Capital Flows, Credit Markets and Growth in South Africa: The Role of Global Economic Growth, Policy Shifts and Uncertainties

ISBN-13: 9783030308872 / Angielski / Twarda / 2020 / 385 str.

Nombulelo Gumata; Eliphas Ndou

Spis treści

1 Introduction.- Part I Global Economic Growth, Economic Policy Uncertainty and The Influence of Trade Dynamics

2 Is BRICS GDP Growth a Source of Shocks or an Amplifier of Global Growth Responses? What Are the Policy Implications for South Africa?

3 Does the Trade-Openness Channel Impact the Effects of Business Confidence Shocks on Investment Growth?

4 Trade-Openness, Consumer Price Inflation and Exchange Rate Depreciation Shocks

5 Global Growth and Economic Policy Uncertainty Shock Effects on the South African Economy: Do These Reinforce Each Other?

6. Heightened Foreign Economic Policy Uncertainty Shock Effects on the South African Economy: Transmission via Capital Flows, Credit Conditions and Business Confidence Channels

Part II Global Policy Rates and The South African Economy

7 In Which Direction Is There a Momentum Effect in the Changes in the Spread Between the Repo Rate and Federal Funds Rate?

8 How Do Global Real Policy Rates Impact the South African GDP Growth and Labour Market Conditions?

9 To What Extent Do Capital Inflows Impact the Response of the South African Economic Growth to Positive SA-US Interest Rate Differential Shocks?

Part III Capital Flow Surges, Sudden Stops and Elevated Portfolio Inflows Volatility Effects

10 Economic Costs of Capital Flow Episodes in South Africa

11 Capital Flow Surges, Sudden Stops and Elevated Portfolio Inflow Volatility Shocks: What is the Nature of Their Interaction with GDP Growth and Credit?

12 Bank and Non-bank Capital Flows and The Sectorial Reallocation of Credit Away from the Household Sector

13 Banking and Non-banking Capital Flows and The Sectorial Reallocation of Credit Away from Companies

14 Equity, Debt Inflows and the Price Stability Mandate

15 Do Local Investors Play a Stabilising Role Relative to Foreign Investors After Economic Shocks?

16 Do Investors’ Net Purchases and Capital Retrenchment Activities Impact the Monetary Policy Response to Positive Inflation Shocks?

Part IV The Transmission of Sovereign Debt Credit Ratings Downgrades and Upgrades into the Credit Markets and the Real Economy

17 What Role Does Business Confidence Play in Transmitting Sovereign Debt Credit Ratings Upgrades and Downgrades Shocks into the Real Economy?

18 Are Sovereign Debt Credit Ratings Shocks Transmitted Via Economic Growth to Impact Credit Growth?

19 Does the Cost of Government Borrowing Transmit Sovereign Debt Credit Ratings Downgrades Shocks to Credit Growth? 

Part V The Output–Inflation Trade-off, External Shocks, Labour Market Conditions and Inflation Expectations

20 The Output-gap, Nominal Wage and Consumer Price Inflation Volatility Trade-off

21 The Output-Gap and Inflation Volatility Trade-off: Do External Shocks and Inflation Expectations Shift the Taylor Curve

22 Do Adverse Global Trade Shocks Impact the Trade-off Between the Inflation and Output-Gap Volatilities

23 Do the Labour Market Conditions Shocks Impact the Trade-off Between the Inflation and Output-Gap Volatilities?

Part VI The Policy Ineffectiveness Issues

24 The Output Gap–Inflation Trade-off and the Policy Ineffectiveness

25 Inflation Regimes and the Transmission of Positive Nominal Demand Shocks to the Price Level

O autorze

Nombulelo Gumata is an economist who has co-authored several books in the areas of international finance and macroeconomics, macro-prudential and regulatory tools and financial stability, labour markets, monetary and fiscal policy.

Eliphas Ndou is an economist at the South African Reserve Bank and has authored books in international finance, public finances, monetary, labour, macro and microeconomics, time-series econometrics, banking regulation and macro-prudential policy.  

Blurb

This book examines the dynamics in capital flows, credit markets and growth in South Africa. The authors explore the role of global economic growth, policy shifts and various economic policy uncertainties. Central banks in advanced economies are engaged in unconventional monetary policy tools such as balance sheet policies, negative interest rates and extended forward guidance to assist them to meet their price, financial and macro-economic stability objectives. This book determines whether BRICS GDP growth is a source of shocks or an amplifier of global growth shocks. The authors find that global economic growth and policy uncertainty reinforce each other via capital flows, credit conditions and business confidence on the domestic economy. Furthermore, they demonstrate that there is momentum in the changes in the spread between the repo rate and federal funds rate. In addition, global real policy rates impact domestic GDP growth and labor market conditions. The authors examine the economic costs of capital flow surges, sudden stops and elevated portfolio volatility shocks and their interaction with GDP growth and credit. They show that equity and debt inflows matter in the attainment of the price stability mandate. Moreover, business confidence transmits sovereign credit ratings upgrades and downgrades shocks to the real economy via GDP growth, the cost of government debt and borrowing to impact credit growth. High GDP growth increases the likelihood of sovereign credit ratings upgrades, hence policymakers should implement pro-growth policies. Inflation regimes impact the transmission of positive nominal demand shocks to the price level. Low and stable inflation (inflation below 4.5 per cent) reduces the pass-through of positive nominal demand shocks to inflation.