The price puzzle and the role of South African monetary policy in Botswana and Namibia
Journal of Economic and Financial Sciences
| Field | Value | |
| Title | The price puzzle and the role of South African monetary policy in Botswana and Namibia | |
| Creator | Burger, Philippe Fillipus, Helvi Molalapata, Innocent | |
| Description | Using SVAR analysis, this paper finds what Sims calls a ‘price puzzle’, i.e. a case where CPI increases after a positive interest rate shock. The SVAR analysis controls for various monetary transmission mechanisms, including one based on the South African dominance hypothesis that links South African monetary policy to inflation in Botswana and Namibia. The paper follows Castelnuovo and Surico and interprets the price puzzle as a symptom of an indeterminate monetary policy. Subsequently the paper explores the finding of indeterminate monetary policy further by using an unstructured VAR to estimate the monetary reaction functions of Botswana and Namibia. These results also point to the presence of an indeterminate monetary policy. Lastly, both the SVAR and the unstructured VAR estimated for the monetary reaction function indicate the importance of the exchange rate, and not the interest rate, as a determinant of inflation in both Botswana and Namibia | |
| Publisher | AOSIS | |
| Date | 2012-04-30 | |
| Identifier | 10.4102/jef.v5i1.313 | |
| Source | Journal of Economic and Financial Sciences; Vol 5, No 1 (2012); 193-214 2312-2803 1995-7076 | |
| Language | eng | |
| Relation |
The following web links (URLs) may trigger a file download or direct you to an alternative webpage to gain access to a publication file format of the published article:
https://jefjournal.org.za/index.php/jef/article/view/313/396
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