IMF Working Papers

A Bayesian-Estimated Model of Inflation Targeting in South Africa

By Thomas Harjes, Luca A Ricci

February 1, 2008

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Thomas Harjes, and Luca A Ricci. A Bayesian-Estimated Model of Inflation Targeting in South Africa, (USA: International Monetary Fund, 2008) accessed September 19, 2024
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 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.

Subject: Exchange rates, Inflation, Inflation targeting, Output gap, Real exchange rates

Keywords: Open economy, RR16, WP

Publication Details

  • Pages:

    24

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2008/048

  • Stock No:

    WPIEA2008048

  • ISBN:

    9781451869101

  • ISSN:

    1018-5941