IMF Staff Papers, Volume 48, No. 2

IMF Staff Papers, December 12, 2001

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IMF Staff Papers, Volume 48, No. 2

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Bibliographic details

• Published: December 12, 2001
• Series: IMF Staff Papers
• Volume: 48
• DOI: https://doi.org/10.5089/9781451974256.024

Summary

• This paper analyzes the link between product variety and economic growth.
• It finds support for the hypothesis that a greater degree of product variety relative to the United States helps to explain relative per capita GDP levels.
• The paper presents an empirical study for South Africa, which indicates:
  • there exists a stable money demand type of relationship among domestic prices, broad money, real income, and interest rates, and
  • a long-term relationship among domestic prices, foreign prices, and the nominal exchange rate.

Empirical findings and implications

• Product variety and income:
  • Greater product variety relative to the United States is associated with higher relative per capita GDP levels.
• South Africa case study:
  • Stable money demand relationship among domestic prices, broad money, real income, and interest rates.
  • Long-term relationship among domestic prices, foreign prices, and the nominal exchange rate.
• These findings connect microeconomic product variety concepts with macroeconomic price, money, and exchange rate dynamics.

Subjects and keywords

• Subjects: Agroindustries, Defense spending, Economic sectors, Expenditure, Inflation, Inflation targeting, Monetary policy, Prices
• Keywords: Africa, Agroindustries, currency demand, Defense spending, East Asia, Eastern Europe, Europe, Global, Inflation, Inflation targeting, military spending, pass-through behavior, pass-through coefficient, price, product variety, SP