All Rights Reserved
AccessEcon LLC 2006, 2008.
Powered by MinhViet JSC

 
Ekaterina Pirozhkova and Nicola Viegi
 
''Changing the inflation target in emerging markets: the reward of reducing risk''
( 2023, Vol. 43 No.3 )
 
 
This paper analyses the effects of change by the South African Reserve Bank (SARB) in its preferred definition of inflation target in July 2017 from a range to a point target. We estimate the implications of this shift by means of a Bayesian vector autoregression-based counterfactual exercise. Our results show that the inflation target change allowed to reduce prices and inflation expectations without negative effects on real output and employment. This was achieved via the reduction in the South African - US long-term interest rate spread (i.e. by a reduction in risk) and by a subsequent positive effect on asset prices.
 
 
Keywords: monetary policy transmission, monetary policy communication, inflation target
JEL: E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment: General (includes Measurement and Data)
 
Description of Appendix:

The supplemental material contains technical appendix to the manuscript providing details to the model, the dataset and the methodology.
EB-23-00337-Appendix.pdf
 
 
Manuscript Received : Jul 24 2023 Manuscript Accepted : Sep 30 2023

  This abstract has been downloaded 77 times                The Full PDF of this paper has been downloaded 156027 times