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The Marshall-Lerner condition states that a trade balance improves after currency depreciation if trade elasticities exceed one. Using the Vector Error Correction Method (VECM), this study tests the condition for South Africa, focusing on how exchange rate changes affect the trade balance under a floating exchange rate regime. The analysis examines short- and long-run impacts on exports and imports to assess whether exchange rate adjustments can improve the trade balance. Findings reveal that global income growth and exchange rate appreciation positively influence exports, while imports increase with both appreciation and higher domestic income. Although exports and imports respond strongly to exchange rate changes, the Marshall-Lerner condition does not hold for South Africa, suggesting that exchange rate adjustments alone may not improve the trade balance.

The present study aims to examine the relationship between exchange rate undervaluation and economic growth in South Africa, focusing on the various transmission mechanisms through which this relationship occurs. Through the adoption of secondary quarterly data spanning the period 1980 to 2018 and a two-step Generalised Method of Moments approach. The study estimated a Behavioural Equilibrium Exchange Rate of South Africa and used it to construct a measure of Exchange rate undervaluation. Further, the study examined the effects of Exchange rate undervaluation on the tradable sector, the savings/capital accumulation sector, and the total factor productivity sector. The study found evidence of the tradable sector and total factor productivity (TFP) channels in South Africa. Therefore, we conclude that there exist valuable lessons to be learnt through the analysis of this relationship on a micro level compared to a macro level. Macro-level studies overlook the individual effects, hence why results have been inconclusive. This, therefore, means that South Africa has an incentive to keep the Rand at a competitive level since the industrial and agricultural sectors benefit from a competitive Exchange rate.

This study investigates the dynamic relationship between credit supply and demand shocks and household consumption in South Africa using a quantile autoregressive distributed lag (QARDL) model. Motivated by the increasing reliance of South African households on debt amid stagnant income growth, rising living costs, and persistent unemployment, the research aims to understand how credit market conditions influence consumption across different segments of the income distribution. Drawing on data spanning from 1970 to 2024, the study incorporates key macroeconomic variables including real GDP per capita, household income per capita, household debt as a percentage of GDP, the credit-to-GDP ratio, inflation, interest rates, and the unemployment rate. The QARDL framework allows for the estimation of both short-run and long-run relationships while accounting for heterogeneity across consumption quantiles. The results indicate that household consumption is more responsive to income shocks and credit availability in the lower and middle quantiles, suggesting heightened sensitivity among poorer households. Credit supply, proxied by the credit-to-GDP ratio, exhibits weak but positive short-run effects, while household debt consistently exerts a negative influence on consumption across all quantiles and time horizons, with stronger effects in lower quantiles. These findings highlight the consumption-depressing effects of excessive debt, especially for financially vulnerable households. Moreover, macroeconomic stability indicators such as inflation and interest rates are found to negatively affect consumption, particularly in lower quantiles, underscoring the uneven transmission of monetary policy. The empirical results support the hypothesis that household debt contributes to financial fragility and undermines consumption over time, while credit supply shocks play a more modest role. The study concludes that policies aimed at improving income stability, managing household debt levels, and enhancing financial inclusion—particularly for low-income groups—are essential for sustaining household consumption and promoting inclusive economic growth in South Africa.

Several official dating institutions viz: SARB, NBER, OECD, CEPR, and others, provide Business Cycle (BC) chronologies with lags ranging from three months to several years. This is problematic for the various oppressed as it poses limits to the usefulness of BC indicators in terms of forecasting and policy implementation at large. In this article, we propose the construction of composite indicators as accurate measures of business cycles in South Africa. We use this composite index to facilitate comparison of both a non-parametric Bry and Boschan dating algorithm and a parametric Markov Switching dating method, in terms of performance and accuracy of dating business cycle turning points in South Africa. Utilising data spanning the period 2000M1 – 2018M12, empirical evidence obtained is such that, composite indices are better than single indicators due to information rich. Further, while the parametric and non-parametric methods’ performances are matched in terms of the number of turning points identified, however, the non-parametric method is more accurate in identifying these turning points. Due to its accuracy the non-parametric method proved to be a promising method of dating business cycle turning points in South Africa and alleviate the problems which are currently facing the South African Reserve Bank, the private sector and the economy at large.

