European Parliament Library

Monetary Policy and Relative Price Shocks in South Africa and Other Inflation Targeters, Alfredo Cuevas, Secil Topak

When faced with a relative price shock, monetary authorities often aim to contain its second round effects on inflation while accepting first round effects. We analyze the experience of South Africa and other inflation targeters to explore whether and when this policy prescription implies changing the monetary policy stance. Inflation targeting central banks differ on how aggressively they typically react to relative price shocks, reflecting differences in resilience of underlying inflation to such shocks. An examination of individual policy decisions reveals the importance of the broader economic context in framing the responses to relative price shocks
Table Of Contents
Contents; I. Introduction; Figures; 1. Food and Price Shocks in Perspective; II. First and Second Round Effects of Relative Price Shocks; 2. Evidence of Second Round Effects of Shocks to Food Prices; Tables; 1. Granger Causality Tests; 3. Effects of Relative Price Shocks on Inflation Expectations; 4. Second Round Effects May Already Be in Train in South Africa; III. Historical Perspective on Monetary Policy Responses to Relative Price Shocks; 2. Estimation of Equation 1 for Selected Countries; 3. Distribution of the Coefficient on the Variable Representing Underlying Inflation
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (27 p.)
Specific Material Designation
Form Of Item

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