Inequality, Output-Inflation Trade-Off and Economic Policy Uncertainty : Evidence From South Africa

Description

This book focuses on income inequality, output-inflation trade-off and economic policy uncertainty in South Africa. Tight monetary and macroprudential policies raise income inequality. Income inequality transmits monetary policy and macroprudential policy shocks to real economic activity. Economic policy uncertainty influences the dynamics in the lending rate margins, inflation expectations, credit, pass-through of the repo rate to bank lending rates and companies’ cash holdings. The trade-off between output and inflation and output growth persistence vary with inflation regimes. Stimulatory demand policy shocks are less effective in high inflation regime. High income inequality raises consumption inequality, which raises demand for credit, but price stability matters in this link. Increased bank concentration raises income inequality, lowers economic growth and employment rate. Elevated economic policy uncertainty lowers output growth, lowers capital formation, reduces credit and raises companies’ cash holdings. Increased companies’ cash holdings reduce capital formation and impact the transmission of expansionary monetary policy shocks to real economic activity. This book shows there is an inflation level within the target band below it which lowers income inequality, while raising GDP growth and employment. Thus price stability, economic policy uncertainty and income inequality matter for the efficient transmission of policy shocks. Front Matter ....Pages i-xxxvii Introduction (Eliphas Ndou, Thabo Mokoena)....Pages 1-31 Front Matter ....Pages 33-33 Income Inequality and GDP Growth Nexus in South Africa: Does the 4.5% Consumer Price Inflation Threshold and Other Channels Play a Role? (Eliphas Ndou, Thabo Mokoena)....Pages 35-50 Does the Inflation Rate Below 4.5% Matter for the Distributional Effects of Positive Inflation Shocks on Income Inequality in South Africa? (Eliphas Ndou, Thabo Mokoena)....Pages 51-72 Front Matter ....Pages 73-73 Does the Income Inequality Channel Impact the Transmission of Monetary Policy Shocks to Economic Activity? (Eliphas Ndou, Thabo Mokoena)....Pages 75-86 Do Monetary Policy Shocks Influence Income Inequality Dynamics in South Africa? (Eliphas Ndou, Thabo Mokoena)....Pages 87-103 Does Trade Openness Impact the Link Between Monetary Policy and Both Income Inequality and Consumption Inequalities? (Eliphas Ndou, Thabo Mokoena)....Pages 105-116 Does Financial Globalisation Impact the Link Between Monetary Policy and Income Inequality? (Eliphas Ndou, Thabo Mokoena)....Pages 117-131 Front Matter ....Pages 133-133 Does Monetary Policy Impact the Effects of Shares of Manufacturing Employment Shocks on Income Inequality? (Eliphas Ndou, Thabo Mokoena)....Pages 135-148 Is There a Role for the Monetary Policy Channel in Transmitting Positive Shocks to the Services Sector Employment Shares to Income Inequality? (Eliphas Ndou, Thabo Mokoena)....Pages 149-158 Front Matter ....Pages 159-159 Does the Consumption Inequality Channel Impact the Transmission of Positive Income Inequality Shocks to Credit Dynamics in South Africa? Insights Before 2009Q1 (Eliphas Ndou, Thabo Mokoena)....Pages 161-173 Does Price Stability Impact the Link Between Income Inequality and Consumption Inequality? (Eliphas Ndou, Thabo Mokoena)....Pages 175-185 Front Matter ....Pages 187-187 Do Positive Excess Capital Adequacy Ratio Shocks Influence the Income Inequality Dynamics in