TY - BOOK ID - 85290814 TI - Monetary Policy Credibility and Exchange Rate Pass-Through in South Africa AU - Kabundi, Alain. AU - Mlachila, Montfort. PY - 2018 SN - 1484371720 1484371682 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Monetary policy KW - Monetary management KW - Economic policy KW - Currency boards KW - Money supply KW - Banks and Banking KW - Foreign Exchange KW - Inflation KW - Labor KW - Money and Monetary Policy KW - Macroeconomics KW - Price Level KW - Deflation KW - Monetary Policy KW - Central Banks and Their Policies KW - Banks KW - Depository Institutions KW - Micro Finance Institutions KW - Mortgages KW - Labor-Management Relations, Trade Unions, and Collective Bargaining: General KW - Currency KW - Foreign exchange KW - Monetary economics KW - Banking KW - Trade unions KW - Exchange rate pass-through KW - Inflation targeting KW - Labor unions KW - Prices KW - Import prices KW - Banks and banking KW - Imports KW - South Africa UR - https://www.unicat.be/uniCat?func=search&query=sysid:85290814 AB - This paper investigates the key factors that explain the documented decline in the exchange rate pass-through in South Africa over the past two decades, which coincides with the adoption of the inflation-targeting regime. The paper conjectures, in line with the literature, that this outcome is largely due to improved monetary policy credibility. To do this, it first documents the factors that explain monetary policy credibility. Using the standard deviation of individual inflation forecasts as a measure of monetary policy credibility, its shows that the latter is negatively affected by the level of inflation itself, monetary policy uncertainty, and a measure of the unobserved stochastic volatility of inflation. The second phase proceeds by analyzing the determinants of the pass-through using the monetary policy credibility index derived from the first phase. The paper confirms the remarkable achievement that, despite the many shocks that the economy has witnessed, the declining pass-through is indeed explained by the improving monetary policy credibility. ER -