokozisi Mncedisi Tshuma
      Pages 371-380
  8. Back Matter
    Pages 391-416

About this book

Introduction

This book focuses on the exchange rate pass-through (ERPT), second round effects and the inflation process in South Africa. The authors demonstrate that magnitudes of the second round effects of the exchange rate depreciation and oil price shocks depend on inflation regimes. The impact of positive oil price shocks on inflation is weakened by monetary policy credibility. Evidence shows the influence of oil price on unit labour costs and correlation between exchange rate changes and inflation has weakened. In addition, ERPT is reduced by low business and consumer confidence, high trade openness, low inflation and high exchange rate volatility which weaken real economic activity. Both monetary and fiscal policy credibility lowers the sizes of ERPT to inflation and inflation expectations. Fiscal policy via fuel levies, administered prices and public transport inflation channel impacts the responses of monetary policy to inflation shocks. The authors show that second round effects contribute very little to wage inflation following an exchange rate depreciation shock. Both lending rate and household consumption responds asymmetrical to repo rate changes. 

This book will appeal to policymakers, students, academics and analysts.

Keywords

Second-round effects Counterfactual responses Exchange rate pass-through Time varying exchange rate Monetary policy credibility Fiscal policy credibility Time varying interest rate pass-through Consumer price inflation Oil price inflation Exchange rate depreciation shocks South African credit markets

Authors and affiliations

  • Eliphas Ndou
    • 1
  • Nombulelo Gumata
    • 2
  • Mthokozisi Mncedisi Tshuma
    • 3
  1. 1.South African Reserve BankPretoriaSouth Africa
  2. 2.PretoriaSouth Africa
  3. 3.National Planning Commission SecretariatPretoriaSouth Africa

Bibliographic information

  • DOI https://doi.org/10.1007/978-3-030-13932-2
  • Copyright Information The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG, part of Springer Nature 2019
  • Publisher Name Palgrave Macmillan, Cham
  • eBook Packages Economics and Finance
  • Print ISBN 978-3-030-13931-5
  • Online ISBN 978-3-030-13932-2
  • Buy this book on publisher's site
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Finance, Business & Banking