Exchange Rate, Second Round Effects and Inflation Processes Evidence
This book focuses on the exchange rate pass-through (ERPT), second round effects and the inflation process in South Africa. The authors demonstrate that magnitudes of the second round effects of the exchange rate depreciation and oil price shocks depend o
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Exchange Rate, Second Round Effects and Inflation Processes Evidence From South Africa
Exchange Rate, Second Round Effects and Inflation Processes
Eliphas Ndou · Nombulelo Gumata Mthokozisi Mncedisi Tshuma
Exchange Rate, Second Round Effects and Inflation Processes Evidence From South Africa
Eliphas Ndou South African Reserve Bank Pretoria, South Africa
Nombulelo Gumata Pretoria, South Africa
Mthokozisi Mncedisi Tshuma National Planning Commission Secretariat Pretoria, South Africa
ISBN 978-3-030-13931-5 ISBN 978-3-030-13932-2 (eBook) https://doi.org/10.1007/978-3-030-13932-2 Library of Congress Control Number: 2019931936 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2019 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Preface
The book assesses the extent to which certain macroeconomic variables act as channels that transmit shocks to the exchange rate pass-through, influence the size of the second-round effects and inflation formation process in South Africa. The book is divided into six sections, with several objectives. The objectives include presenting empirical evidence indicating that economic relationships are dynamic and not static and inflation regimes matter. Evidence contained in the book is robust to the application of different techniques and model specifications. We cover existing gaps in academic research and policy discussions and show that the counterfactual analysis, albeit its weakness like any other quantitative technique, is a more informative tool for policy analysis and recommendations. We thus encourage the policymakers to decompose the exchange rate effects into
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