- Title
- Inflation, exchange rate and unemployment nexuses in South Africa: lessons from the Inflation Targeting Framework
- Creator
- Taderera, Christie Simbarashe
- Subject
- Foreign exchange rates -- South Africa
- Subject
- Inflation (Finance) -- South Africa
- Subject
- South Africa
- Date Issued
- 2021-12
- Date
- 2021-12
- Type
- Master's theses
- Type
- text
- Identifier
- http://hdl.handle.net/10948/54752
- Identifier
- vital:47656
- Description
- Unemployment, inflation and exchange rate are key macroeconomic indicators and determinants of the development of a nation, but their relationship remain ambiguous. From the last quarter of 1994 to the same period in 2019, unemployment in South Africa increased from 20 percent to 29.1 percent while over the same period, inflation fell from 15 percent to 4.5 percent. Exchange rate at the same time has increased from 3.55Rand: 1USD to 14.45Rand: 1USD (World Bank Data, 2020). With the adoption of inflation targeting framework as a way of stabilising the general price level which has a trickle effect on unemployment, South Africa has a relatively high unemployment rate of 29.1 percent. This study investigates the relationship between unemployment, inflation and exchange rate in South Africa from 2009 Quarter 1 to 2020 Quarter 1. Furthermore, the study examines the relationship between employment, inflation and exchange rate from 1970 to 2019. Lastly the study investigates the inflation threshold from 1970 to 2019. The study employs the Autoregressive Distributed Lag (ARDL) model and shows that there is no short run and long run relationship between unemployment, inflation and exchange rate. There was however a short run and long run relationship between employment, inflation, exchange rate. In a long run analysis, there is a positive relationship between employment and economic growth for both in the short run and long run. Using the conditional least squares method, an inflation threshold of 5% was found to maximise employment in South Africa vindicating the inflation target of 3-5 percent. Based on the findings of this study, it is recommended that policy measures that increase government expenditure and economic growth be made. Thus, policy makers should increase government expenditure, either by running budget deficits or by collecting more revenue to finance its expenditures so as to increase employment or decrease unemployment without incurring the risk of crowding out. Additionally, from the inflation threshold examination, the current interest rate manipulation by raising or lowering the rate must be used to ensure inflation is kept below 5 per cent.
- Description
- Thesis (MCom) -- Faculty of Business and Economic Sciences, 2021
- Format
- computer
- Format
- online resource
- Format
- Format
- 1 online resource (xii, 99 pages)
- Publisher
- Nelson Mandela University
- Publisher
- Faculty of Business and Economic Sciences
- Language
- English
- Rights
- rights holder
- Rights
- All Rights Reserved
- Rights
- Open Access
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NMU School for Economics, Development and Tourism
| Thumbnail | File | Description | Size | Format | |||
|---|---|---|---|---|---|---|---|
| View Details Download | SOURCE1 | Taderera, C.pdf | 2 MB | Adobe Acrobat PDF | View Details Download |