The article reports on the complementarity and substitutability of Macroprudential and Monetary policies in South Africa, based on the interactions of both Business and Financial cycles. To this end, a Dynamic Conditional Correlations and the Asymmetric Dynamic Conditional Correlations MGARCH models together with the Granger Causality model, the Artificial Neural Network VAR model, and the Structural VAR model, were adopted for the analyses of synchronization, causality, and the analysis of shocks to cycles, respectively. Empirical evidence obtained is such that, under conditions of financial and real economic stress in South Africa, there exists high synchronicity and bidirectional causality between CBCI and CFCI. Hence, Macroprudential and Monetary policies become complements, there exists interdependence between the two policies and actions of one policy contributes to the improvement of the other. However, under normal times there exist no synchronicity and a unidirectional causality relationship running from CBCI to CFCI, was observed. Under such conditions, Macroprudential and Monetary policies become substitutes, therefore, the two policies become independent of each other, hence, only one policy can achieve the desired outcome. Overall, a shock to one cycle is a major determinant of the fluctuations of the other cycle.

This paper examines the exchange rate pass-through (ERPT) and its impact on home inflation in Bangladesh, particularly in the post-pandemic era. Examining important economic factors including the nominal exchange rate (NER), money supply (M2), industrial production (IP), and global commodity index (GCI) using monthly data from January 2002 to August 2023 helps one to grasp their combined influence on consumer price inflation (CPI). By means of Johansen cointegration and Vector Error Correction Model (VECM) approaches, the study reveals important short-term and long-term dynamics. Contrary to patterns in many emerging nations, the results show that changes in exchange rates have apparently little impact on home prices. Rather, changes in the money supply and world commodities prices mostly influence inflation; the latter becomes a major factor. The study also exposes an unexpected positive link between industrial production and CPI, implying complexity in Bangladesh's production-driven economic structure. Moreover, this investigation underlines how complex monetary expansion, external commodities shocks, and devaluation of money interact to shape inflationary pressures. These results offer legislators important new perspectives and support strong monetary policies and focused involvement in world commodities markets to help to lower inflation. This study clarifies ERPT in developing countries and provides direction on inflation control techniques for Bangladesh.

Following the 2007-2009 global financial crisis, the South African Reserve Bank (SARB) prioritised financial stability. This study assesses the impact of financial stability on South Africa's output and price stability, which is crucial for framing its monetary policy. Utilising a Structural Vector Autoregression (SVAR) approach, the influence of the Financial Conditions Index (FCI) on the Gross Domestic Product (GDP) and Consumer Price Index (CPI) between 1960Q1 and 2022Q4 was analysed. Results revealed a strong connection between these objectives. GDP drops after an FCI disturbance, whereas the CPI trends upwards when the SARB counters financial imbalances. This vital finding indicates a positive relation between enhanced financial conditions and output stabilisation but reveals a trade-off between price and financial stability. After a GDP shock, financial conditions improve, but they deteriorate following a CPI shock. If the SARB reacts by "mopping up" post-crisis, the policy rate typically drops, pointing to potential financial vulnerabilities. Both GDP and CPI react positively to FCI disturbances when SARB is passive. The evidence suggests that while financial stability bolsters output stability, it might endanger price stability. Thus, amongst other recommendations, South Africa's monetary policy authorities must lean against financial imbalances instead of mopping after a crisis

