Monetary policy and inflation expectations: impact and causal analysis of heterogeneous economic agents’ expectations in South Africa
This study employs a Vector Error Correction (VEC) model to investigate the dynamic relationship between changes in monetary policy and inflation expectations within various sectors. The analysis encompasses data from the financial, business, and trade union sectors, spanning the first quarter of 20...
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2024-12-01
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| Series: | Journal of Applied Economics |
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| Online Access: | https://www.tandfonline.com/doi/10.1080/15140326.2023.2289724 |
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| _version_ | 1849434205758423040 |
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| author | Thobani Mlangeni Eugene Msizi Buthelezi |
| author_facet | Thobani Mlangeni Eugene Msizi Buthelezi |
| author_sort | Thobani Mlangeni |
| collection | DOAJ |
| description | This study employs a Vector Error Correction (VEC) model to investigate the dynamic relationship between changes in monetary policy and inflation expectations within various sectors. The analysis encompasses data from the financial, business, and trade union sectors, spanning the first quarter of 2000 to the fourth quarter of 2022. Results indicate that trade unions exhibit sensitivity to previous changes in the repo rate. In the long term, monetary policy influences inflation expectations within the financial sector. In contrast, elevated repo rates in the business sector correlate with diminished expectations, subsequently impacting wage dynamics. Granger causality tests establish a significant link between repo rate shifts and inflation expectations in the business and trade union sectors. The study advances the understanding of diverse sector responses to monetary policy’s impact on inflation expectations, and implement sector-specific policy adjustments that consider the unique dynamics of each sector, ensuring a more targeted and effective response. |
| format | Article |
| id | doaj-art-99cd0dda653844748e4200721ed704be |
| institution | Kabale University |
| issn | 1514-0326 1667-6726 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Journal of Applied Economics |
| spelling | doaj-art-99cd0dda653844748e4200721ed704be2025-08-20T03:26:44ZengTaylor & Francis GroupJournal of Applied Economics1514-03261667-67262024-12-0127110.1080/15140326.2023.2289724Monetary policy and inflation expectations: impact and causal analysis of heterogeneous economic agents’ expectations in South AfricaThobani Mlangeni0Eugene Msizi Buthelezi1Department of Economics and Finance, the University of Free State, Bloemfontein, South AfricaDepartment of Economics and Finance, the University of Free State, Bloemfontein, South AfricaThis study employs a Vector Error Correction (VEC) model to investigate the dynamic relationship between changes in monetary policy and inflation expectations within various sectors. The analysis encompasses data from the financial, business, and trade union sectors, spanning the first quarter of 2000 to the fourth quarter of 2022. Results indicate that trade unions exhibit sensitivity to previous changes in the repo rate. In the long term, monetary policy influences inflation expectations within the financial sector. In contrast, elevated repo rates in the business sector correlate with diminished expectations, subsequently impacting wage dynamics. Granger causality tests establish a significant link between repo rate shifts and inflation expectations in the business and trade union sectors. The study advances the understanding of diverse sector responses to monetary policy’s impact on inflation expectations, and implement sector-specific policy adjustments that consider the unique dynamics of each sector, ensuring a more targeted and effective response.https://www.tandfonline.com/doi/10.1080/15140326.2023.2289724Monetary policyinflation expectations |
| spellingShingle | Thobani Mlangeni Eugene Msizi Buthelezi Monetary policy and inflation expectations: impact and causal analysis of heterogeneous economic agents’ expectations in South Africa Journal of Applied Economics Monetary policy inflation expectations |
| title | Monetary policy and inflation expectations: impact and causal analysis of heterogeneous economic agents’ expectations in South Africa |
| title_full | Monetary policy and inflation expectations: impact and causal analysis of heterogeneous economic agents’ expectations in South Africa |
| title_fullStr | Monetary policy and inflation expectations: impact and causal analysis of heterogeneous economic agents’ expectations in South Africa |
| title_full_unstemmed | Monetary policy and inflation expectations: impact and causal analysis of heterogeneous economic agents’ expectations in South Africa |
| title_short | Monetary policy and inflation expectations: impact and causal analysis of heterogeneous economic agents’ expectations in South Africa |
| title_sort | monetary policy and inflation expectations impact and causal analysis of heterogeneous economic agents expectations in south africa |
| topic | Monetary policy inflation expectations |
| url | https://www.tandfonline.com/doi/10.1080/15140326.2023.2289724 |
| work_keys_str_mv | AT thobanimlangeni monetarypolicyandinflationexpectationsimpactandcausalanalysisofheterogeneouseconomicagentsexpectationsinsouthafrica AT eugenemsizibuthelezi monetarypolicyandinflationexpectationsimpactandcausalanalysisofheterogeneouseconomicagentsexpectationsinsouthafrica |