Does the Household Financial Wealth Explain the Asymmetric Response of Consumption to Monetary Policy Shock in South Africa?
Evidence shows that in absolute terms, the decline in household consumption due to the repo rate tightening shocks exceeds the increase in household consumption following a repo rate loosening shock of the same magnitude. In addition, evidence show the asymmetric is linked to the role of household financial asset channel. Furthermore, household wealth amplifies the proportion of fluctuations very much in household consumption due to repo rate tightening shocks compared to those due to repo rate loosening shock.
- Apergis, N., & Miller, S. M. (2004). Consumption asymmetry and the stock market: Empirical evidence (Working Paper No. 2004-43). University of Connecticut, Department of Economics.Google Scholar
- Disney, R. F., Henley, A., & Jevons, D. (2002). House price shocks, negative equity and household consumption in the UK in the 1990s. Presented at the 57th European meeting of the Econometric Society, Venice. Google Scholar
- Duesenberry, J. S. (1949). Income, saving and the theory of consumer behaviour. Princeton: Princeton University Press.Google Scholar
- Groenewold, N. (2003). Consumption and stock prices: Can we distinguish signalling from wealth effects? (Discussion Paper No. 03.22). The University of Western Australia. Google Scholar
- Hall, R. E. (1978). Stochastic implications of the life cycle-permanent income hypothesis: Theory and evidence. Journal of Political Economy, 86, 971–987. Google Scholar
- Ludvigson, S., Steindel, C., & Lettau, M. (2002, May). Monetary policy transmission through the consumption-wealth channel. Economic Policy Review, 5, 117–133.Google Scholar
- Mullineux, A., Macdonald, G., & Sensarma, R. (2011). Asymmetric effects of interest rate changes: The role of the consumption-wealth channel. Applied Economics, 43, 1991–2001. Google Scholar
- Ncube, M., & Ndou, E. (2013). Monetary policy and the Economy in South Africa. Palgrave Macmillan.Google Scholar