Identifying monetary policy rules in South Africa with inflation expectations and unemployment

Shannon Bold and Laurence Harris

No wp-2018-43, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: This paper investigates whether a Taylor rule accurately describes the South African Reserve Bank's reaction function in setting interest rates using quarterly data, covering the period since inflation targeting was formally adopted in 2000. The classic Taylor rule is modified to determine whether the South African Reserve Bank takes into account inflation expectations and labour market conditions. Our findings indicate that a modified Taylor rule does describe the South African Reserve Bank's policy rate adjustments.

Keywords: Employment; Labour; Monetary policy; Output gap; Taylor rule; Unemployment gap (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (6)

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