M.Com. (Economics) / This study looked into the possible presence of structural inflation in South Africa. The South African rate of inflation has, by the time this study was undertaken, showed resistance to reduce in the face of several years of demand management policies. It was this resistance that led to the idea that the South African inflation rate might be the result of several structural factors in the economy. The study was done in three separate stages. In the first, a study of the conventional theories of inflation, the demand-pull and cost push theories, was done. The main objective was to establish whether inflation could be controlled by the medicine these theories prescribed. In section two, the different schools of thought as regards the structural approach to inflation were analyzed. The structuralist school, developed during the late 1950s, described inflation as the result of productivity discrepancies mainly between the agricultural and industrial sectors. The structural school, which developed during the early 1970s has two variations. The first, the Scandinavian variant, ascribes inflation to the existing productivity gap between the international competing sectors and the domestic sectors, whilst no corresponding gap in salaries between the relevant sectors exists. The second variant designates inflation to the gap existing between the labour productivity in the public and private sectors. Here again, no such salary gap exists between the sectors. The last structural inflation school of thought discussed was the one prevailing in the USA. This school saw inflation as the result of the unproductive use of capital and labour when measured against the incomes generated by the same factors of production. In section three of the study, the abovementioned theories of structural inflation were empirically applied in the South African context. In all cases very definite pointers, indicating the applicability ·of these theories in the South African situation were found. In all cases two main sector groups were constructed; each consisted as the sum of the weighted productivity of wages of the sectors belonging to that sector group i.e. internationally or domestically competitive and public or private competing groups. The constructed series for labour productivity and wages and salaries for the different sector groups were then compared.

D.Com. (Economics) / This study covers the possible causes of inflation in South Africa. Inflation is usually defined as a period of sustained increase in the general price level. The South African inflation rate has accelerated from a moderate start in the early 1960's, and has shown a persistent resistance to regain former levels ever since. This resistance called for an identification of the causes of inflation and for some light to be shed on the inflation process experienced in South Africa since 1965. The aim of the investigation was, firstly, to estimate an inflation function: and, secondly, to simulate the inflation rate. The study was carried out in two stages. In the first, a survey was carried out of all the applicable inflation theories. The conventional inflation theories, the quantity monetary theory and the demand-pull and cost-push theories were analysed. Consequently, the new inflation theories were discussed. The discussion starts off with an analysis of the Phillips curve, as interpreted by R. Lipsey, and the differentiation by Friedman and Phelps between the short-run and long-run Phillips curves, through to the criticism by the School of Rational Expectation.

This study reports the development and use of an original methodology to measure inflation credibility, as well as the first results of such measurement in terms of an inflation credibility barometer. The barometer is an instrument measuring the degree of acceptance of the accuracy of historic inflation figures. Despite the lack of knowledge about inflation and the low inflation credibility recorded by this first calculation of an inflation credibility barometer for South Africa, valuable information about inflation is unveiled to the authorities. The research results serve as a benchmark, but cannot be compared to earlier research, as this study represents the first systematic measurement of inflation credibility in South Africa. The barometer yields better results than the limited current international measurement of perceptions of the accuracy of historic inflation figures. The barometer (i) reports the credibility of inflation figures as a figure between zero and 100; (ii) will highlight changes in credibility over time with repeated use; (iii) can be explained easily to the general public; (iv) provides for international comparison between countries; and (v) can be used by all countries. The use of inflation credibility barometers and changes in barometer readings over time can also serve as an early warning system for changes in inflation perceptions that might feed through to inflation expectations. Sampling results used to calculate a South African inflation credibility barometer show little public understanding of the rate of inflation. Owing to an increased focus on inflation figures in countries using an inflation-targeting monetary policy, central banks entrusted with such a policy should adopt a communication strategy highlighting the calculation and measurement of the rate of inflation. This study shows that no generally accepted international benchmarks for successful central-bank communication strategies have been developed, but the use of the methodology developed in this study will assist in the assessment of the effectiveness of communication strategies. This study makes three further contributions of significance to available literature on inflation in South Africa. The first is an analysis of price increases and inflation over a period of 85 years (1921 to 2006) and a selected comparison of salaries and remuneration over a period of 78 years (1929 to 2006). To this end data sets were developed for comparative purposes, thereby distinguishing between perception and reality about the accuracy of inflation figures over time. As this comparison has not been done before, a methodology was developed that can be used in future research. Based on these comparisons an inflation accuracy indicator (JAI) is developed for the first time. The research showed no systematic over or under-reporting of price increases, therefore confirming the general accuracy of the consumer price index (CPI) over time. As with the inflation credibility barometer, this methodology can be used internationally to confirm the accuracy of countries' inflation figures over time. This methodology can also be used by developing countries with capacity constraints in economic modelling and forecasting. The second contribution to available literature is the first analysis of South Africa's experience with inflation over a period of 85 years from the perspective of the central bank. This analysis highlights not only the difficulties encountered by a central bank to contain inflation, but also focuses the attention on the policy errors of the authorities in their quest to contain rising prices. The third contribution is an analysis of international and domestic initiatives aimed at improving the accuracy and measurement of inflation. The implications of these initiatives for developing countries are considered in the interest of a level international playing field between developed and developing countries. / Thesis (Ph.D.)-University of KwaZulu-Natal, Durban, 2007.

