Regional asymmetries in monetary transmission: The case of South Africa |
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| Authors: | David Fielding Kalvinder Shields |
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| Institution: | aDepartment of Economics, University of Otago, Dunedin 9001, New Zealand;bCentre for the Study of African Economies, Oxford University, United Kingdom;cDepartment of Economics, Melbourne University, Australia |
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| Abstract: | PPP is unlikely to hold instantaneously for all commodities across the different regions of a monetary area. It is therefore possible that monetary expansions or contractions will have different effects in different regions, if there are regional asymmetries in the monetary transmission mechanism. We estimate the size of such asymmetries across the nine provinces of South Africa over the period 1997–2005. There are large and statistically significant differences in the response of prices to monetary expansions and contractions. The problems arising from transmission mechanism asymmetries are not restricted to international monetary unions. |
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| Keywords: | Inflation Monetary union South Africa Transmission mechanism |
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