This paper investigates the asymmetric exchange rate pass-through (ERPT) to inflation in Nigeria. The study employed Autoregressive Distributed Lag (ARDL) and Nonlinear ARDL (NARDL) models from 2010Q1 to 2024Q2. The analysis incorporates key policy changes, such as the 2023 exchange rate unification, and explores both the short- and long-run impacts of exchange rate fluctuations on food and headline inflation. In particular, the study highlights the response and pass-through periods of exchange rate shocks, with depreciation demonstrating a stronger and more immediate effect on inflation than on appreciation. Results reveal that exchange rate depreciation exerts significant cost-push pressures, with a pass-through effect observed within 3 to 4 quarters, while the effect of appreciation is weaker and more prolonged. This asymmetry is especially pronounced for food inflation, where the dependency on imported goods accelerates the transmission of exchange rate shocks to consumer prices. The study also finds that cumulative depreciation has a much more pronounced effect on inflation. At the same time, appreciation offers minimal relief, reflecting Nigeria’s vulnerability to exchange rate volatility due to its reliance on imports. The findings show the importance of managing exchange rate fluctuations to control inflation, particularly given the asymmetry in how depreciation and appreciation affect prices. By providing a comprehensive analysis of both long- and short-run dynamics, this study contributes to the understanding of ERPT in Nigeria, offering insights for policymakers to implement targeted interventions to mitigate inflationary pressures in the context of exchange rate instability.

This study investigates the long-term and short-term relationships between different monetary aggregates (M0, M1, M2, and M3) and GDP in Saudi Arabia using the Engle-Granger cointegration test and the Granger causality test. The results reveal that M2 has the most stable long-term relationship with GDP, making it the most reliable aggregate for policy formulation. M1 also shows a strong relationship, while M3’s connection is comparatively weaker. The causality analysis indicates bidirectional relationships between GDP and M1, M2, and M3, suggesting that changes in these aggregates can both influence and be influenced by economic activity. In contrast, M0 shows no significant long-term relationship and only responds to changes in GDP, indicating its limited policy relevance. These findings highlight the importance of using broader aggregates like M2 for effective policy targeting in Saudi Arabia’s evolving economic landscape. The study provides crucial insights for policymakers in selecting appropriate monetary aggregates for long-term planning and short-term economic stabilization.

Although the onset of the pandemic pressured monetary and fiscal policy across the globe, deficit finance was aided by the large, established debt markets in countries like the United States.  The expansionary efforts in emerging markets like Latin America put greater strains on their more limited capacity.  Our study analyzes data from seven Latin American countries, three European countries, three Asian countries, and the United States. We utilize panel vector autoregressive (VAR) models to explore the dynamic interactions and feedback mechanisms among the policy variables, while accounting for unobserved country-specific effects.  Our results demonstrate strong and significant interactions between monetary and fiscal policy around the time of the pandemic, with the primary causal effects running from fiscal to monetary policy.  Additionally, our results yield evidence of countercyclical policy reactions to inflation for both monetary and fiscal policy over the pandemic period.  

This research examines domestic debt, private sector lending, and economic development in emerging countries, focusing on Bangladesh. This analysis uses 1960–2022 Bangladeshi secondary data, World Bank World Development Indicators and Bangladesh Ministry of Finance economic statistics. Domestic debt and private sector credit affect emerging nations' economic development, according to this study's theoretical approach. This research examines the link between two factors to add to the literature and provide Bangladesh-specific insights. It is quantitative research that examines domestic debt, private sector credit, and economic development using regression analysis and statistical testing. The conclusions aids Bangladesh's economic development policymakers, economists, and stakeholders. Understanding national debt, financing from the private sector, and the advancement of the country's economy helps policymakers manage debt, allocate credit, and set economic policy. The conducted study also improves theoretical understanding of economic development in underdeveloped countries and illuminates Bangladesh's unique conditions. It examined household debt, private sector lending, and Bangladeshi economic development as well as examines the patterns of economic growth in emerging nations to enhance policy debates and broaden knowledge.