This study analyses various perspectives on inflation targeting as a monetary policy framework in South Africa. The study uses semi-structured interviews with participants who represent the perspectives of trade unions, SARB, and academics amongst others. All the interviews were recorded on audio tape to ensure accuracy and effective data collection. The interviews of all participants were analyzed to establish degrees of similarities and differences amongst them. The study also looks at the relationship between inflation and interest rates. The use of interest rates as a tool to curb inflation is also discussed, as is the effect of the exchange rate on inflation. The Philips Curve Theory and the Fisher Hypothesis provide empirical evidence to support inflation targeting. Moreover, the perspective raised by the ANC Alliance partners were that an inflation band of 3% - 6% is too narrow, too low and hampers economic growth. Then Analysis suggests a significant policy shift away from inflation targeting after the 2009 elections, as a result of dissatisfaction from the Alliance partners of the ruling party. The main objective of this study is to solicit perspectives on inflation targeting from various political parties, trade unions, businesses, the SARB and academics, as well as investigate case studies from other countries. An underlying task of this study is to predict what South Africans should expect from a Zuma Government with regard to monetary policy. / Thesis (MBA)-University of KwaZulu-Natal, 2009.

M.Comm. / The aim of this study is to examine the appropriateness of inflation targeting as the future monetary policy strategy of South Africa. In keeping with international trends, South Africa needs to recognise the changing financial environment in which the Reserve Bank must now operate. The purpose of this study is to show whether South Africa's economic environment and the SARB as the monetary authorities, are indeed ready for implementing inflation targeting in South Africa. Given the limited experience with inflation targeting, the theoretical analysis has formed the foundation that has shaped and influenced the thinking on this strategy monetary policy. The rationale for price stability as the long-term goal of monetary policy is pivotal to all the strategies for controlling inflation: exchange rate pegging; monetary targeting; nominal GDP targeting; the "Just Do It" policy; and lastly, inflation targeting. This study examines the key features and concepts of inflation targeting in order to determine their relevance in a framework for South Africa. Transparency and accountability are central to the inflation-targeting regime and depend largely on the independence of the central bank. It is important to establish the credibility and flexibility of the inflation-targeting framework through frequent communication and by ensuring the accountability of the central bank to the government and the public. Policymakers are faced with many issues and choices when designing the inflation targeting strategy and the potential benefits of the framework will depend on how effectively the strategy is formulated and implemented. It is vital that the design of the strategy attempt to effectively balance both the transparency and the flexibility of the framework. Once we have the theoretical basis we do a detailed analysis of the international experience with inflation targeting. The 1990's saw a number of countries adopting explicit inflation targets as the goal of monetary policy: New Zealand, Canada, the United Kingdom, Sweden, Australia, Finland, Israel, Spain and the Czech Republic. Each country had its own challenges and issues with designing the inflation-targeting framework. We draw on the lessons from the international experience to assess the applicability of inflation targeting for South Africa. After looking at a brief history of South African monetary policy we consider whether the institutional framework in South Africa is appropriate for effectively implementing inflation targeting. We also take a look at the issues of design and implementation that are relevant to the South African situation while considering the central question of whether South Africa is indeed ready for inflation targeting. Finally, we show that the success of an inflation-targeting framework in South Africa will depend on the ability of the Reserve Bank to ensure the transparency of monetary policy and the reliability of the inflation forecasts. At the same time, the credibility of the inflation-targeting regime will depend, not only on a political commitment by the government, but also on the unfailing support of the labour market and the general public. Thus, the biggest challenge facing the Reserve Bank is to prepare itself and the South African market for the new age of direct inflation targeting as an anchor for monetary policy.

