An Empirical Investigation Into the Budget Deficit ‐ Inflation Nexus in South Africa

Modelling Inflation in South Africa: A Multivariate Cointegration Analysis

“…More specifically, we employ an expectations augmented Phillips curve framework to investigate the link between inflation, unit labour costs, the output gap, the real exchange rate and inflation expectations. Thus, our methodology is in line with the earlier work for South Africa by Anorua (2003) and Kaseeram et al (2004). We find evidence consistent with mark-up behaviour of output prices over unit labour costs, which in turn are driven by inflation expectations.…”

“…So, the new economy has also highlighted the importance of the cost-push dimension of the inflation process, associated with technology and deregulation For South Africa there have been a number of recent time-series studies that try to explain the determinants of inflation. Anorua (2003) ascertains the time series properties of budget deficits, inflation and M3 by using a VECM model. He finds that real broad money supply Granger-causes inflation, and that there is a bi-directional causal relationship between real budget deficits and inflation.…”

Budget deficits, money supply and price level in West Africa

“…Durevall and Ndung'u (2001) use a dynamic error correction model of inflation for Kenya and find that money supply affects prices only in the short-run. Anoruo (2003) uses the Johansen cointegration procedure and Granger causality tests to show that money supply causes both budget deficits and inflation rate in South Africa. He also finds bidirectional causal relationship between deficits and inflation.…”

Bank lending, expenditure components and inflation in South Africa: assessment from bounds testing approach

“…Anoruo (2003) ascertains the time series properties of budget deficits, inflation and M3 using a VECM model. He finds that real broad money supply Grangercauses inflation, and that there is a bi-directional causal relationship between real budget deficits and inflation.…”