The impact of South African monetary policy on output and price stability in Namibia
- Authors: William, Anna Martha Tandakos
- Date: 2020
- Subjects: Common Monetary Area (Organization) , Monetary unions -- Africa, Southern , Monetary policy -- South Africa , Monetary policy -- Namibia , Repurchase agreements -- South Africa , Repurchase agreements -- Namibia , Inflation (Finance) -- South Africa , Inflation (Finance) -- Namibia , Namibia -- Economic conditions , Transmission mechanism (Monetary policy)
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10962/167709 , vital:41505
- Description: Namibia is a member country of the Common Monetary Area (CMA) with Lesotho, Swaziland and South Africa. South Africa is the anchor country to which the smaller member states have surrendered monetary policy authority. This thesis therefore examines the empirical relationship between the South Africa repo rate (SArepo) on the one hand and Namibia’s repo rate (Namrepo), Prime Lending Rate (PLR), Private Sector Credit Extension (PSCE), Consumer Price Index (CPI) and Gross Domestic Product (GDP) on the other hand. The credit channel of the monetary policy transmission mechanism informs the theoretical foundation of the thesis. Vector Autoregression modelling, variance decomposition and impulse response functions were used to explore the nature and strength of the relationship between the SArepo and said variables in Namibia. This thesis used quarterly data for the period 2003 to 2017. The variation in the Namrepo was predominantly explained by the SArepo, which confirmed that the Namrepo strongly followed the SArepo. The impulse response function results found that the impact of a contractionary monetary policy shock (an increase in the SArepo) lasted for up to six quarters before the effect started to fade. The Namrepo exhibited a positive response to an increase in the SArepo, although the magnitude of the response started to fade after the third quarter. The PLR, as a representative of market rates in Namibia, also exhibited a positive response to an increase in the SArepo. The results were similar for the Namrepo and the PLR because changes to the NamRepo are passed through immediately to the market interest rates. On the real variables, the study found that a contractionary monetary policy shock initiated in South Africa resulted in an increase in inflation in Namibia of less than 0.4 percent, whereas output declined by less than 1.0 percent. Interestingly, a Namibia (domestic) contractionary monetary policy shock resulted in a decline in prices of less than 0.4 percent. GDP, on the other hand, exhibited a positive response to a contractionary monetary shock, with an increase of less than 2.0 percent in the first four quarters of the period observed. The results reflected that a contractionary monetary policy shock from South Africa was more effective with regard to its impact on GDP; however, a domestic monetary policy shock was more effective at impacting on domestic inflation compared to the impact from South Africa.
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- Date Issued: 2020
Monetary policy in Namibia, 1993-2011
- Authors: Sheefeni, Johannes Peyavali Sheefeni
- Date: 2013
- Subjects: Monetary policy -- Namibia , Transmission mechanism (Monetary policy) -- Namibia , Money supply -- Namibia
- Language: English
- Type: Thesis , Doctoral , DPhil
- Identifier: http://hdl.handle.net/10948/3935 , vital:20493
- Description: This thesis investigated the role of monetary policy in Namibia for the period 1993 to 2011. It aims at achieving six objectives. First, it reviews the evolution of monetary policy in Namibia for the period 1980 to 2011. Second, it investigates the interest rate channel of the monetary policy transmission mechanism in Namibia. Third, it analyses the credit channel of the monetary policy transmission mechanism in Namibia. Fourth, it evaluates the exchange rate channel of the monetary policy transmission mechanism in Namibia. Fifth, it studies the money effect model in the context of the monetary policy transmission mechanism in Namibia. Sixth, it examines the exchange rate pass–through (ERPT) to domestic prices in Namibia. In order to achieve the objectives of the relative importance of the different channels of monetary policy transmission, a structural vector autoregressive model of the Namibian economy is constructed. Specifically the responses of the output and prices to monetary policy shocks for Namibia over the quarterly period 1993:Q1 to 2011:Q4 are investigated using impulse response functions and forecast variance error decompositions obtained from a structural vector autoregressive model (SVAR). The thesis also examined the exchange rate pass-through from exchange rate to domestic prices using both SVAR and the single equation error correction model (ECM). Estimation results on the different channels of monetary policy transmission mechanism showed that the interest rate channel and the credit channel are effective in transmitting monetary policy actions. The exchange rate channel is also operative but not effective. The money effect model confirms that inflation in Namibia is not a monetary phenomenon. The results of the pass-through relationship showed that there is an incomplete but high exchange rate pass-through from exchange rate to domestic prices.
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- Date Issued: 2013