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Inflation and the role of wages in South Africa: A co-integration analysis

Author

Listed:
  • Ben Smit
  • Stan du Plessis

    (University of Stellenbosch)

Abstract

An explanation of inflation that focuses on the costs of production, wages (or unit labour costs) plays a central role. In South Africa, the recent change to an inflation-targeting monetary policy framework and the relative strong role of trade unions has increased the need to understand and quantify the interaction between inflation and wages. The purpose of the working paper is to investigate this relationship empirically, on both the aggregate and sectoral levels, using multivariate co-integration techniques.

Suggested Citation

  • Ben Smit & Stan du Plessis, 2001. "Inflation and the role of wages in South Africa: A co-integration analysis," Working Papers 01053, University of Cape Town, Development Policy Research Unit.
    • Handle: RePEc:ctw:wpaper:01053
    as

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    File URL: http://hdl.handle.net/11427/7215
    File Function: First version, 2001
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    References listed on IDEAS

    as
    1. Hendry, David F, 1985. "Monetary Economic Myth and Econometric Reality," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 1(1), pages 72-84, Spring.
    2. Mr. Gunnar Jonsson, 1999. "Inflation, Money Demand, and Purchasing Power Parity in South Africa," IMF Working Papers 1999/122, International Monetary Fund.
    3. Stockton, David J & Glassman, James E, 1987. "An Evaluation of the Forecast Performance of Alternative Models of Inflation," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 108-117, February.
    4. J.W. Fedderke & E. Schaling, 2005. "Modelling Inflation In South Africa: A Multivariate Cointegration Analysis," South African Journal of Economics, Economic Society of South Africa, vol. 73(1), pages 79-92, March.
    5. Hendry, David F, 1986. "Using PC-GIVE in Econometrics Teaching," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(1), pages 87-98, February.
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    More about this item

    Keywords

    South Africa: wages; unit labour costs; costs of production;
    All these keywords.

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics

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