This study investigated the nexus between financial development and economic growth, exploring the short-run and long-run impact of financial development on economic growth in the Sothern African Development Community (SADC). The SADC was fragmented into middle-income countries and low-income countries so as to ascertain the income effect on the nature of the relationship, an exploration not considered by previous studies. The study used panel data covering the period 1980 to 2020. It employed the Autoregressive Distributed Lag (ARDL) Bounds and the Toda and Yamamoto and Dolado and Lütkepohl (TYDL) models to examine the relationship and the direction of causality respectively. In the short run, financial development, through domestic credit to the private sector, spurs economic growth and in the long run financial development focus should be on promoting bank deposits. Causality tests between economic growth and financial development tests showed mixed results depending on the variable used for measuring financial development. In addition, the SADC countries are encouraged to strengthen their financial sector legislation, strategies, and banking system supervision so as to enhance the financial sector efficiency as well as to realise the benefits of financial innovation.

Despite the many studies on inflation, stock prices, and foreign exchange reserves, there is still little research linking these three with world oil prices to the rupiah exchange rate, especially comparing them to conditions before and after the pandemic. This study aimed to test and analyze the effect of inflation, stock prices, foreign exchange reserves, and world oil prices on the rupiah exchange rate against the dollar. The object of this research is Bank Indonesia and the Stock Exchange by producing a sample in this study which is 62 months. The data is divided into 2 categories 31 months before the co-19 pandemic and 31 months during the co-19 pandemic. Data collection techniques in this study used secondary data.

Agricultural growth is closely associated with sustainable economic development. This is especially true from the perspective of developing countries, such as Indonesia and Pakistan, where significant portions of the labour force are dependent on agriculture for their livelihood. This paper aims to examine the effects of macroeconomic policy (i.e. monetary policy) on employment, food inflation, and agricultural growth by analysing to what extent monetary policy is effective in controlling food price inflation, the effect of contractionary monetary policy on the agricultural sector’s employment and productivity, and the extent of monetary policy transmission to money market rates and 10-year interest rates. We employed a factor-augmented vector autoregressive model proposed by Bernanke et al. (2005) to agricultural data from 1995 and 1996 to 2016 for Indonesia and Pakistan, respectively. Main findings of the study demonstrate that tight monetary policy significantly reduced food inflation and agricultural production while increasing the rural unemployment rate. Short-term and 10-year interest rates increased owing to the contractionary monetary policies pursued by both countries. An inclusive monetary policy whereby policymakers work alongside governments to achieve price stabilisation and reasonable employment rates is recommended.

Central bank digital currencies (CBDCs) give rise to many possibilities including those of negative interest rates. A two-period decision model is presented between one central bank and one representative household. The central bank applies the Taylor (1993) rule to choose its interest rate. The household allocates its resources strategically to production, consumption, CBDC holding, and non-CBDC holding. The results are determined analytically and illustrated numerically by varying 19 parameter values. Interesting novelties of the article are that the central bank may choose negative CBDC interest rates when the household holds far more CBDC than non-CBDC, for low inflation rates, low real interest rates, low household’s potential production, low weight assigned to inflation in the Taylor (1993) rule, high target inflation rate, and high household’s production parameter. That usually causes the household to decrease its CBDC holding and increase its non-CBDC holding, production and consumption. The central bank may increase its CBDC interest rate to compete with an increasing non-CBDC interest rate if the household’s transaction efficiencies for CBDC and non-CBDC increase, or the household’s transaction efficiency for consumption decreases. Shocks to production, inflation and interest rates are analyzed.

In a two-period decision model, a central bank chooses a CBDC (central bank digital currency) interest rate and a representative household allocates resources into production, consumption, CBDC holding, and non-CBDC holding. The model’s analytical results and a plausible benchmark are compared with the empirics for the US, China and Russia. Interesting novelties of the article are that the model predicts that the US in 2021/2022 should choose  rather than 0.125% CBDC interest to combat its high October 2021 empirical inflation of 6.2%. That would induce households to hold more CBDC, hold less non-CBDC, and produce and consume less. In contrast, the model predicts that China should choose a low  rather than  CBDC interest rate. That would decrease each household’s CBDC holding and increase the low inflation. The model predicts that Russia should choose  rather than  CBDC interest rate. Russia’s strategy is remarkably consistent with the model’s predictions. The model predicts that the central bank should choose negative CBDC interest rate when the inflation and real interest rate are low, and the inflation target is high. The article shows how extremely high inflation, which increases the CBDC interest rate, makes production and consumption nearly impossible, unless the real interest rate is extremely negative.

