The role of commodity prices in macroeconomic policy in South Africa
Date
2007
Authors
Ocran M.K.
Biekpe N.
Journal Title
Journal ISSN
Volume Title
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Abstract
This paper examines whether commodity prices can be used as signal for informing macroeconomic policy in South Africa using the new approach for testing Granger causality developed by Toda and Yamamoto (1995). Evidence of causality from average gold price to interest rate, money, exchange rate and the consumer price index was observed. Again, evidence of causality was observed from metals price index to interest rate, money and exchange rate. The results suggest there is merit in using South Africa's average gold price and the metals price index of the International Monetary Fund as informational variables in setting monetary policy. © 2007 The Authors; Journal compilation © Economic Society of South Africa 2007.
Description
Keywords
commodity price, economic policy, exchange rate, Granger causality test, interest rate, macroeconomics, price dynamics, Africa, South Africa, Southern Africa, Sub-Saharan Africa
Citation
South African Journal of Economics
75
2
75
2