search query: @indexterm South africa / total: 271
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| Author: | Frankel, J. Smit, B. Sturzenegger, F. |
| Title: | Fiscal and monetary policy in a commodity-based economy |
| Journal: | Economics of transition
2008 : VOL. 16:4, p. 679-713 |
| Index terms: | south africa monetary policy fiscal policy |
| Language: | eng |
| Abstract: | In South Africa, monetary policy concentrates mainly on building nominal credibility through focusing on inflation while fiscal policy concentrates on output stabilization. This article analyzes the convenience of such a policy mix. The study estimates the business cycle impact of fiscal and monetary policy to find that so far fiscal policy has been mostly pro-cyclical and monetary policy has been mildly counter-cyclical over the last couple of years. It is argued that fiscal policy should be made significantly more counter-cyclical than it has been. This strategy would deliver more macroeconomic stability and potentially higher growth. It is recommended that the authorities take a pragmatic approach to floating, mostly allowing the currency to move freely, but intervening to avoid overvaluation. |
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