Inflation, Money Demand, and Purchasing Power Parity in South Africa

Author/Editor:

Gunnar Jonsson

Publication Date:

September 1, 1999

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This empirical study for South Africa indicates that there exists a stable money demand type of relationship among domestic prices, broad money, real income, and interest rates, as well as a long-run relationship among domestic prices, foreign prices, and the nominal exchange rate. In the short run, shocks to the nominal exchange rate affect domestic prices but have virtually no impact on real output, while shocks to broad money have a temporary impact on real output before becoming inflationary. Both types of shocks seem to trigger a monetary policy response, since the short-term interest rate adjusts quickly.

Series:

Working Paper No. 99/122

Subject:

English

Publication Date:

September 1, 1999

ISBN/ISSN:

9781451854473/1018-5941

Stock No:

WPIEA1221999

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

28

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