M.Comm. / The overall objective of this study was to determine the appropriateness of Inflation Targeting to South Africa, or of South Africa's suitability for Inflation Targeting. For that reason, I shall produce information that will aid in the determination of whether the South African Reserve Bank has been correct in their adoption of this framework, and to propose an alternative, more all-encompassing option. The research design used in this study in terms of Tripodi, Fellin and Meyer's (1982:40) classification can be termed as a hybrid of the exploratory and the quantitative-descriptive designs. Chapter 1 introduces the reader to the research paper. This chapter incorporates the rationale and importance of the study, its methodology, hypothesis, limitations, aims, and referencing method. It sets out clear aims and objectives for the thesis while providing an overview of the material. To facilitate the analysis of Inflation Targeting in South Africa it was vital to have a clear and accurate understanding of what Inflation Targeting is. The definition and an analysis of the definition are covered in Chapter 2. As other authors have detailed this aspect voluminously, it is just dealt with summarily in this section. Chapter 3 discusses the requirements for Inflation Targeting as set out by the authorities. These factors are primarily of a technical nature. While the information garnered for this section is invaluable, it is inadequate in isolation. Countries' individual circumstances play an important role, and need to be considered along with the purely technical requirements for Inflation Targeting. This chapter is important in the analysis as it provides an important yardstick for the analysis of the requirements in South Africa. In order to attain an enhanced grasp of Inflation Targeting and its potential impact and effects on South Africa, it is imperative to take lessons from other countries where the framework has been implemented. Chapter 4 analyses international experiences with Inflation Targeting, with the main aim of learning from the experience of developed and, more importantly, developing nations. The paper then moves into the most important section: that of South Africa. Once a full understanding of what Inflation Targeting involves is obtained, both theoretically and empirically, we are in a position to consider where South Africa fits in. South African monetary policy is evaluated briefly, while the technical requirements of Inflation Targeting are analysed in their South African context. Various problems are discussed with the applicability of the framework to South Africa. The later part of this section analyses technical and socio-political complicating factors, while a description is provided of a suggested alternative framework. The final chapter concludes that South Africa is, indeed, almost certainly "less than suitable" for Inflation Targeting and suggests that a more holistic framework of a "GEAR-type" nature is more likely to be appropriate to a country with the uniqueness of South Africa.

Thesis (MBA)--Stellenbosch University, 2002. / ENGLISH ABSTRACT: Inflation has many negative effects and for this reason the South African Reserve Bank, like central banks in most countries, is strongly opposed to inflation and uses its monetary policy to combat it. This action is necessary for continued economic growth, prosperity and a fair distribution of income and wealth. Low inflation and a stable financial environment are important prerequisites for the achievement of these objectives on a long-term basis. In order to combat inflation in South Africa it was announced in the Budget Speech on the 23 February 2000, that a policy of inflation targeting would be implemented in South Africa. The objective is to bring inflation within the target band of three to six percent by the year 2002. Inflation targeting has been successful in helping New Zealand, Canada, Israel, the United Kingdom, Sweden, Australia and Spain achieve and maintain low rates of inflation. This does not mean, however, that inflation targeting has been implemented without incurring costs in lost output and employment, but there is no evidence that the adoption of inflation targets has produced harmful effects to the real economy over the long-term. Instead, the low inflation rates achieved in the inflation targeting countries have improved the prospects for sustainable longterm growth. However, inflation targeting is not appropriate for all countries. There are certain developing countries that do not meet the basic requirements for adopting inflation targeting. In this study the viability of implementing inflation targeting as a policy solution to combat inflation in South Africa is examined. In order to determine this, focus is placed on the key characteristics and features of inflation targeting. The reasons why countries have implemented inflation targeting are viewed and the prerequisites that must be met before inflation targeting can be implemented are discussed. The advantages and disadvantages of this approach are also highlighted. Furthermore, focus is placed on how inflation targeting has been implemented in some of the advanced economies in order to determine whether it can be successfully implemented in developing countries, and if so, in which developing countries. Finally equipped with an .understanding of the theoretical aspects of inflation targeting and drawing from the lessons of the international experiences, focus is placed on how viable it is to implement inflation targeting in South Africa. / AFRIKAANSE OPSOMMING: Wêreldwyd neem Sentrale Banke van ontwikkelende lande, aktiewe stappe in die bekamping van inflasie. Die Suid Afrikaanse Reserwe Bank, net soos ander Sentrale Banke is ook gekant teen inflasie en maak gebruik van hulle monetêre beleid vir die bekamping van inflasie. Bekamping van inflasie is van kardinale belang om voortgesette ekonomiese groei, welvaart en 'n regverdige verspreiding van inkomste en rykdom te verseker. Lae inflasie en 'n stabiele finansiële omgewing is belangrike voorvereistes om hierdie finansiële doelwitte in die langtermyn te bereik. Ten einde inflasie in Suid Afrika te bekamp, het die Minister van Finansies in sy begrotingsrede van 23 Februarie 2000, aangekondig dat Suid Afrika 'n beleid van inflasie bekamping gaan implementeer. Die doelwit van so beleid sou wees om inflasie binne 'n drie tot ses persent teikenband te beperk teen die jaar 2002. Inflasie bekamping was suksesvol in die bekamping van inflasie in lande soos New Zealand, Kanada, Israel, Die Verenigde Koningkryk, Swede, Australia en Spanje, waar lae inflasie koerse behaal is en gehandhaaf word. Alhoewel 'n beleid van inflasie bekamping met indirekte koste en 'n verlies in produksie en werksgeleenthede gepaard gaan, is daar geen bewyse dat die implementering van inflasie teikens 'n wesenlike effek op die ekonomie in die langtermyn het nie. Inteendeel, lae inflasie in die teikengroep lande het verseker dat voortdurende ekonomiese groei oor die langtermyn gehandhaaf kon word. 'n Beleid van inflasie bekamping is nie wenslik vir alle lande nie. Daar is verskeie ontwikkelende lande wat nie aan die basiese voorvereistes vir die implementering van 'n beleid van inflasie bekamping voldoen nie. In hierdie studie word die wenslikheid, al dan nie vir die implementering van 'n beleid van inflasie bekamping, as 'n beleidsoplossing in die bekamping van inflasie in Suid Afrika ondersoek. Ten einde dit te bereik word die fokus op die hoof karaktertrekke en einskappe van inflasie bekamping geplaas. Die redes waarom lande inflasie bekamping implementeer, asook die voorvereistes waaraan voldoen moet word, alvorens 'n beleid van inflasie bekamping geimplementeer kan word, word bespreek. Die voor- en nadele van hierdie werkswyse word ook uitgelig. Voorts word gefokus op die implementering van inflasie bekamping in ontwikkelde ekonomieë, om te bepaal of dit op die ekonomieë van ontwikkelende lande toegepas kan word, en indien wel, watter ontwikkelende lande? Toegerus met 'n begrip van die teoretiese aspekte van inflasie bekamping, gepaardgaande met die internasionale ervarings, word daar gefokus op die wenslikheid, vir die implementering van 'n beleid van inflasie bekamping in Suid Afrika.

