A Bayesian-Estimated Model of Inflation Targeting in South Africa

26 Pages Posted: 24 Mar 2008

See all articles by Thomas Harjes

Thomas Harjes

International Monetary Fund (IMF)

Luca A. Ricci

International Monetary Fund (IMF) - Research Department

Date Written: February 2008

Abstract

This paper estimates a small dynamic macroeconomic model for the South African economy with Bayesian methods. The model is tailored to assessing the impact of domestic as well as external shocks on inflation within an inflation targeting framework, by incorporating forward-looking behavior of private agents and of the monetary authority. The model is able to display important empirical features of the monetary transmission mechanism that have been found in other studies. It helps to integrate the short-term inflation outlook into a consistent medium-term framework and to design the policy response for various shocks that affect inflation.

Keywords: Inflation targeting, South Africa, Inflation, Energy prices, Exchange rate instability, Demand

Suggested Citation

Harjes, Thomas and Ricci, Luca Antonio, A Bayesian-Estimated Model of Inflation Targeting in South Africa (February 2008). IMF Working Papers, Vol. , pp. 1-24, 2008. Available at SSRN: https://ssrn.com/abstract=1112150

Thomas Harjes (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Luca Antonio Ricci

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-6007 (Phone)
202-623-4072 (Fax)

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