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An employment targeting framework for central bank policy in South Africa

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  • Gerald Epstein

Abstract

This paper presents an employment targeting (ET) framework as an alternative to an inflation targeting monetary policy framework for South Africa. The framework incorporates some of the advantages normally claimed for a targeting framework - namely, enhancing transparency and accountability - while focusing the goals of monetary policy more directly on critical macroeconomic problems facing the South African economy, namely, employment, subject, of course, to an inflation constraint. Re-orienting monetary policy toward generating employment will require that monetary policy re-develop and utilize a multiplicity of monetary policy and credit tools, including tools for credit allocation and capital management. The paper presents a VAR based simulation model for South Africa that shows that more expansionary monetary policy can contribute to faster economic growth without seriously exacerbating inflation or exchange rate instability.

Suggested Citation

  • Gerald Epstein, 2008. "An employment targeting framework for central bank policy in South Africa," International Review of Applied Economics, Taylor & Francis Journals, vol. 22(2), pages 243-258.
    • Handle: RePEc:taf:irapec:v:22:y:2008:i:2:p:243-258
    DOI: 10.1080/02692170701880775
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    References listed on IDEAS

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    1. Laurence M. Ball & Niamh Sheridan, 2004. "Does Inflation Targeting Matter?," NBER Chapters, in: The Inflation-Targeting Debate, pages 249-276, National Bureau of Economic Research, Inc.
    2. Stan du Plessis & Ben Smit, 2006. "Economic growth in South Africa since 1994," Working Papers 01/2006, Stellenbosch University, Department of Economics.
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    Cited by:

    1. Anwar, Sarah. & Islam, Iyanatul,, 2011. "Should developing countries target low, single digit inflation to promote growth and employment," ILO Working Papers 994642503402676, International Labour Organization.
    2. khan, sajawal, 2018. "Managing the Expectations and Monetary Policy effectiveness: Role of Inflation Targeting," MPRA Paper 93170, University Library of Munich, Germany, revised 20 Feb 2019.
    3. Zhandos Ybrayev, 2017. "The Prospect Of Inflation Targeting In Kazakhstan," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 5(1), pages 33-48.
    4. repec:ilo:ilowps:464250 is not listed on IDEAS
    5. James Heintz & Léonce Ndikumana, 2010. "Working Paper 108 - Is there a Case for Formal Inflation Targeting in Sub-Saharan Africa?," Working Paper Series 245, African Development Bank.
    6. James Heintz & Léonce Ndikumana, 2010. "Is There a Case for Formal Inflation Targeting in Sub-Saharan Africa?," Working Papers wp218, Political Economy Research Institute, University of Massachusetts at Amherst.
    7. Andrew Phiri, 2020. "Endogenous monetary approach to optimal inflation–growth nexus in Swaziland," African Journal of Economic and Management Studies, Emerald Group Publishing Limited, vol. 11(4), pages 559-571, March.
    8. Pillay, Timesh D. & Skordis-Worrall, Jolene, 2013. "South African health financing reform 2000–2010: Understanding the agenda-setting process," Health Policy, Elsevier, vol. 109(3), pages 321-331.

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