M. Com. (Financial Economics) / The success of a monetary policy framework depends mostly on whether economic agents, especially the financial market participants, understand monetary policy decisions and are able to predict them in advance. Academics and practitioners agree that a successful Central Bank should be “boring” such that surprises about monetary policy should not arise in the announcements and the actions of the Bank, but rather in the macroeconomic developments. Thus policies that enhance clarity, transparency and communication between a Central Bank and the market can contribute to strengthening monetary policy predictability and improve the effectiveness of monetary policy itself. This dissertation assesses the predictability of the South African Reserve Bank’s (SARB) interest rate decisions since the adoption of the inflation targeting monetary policy framework in February 2000. Firstly, in order to evaluate predictability, money market forward rates are used to test whether the financial market is able to forecast the future level of policy rates, using the unbiased forward rate hypothesis. Then, using an event study methodology, changes in the money market forward rates following a monetary policy announcement are used to test whether the financial market participants were surprised by the SARB’s monetary policy decisions. The results of the unbiased forward rate hypothesis (UFRH) and the event study analysis indicate that, at least in the short term, specifically on a one-month-forward period, financial market participants have been able to predict the SARB’s monetary policy decisions with a high degree of accuracy. Moreover, the results of the event study analysis show that the South African financial market is at least semi-strong efficient, in the sense that monetary policy decisions are quickly incorporated in the market interest rates following the announcements. The event study analysis also provided some evidence that volatility in financial markets at the time of interest rate decisions has been declining over time.

M.Com. (Economics) / The purpose of this dissertation was to investigate the contribution of the world economy to instability in the South African economy via inflation. Double digit inflation in the South African economy remains the most important and' sole major problem influencing stabilization policy in the country. This study concentrated on the instability of the economic growth path in South Africa since the recession period of 1976. From a multiplier-accelerator model the conclusion is reached that two of the main endogenous variables in the economy, namely private consumption and total investment have adapted to behaviour patterns since 1977, in such a way that an economic growth path which deviates monotonically from the equilibrium paths has been guaranteed. The. reason for this is found in the values of two main coefficients namely the propensity to consume and the propensity to invest. The openness of the South African economy is an exogenous threat to stability in the South African economy if a high inflation rate persists.

M.Com. (Financial Economics) / Forecasting inflation is an important concern for economists and business alike throughout the world. Despite the relative success of macroeconomic forecasting models in forecasting inflation, there is potential to improve these models to account for nonlinear relationships between inflation and the chosen independent variables. Artificial neural networks (ANNs) have found increased applicability as a potential nonlinear forecasting tool that accounts for nonlinearity found in data. In this study, we investigate the ability of genetically optimised neural networks to forecast South African inflation. The results were compared to economic forecasts obtained from traditional econometric models as well as macroeconomic structural models. The results obtained show that the genetically optimised neural networks indicate some ability to be used as potential forecasting tools. Their biggest advantage over the traditional forecasting techniques is that they do not impose the restriction of linearity on the data to be forecasted.