© 2017

Labour Market and Fiscal Policy Adjustments to Shocks

The Role and Implications for Price and Financial Stability in South Africa


  • Showcases the implications of the national minimum wage on the price stability mandate by bringing the South African labour market structure into the discussion

  • Deals with diverse indicators of the labor market developments by constructing labour market conditions indices

  • Discusses the role of labour market conditions channel and tests whether labour market conditions matter for credit dynamics

  • Introduces the role of fiscal policy within price stability

  • Explores the potency of the output channel of borrowing costs and sovereign debt changes


Table of contents

  1. Front Matter
    Pages i-li
  2. Labour Market Characteristics and Monetary Policy

  3. The Minimum Wage and Theoretical Predictions

  4. Labour Market Reforms and Price Stability

    1. Front Matter
      Pages 163-163
    2. Nombulelo Gumata, Eliphas Ndou
      Pages 165-181
  5. Labour Market Conditions, Labour Productivity, Inflation Expectations and Monetary Policy

About this book


This book focuses on the implications of the South African labour market dynamics including labour market reforms and fiscal policy for monetary policy and financial stability. Evidence suggests there are benefits in adopting an approach that coordinates labour market policies and reforms, fiscal policy, price and financial stability. In particular, the benefits of coordinating policies present policymakers with policy options in cases where they are confronted by binding policy trade-offs and dilemmas, such as in cases when there is divergence in price and financial and economic growth outcomes.

The empirical insights and policy recommendations are based on different techniques that include the counterfactual and endogenous-exogenous approaches, non-linearities introduced by thresholds and the impact of persistent and transitory shock effects. Themes covered in the book include various aspects of labour market conditions and reforms and their link to inflation and inflation expectations, the impact of the national minimum wage, the interaction between public and private sector wage inflation, economic policy uncertainty and employment, government debt thresholds, sovereign yields and debt ratings downgrades, labour productivity, the impact of inflation regimes on expansionary fiscal and monetary policy multipliers, the increase in government cost of funding on price and financial stability and the link between fiscal policy and credit dynamics.


Labor market Monetary policy Price stability Labor Market Conditions Labor Market Structure

Authors and affiliations

  1. 1.South African Reserve BankPretoriaSouth Africa
  2. 2.South African Reserve BankPretoriaSouth Africa

About the authors

Nombulelo Gumata is a part-time lecturer at the Centre for Education in Economics and Finance Africa. She is the co-author of Global Growth and Financial Spill-Overs and South African Economy and Bank Credit Extension and Real Economic Activity in South Africa: The Impact of Capital Flow Dynamics, Bank Regulation and Selected Macroprudential Tools.

Eliphas Ndou is an economist at the South African Reserve Bank and a lecturer at the University of the Witwatersrand, Johannesburg, South Africa. He is the co-author of Inflation Dynamics in South Africa: The Role of Thresholds, Exchange-rate Pass Through and Inflation Expectations on Policy Trade-offs and Monetary Policy and the Economy in South Africa.  

Bibliographic information

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