South Africa? (Eliphas Ndou, Thabo Mokoena)....Pages 189-204 Does an Unexpected Loosening in the Loan to Value Ratio Has Any Distributive Effects via the Inequality Channel? (Eliphas Ndou, Thabo Mokoena)....Pages 205-220 Is the Tightening in the National Credit Act a Driver of Growth of Income Inequality? (Eliphas Ndou, Thabo Mokoena)....Pages 221-239 Can an Unexpected Loosening in the Labour Market Reforms Reduce the Growth of Income Inequality in South Africa? (Eliphas Ndou, Thabo Mokoena)....Pages 241-251 Front Matter ....Pages 253-253 Does the Increase in Banking Concentration Impact Income Inequality in South Africa? (Eliphas Ndou, Thabo Mokoena)....Pages 255-267 Do Positive Bank Concentration Shocks Impact Economic Growth in South Africa? (Eliphas Ndou, Thabo Mokoena)....Pages 269-280 Do Positive Bank Concentration Shocks Impact Employment in South Africa? (Eliphas Ndou, Thabo Mokoena)....Pages 281-290 Front Matter ....Pages 291-291 Is There Evidence of the Trade-Off in Output and Inflation Volatilities in South Africa? (Eliphas Ndou, Thabo Mokoena)....Pages 293-302 To What Extent Does the Output-Inflation Trade-Off Exist in South Africa and Is It Impacted by the Six Per Cent Inflation Threshold? (Eliphas Ndou, Thabo Mokoena)....Pages 303-316 Do Inflation Regimes Affect the Transmission of Positive Nominal Demand Shocks to the Consumer Price Level? (Eliphas Ndou, Thabo Mokoena)....Pages 317-331 Do Positive Nominal Volatility Shocks Reduce the Output-Inflation Trade-Off and Is There a Role for Inflation Regimes? (Eliphas Ndou, Thabo Mokoena)....Pages 333-340 Front Matter ....Pages 341-341 Does the Persistence of Output Growth Depend on Inflation Regimes? (Eliphas Ndou, Thabo Mokoena)....Pages 343-356 Do the Effects of Expansionary Monetary Policy Shocks on Output Persistence Depend on Inflation Regimes? (Eliphas Ndou, Thabo Mokoena)....Pages 357-366 Output and Policy Ineffectiveness Proposition: A Perspective from Single Regression Equations (Eliphas Ndou, Thabo Mokoena)....Pages 367-376 Front Matter ....Pages 377-377 Does the Economic Policy Uncertainty Channel Impact the Influence of Expansionary Monetary Policy Changes on Output Dynamics? (Eliphas Ndou, Thabo Mokoena)....Pages 379-388 How Does Inflation Impact the Effects of Expansionary Monetary Policy and Fiscal Policies on Real GDP Growth? (Eliphas Ndou, Thabo Mokoena)....Pages 389-398 The Time-Varying Pass-Through of the Lending Rate Responses to the Repo Rate Changes and Loan Intermediation Mark-Ups (Eliphas Ndou, Thabo Mokoena)....Pages 399-414 Do Economic Policy Uncertainty Shocks Impact the Bank Lending Rate Margins? (Eliphas Ndou, Thabo Mokoena)....Pages 415-423 Does Economic Policy Uncertainty Impact the Pass-Through of the Repo Rate to the Bank Lending Rates? (Eliphas Ndou, Thabo Mokoena)....Pages 425-435 Front Matter ....Pages 437-437 Are Credit Growth Reactions to Expansionary Monetary Policy Shocks Weakened by Heightened Economic Policy Uncertainty? (Eliphas Ndou, Thabo Mokoena)....Pages 439-451 Do Companies’ Cash Holdings Impact the Transmission of Economic Policy Uncertainty Shocks to Capital Formation? (Eliphas Ndou, Thabo Mokoena)....Pages 453-470 Does an Increase in the Value of Companies’ Cash Holdings Impact the Transmission of Expansionary Monetary Policy Shocks? Counterfactual Policy Analysis (Eliphas Ndou, Thabo Mokoena)....Pages 471-478 Does an Unexpected Reduction in Economic Policy Uncertainty Impact Inflation Expectations? (Eliphas Ndou, Thabo Mokoena)....Pages 479-491 Back Matter ....Pages 493-507