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Capital Flows, Credit Markets and Growth in South Africa

The Role of Global Economic Growth, Policy Shifts and Uncertainties

  • Nombulelo Gumata
  • Eliphas Ndou
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  • 850 Downloads

Table of contents

  1. Front Matter
    Pages i-xliii
  2. Nombulelo Gumata, Eliphas Ndou
    Pages 1-21
  3. Global Economic Growth, Economic Policy Uncertainty and The Influence of Trade Dynamics

  4. Global Policy Rates and The South African Economy

  5. Capital Flow Surges, Sudden Stops and Elevated Portfolio Inflows Volatility Effects

  6. The Transmission of Sovereign Debt Credit Ratings Downgrades and Upgrades into the Credit Markets and the Real Economy

  7. The Output–Inflation Trade-off, External Shocks, Labour Market Conditions and Inflation Expectations

  8. The Policy Ineffectiveness Issues

    1. Front Matter
      Pages 351-351
    2. Nombulelo Gumata, Eliphas Ndou
      Pages 353-364
  9. Back Matter
    Pages 379-385

About this book

Introduction

This book examines the dynamics in capital flows, credit markets and growth in South Africa. The authors explore the role of global economic growth, policy shifts and various economic policy uncertainties. Central banks in advanced economies are engaged in unconventional monetary policy tools such as balance sheet policies, negative interest rates and extended forward guidance to assist them to meet their price, financial and macro-economic stability objectives. This book determines whether BRICS GDP growth is a source of shocks or an amplifier of global growth shocks. The authors find that global economic growth and policy uncertainty reinforce each other via capital flows, credit conditions and business confidence on the domestic economy. Furthermore, they demonstrate that there is momentum in the changes in the spread between the repo rate and federal funds rate. In addition, global real policy rates impact domestic GDP growth and labor market conditions. The authors examine the economic costs of capital flow surges, sudden stops and elevated portfolio volatility shocks and their interaction with GDP growth and credit. They show that equity and debt inflows matter in the attainment of the price stability mandate. Moreover, business confidence transmits sovereign credit ratings upgrades and downgrades shocks to the real economy via GDP growth, the cost of government debt and borrowing to impact credit growth. High GDP growth increases the likelihood of sovereign credit ratings upgrades, hence policymakers should implement pro-growth policies. Inflation regimes impact the transmission of positive nominal demand shocks to the price level. Low and stable inflation (inflation below 4.5 per cent) reduces the pass-through of positive nominal demand shocks to inflation. 


Keywords

BRICS GDP growth shocks Foreign economic growth uncertainty South African GDP growth Equity flows Monetary policy tightening shocks Federal funds rate Repo rate South African labor market conditions Output growth volatility Taylor curve Expansionary monetary policy Output-employment-unemployment nexus in South Africa

Authors and affiliations

  • Nombulelo Gumata
    • 1
  • Eliphas Ndou
    • 2
  1. 1.South African Reserve BankPretoriaSouth Africa
  2. 2.South African Reserve BankPretoriaSouth Africa

Bibliographic information

  • DOI https://doi.org/10.1007/978-3-030-30888-9
  • Copyright Information The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2019
  • Publisher Name Palgrave Macmillan, Cham
  • eBook Packages Economics and Finance
  • Print ISBN 978-3-030-30887-2
  • Online ISBN 978-3-030-30888-9
  • Buy this book on publisher's site