Monetary Policy Implications on Macroeconomic Performance in the Common Monetary Area: A Panel-SVAR Framework
The CMA (Common Monetary Area) is a quadrilateral monetary arrangement encompassing South Africa, Namibia, Lesotho, and Eswatini. The four countries have undergone a gradual improvement in regional economic integration for the effective economic coordination of their policymaking. Despite the moneta...
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| Format: | Article |
| Language: | English |
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MDPI AG
2023-05-01
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| Series: | Economies |
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| Online Access: | https://www.mdpi.com/2227-7099/11/5/144 |
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| author | Theron Shumba Sophia Mukorera |
| author_facet | Theron Shumba Sophia Mukorera |
| author_sort | Theron Shumba |
| collection | DOAJ |
| description | The CMA (Common Monetary Area) is a quadrilateral monetary arrangement encompassing South Africa, Namibia, Lesotho, and Eswatini. The four countries have undergone a gradual improvement in regional economic integration for the effective economic coordination of their policymaking. Despite the monetary coordination, the countries are still experiencing poor economic performance. This study traces how a shock or an unanticipated change in the anchor country’s central bank’s policy instrument, in this case, South Africa, affects the macroeconomic performance in the entire CMA region. Employing a Panel Structural Vector Autoregressive model (Panel-SVAR) and annual data from 1980–2021, the findings show that a positive shock in the repo rate from South Africa significantly affected important macroeconomic performance indicators. The results indicate that a shock in the anchor country’s repo rate is followed by a significant decline in RGDP_G, a decrease in inflation, a decrease in money supply, and an increase in lending rate in the entire CMA region. The study recommends that CMA monetary authorities and policymakers need to formulate policies toward cushioning the effects of unanticipated monetary policy shock from the anchor country as well as global shocks. |
| first_indexed | 2024-03-11T03:47:53Z |
| format | Article |
| id | doaj.art-8be279cfc0744f418388403c2beebd64 |
| institution | Directory Open Access Journal |
| issn | 2227-7099 |
| language | English |
| last_indexed | 2024-03-11T03:47:53Z |
| publishDate | 2023-05-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Economies |
| spelling | doaj.art-8be279cfc0744f418388403c2beebd642023-11-18T01:07:43ZengMDPI AGEconomies2227-70992023-05-0111514410.3390/economies11050144Monetary Policy Implications on Macroeconomic Performance in the Common Monetary Area: A Panel-SVAR FrameworkTheron Shumba0Sophia Mukorera1School of Accounting, Economics and Finance, University of KwaZulu-Natal, King Edward Ave, Scottsville, Pietermaritzburg 3209, South AfricaSchool of Accounting, Economics and Finance, University of KwaZulu-Natal, King Edward Ave, Scottsville, Pietermaritzburg 3209, South AfricaThe CMA (Common Monetary Area) is a quadrilateral monetary arrangement encompassing South Africa, Namibia, Lesotho, and Eswatini. The four countries have undergone a gradual improvement in regional economic integration for the effective economic coordination of their policymaking. Despite the monetary coordination, the countries are still experiencing poor economic performance. This study traces how a shock or an unanticipated change in the anchor country’s central bank’s policy instrument, in this case, South Africa, affects the macroeconomic performance in the entire CMA region. Employing a Panel Structural Vector Autoregressive model (Panel-SVAR) and annual data from 1980–2021, the findings show that a positive shock in the repo rate from South Africa significantly affected important macroeconomic performance indicators. The results indicate that a shock in the anchor country’s repo rate is followed by a significant decline in RGDP_G, a decrease in inflation, a decrease in money supply, and an increase in lending rate in the entire CMA region. The study recommends that CMA monetary authorities and policymakers need to formulate policies toward cushioning the effects of unanticipated monetary policy shock from the anchor country as well as global shocks.https://www.mdpi.com/2227-7099/11/5/144panel-structural vector autoregressivemonetary policy shockscommon monetary area |
| spellingShingle | Theron Shumba Sophia Mukorera Monetary Policy Implications on Macroeconomic Performance in the Common Monetary Area: A Panel-SVAR Framework Economies panel-structural vector autoregressive monetary policy shocks common monetary area |
| title | Monetary Policy Implications on Macroeconomic Performance in the Common Monetary Area: A Panel-SVAR Framework |
| title_full | Monetary Policy Implications on Macroeconomic Performance in the Common Monetary Area: A Panel-SVAR Framework |
| title_fullStr | Monetary Policy Implications on Macroeconomic Performance in the Common Monetary Area: A Panel-SVAR Framework |
| title_full_unstemmed | Monetary Policy Implications on Macroeconomic Performance in the Common Monetary Area: A Panel-SVAR Framework |
| title_short | Monetary Policy Implications on Macroeconomic Performance in the Common Monetary Area: A Panel-SVAR Framework |
| title_sort | monetary policy implications on macroeconomic performance in the common monetary area a panel svar framework |
| topic | panel-structural vector autoregressive monetary policy shocks common monetary area |
| url | https://www.mdpi.com/2227-7099/11/5/144 |
| work_keys_str_mv | AT theronshumba monetarypolicyimplicationsonmacroeconomicperformanceinthecommonmonetaryareaapanelsvarframework AT sophiamukorera monetarypolicyimplicationsonmacroeconomicperformanceinthecommonmonetaryareaapanelsvarframework |