Almost 2 years, the world has been facing the COVID-19 attack, there is no exception including Indonesia, which incidentally is a developing country. During the pandemic, various industries in all sectors experienced a decline in sales so that they need an injection of funds from investment where with the presence of investors, industry movements, include of small, medium, and large industries could increase and have an influence on national economic growth and development. As a country that has many islands, of course investment as a very important economic sector. Many factors influence developments in an area, some of which are inflation, interest rates, and the economy of each region. To see the development of investment in Indonesia during the COVID-19 pandemic (2020-2021Q3), this study uses panel data to be more specific and detail. The result of the research is that interest rates affect investment developments, while inflation and economic growth have no effect on investment developments in Indonesia.

This study aimed to investigate economic growth (RGDP) and its determinants such as internal debt (INDT), external debt (EXDT), interest rate (RINR), exchange rate (REXR) and trade openness (OPEN). Quarterly data from 1986-2021 used for this investigation were extracted from Central Bank of Nigeria.  Exploratory data analysis (EDA) revealed linear dependence of RGDP and the aforementioned determinants. The EDA and the variance inflation factor revealed the presence of multicollinearity caused by the INDT. As a result of this, the ridge regression method was used and it was found that the multicollinearity problem was addressed with appropriate ridge constant K= 0.29. Hence, ridge regression technique with constant K= 0.29 was a robust method to predict economic growth in Nigeria using the explanatory variables under consideration. Thus, served as a great benefit to the policy makers as the study provided a better understanding of the economic growth and the aforementioned determinants in terms of relationship and in particular the set back caused by EXDT on the economy of Nigeria. Also, the researchers benefited from this study as it engendered the understanding of the appropriate estimation technique to be used when the presence of multicollinearity was established in fitting a linear model. 

This article's main goal is to evaluate the degree of fiscal dominance in Uruguay in 1999-2019 to improve the understanding of economic policy for theoretical reasons and applied needs related to good practices and accountability. Two strategies are followed: one, to quantify the fraction of fiscal expenditures that are financed by monetary liabilities and, the other one, to analyze the effects of fiscal deficit on the price level and inflation because inflationary financing may prevent the central bank from reaching its inflation target. Both situations may subordinate the monetary policy to the fiscal policy, signaling fiscal dominance. In addition, through the analysis performed to assess the degree of fiscal dominance, it is possible to detect the main determining factors of the Uruguayan price level (inflation) formation during the last two decades. So far, preliminary results suggest that inflation is not exclusively a monetary phenomenon and point to some inflationary financing with a mild degree of fiscal dominance.

This paper inspects whether the South Africa Reserve Bank’s (SARB) Monetary Policy Committee (MPC) statements trigger have a causality with newspaper reports from the Mail and Guardian between 2010 and 2021. The study examines whether SARB’s post MPC statements’ readability is reciprocated in the subsequent Mail and Guardian newspaper articles. Using the Flesch Reading Ease Score and Flesch-Kincaid Grade Level score as the methodology, there is a systematic unpacking of both SARB’s MPC statements and newspaper reports from the Mail and Guardian which yield a dataset which is subsequently used to create a computation. This computation is then used to examine whether SARB’s MPC statements Granger cause the subsequent Mail and Guardian newspaper articles. Resultantly, the results show that there is no Granger causality between the SARB’s MPC statements and the Mail and Guardian’s Flesch Reading Ease Score and Flesch-Kincaid Grade Level score.