Spillover effects of the recent US monetary policy shocks on the South African economy: The role of monetary and fiscal policy coordination

Guangling Liu and Marrium Mustapher

No wp-2024-68, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: This study examines how different policy mix regimes affect the impact of recent US contractionary monetary policy on South Africa's inflation and business cycles. The study uses a small open economy New Keynesian Dynamic Stochastic General Equilibrium model with an integrated fiscal block to analyse these effects. Regime M (active monetary policy) is more effective at containing the spillover effects but leads to higher public debt, requiring larger future fiscal surpluses.

Keywords: Monetary and fiscal policy; Spillovers; New Keynesian models; Dynamic stochastic general equilibrium model; Policy coordination (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-cba, nep-dge and nep-mon
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