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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:The changing volatility of the South African economy
Author:Burger, PhilippeISNI
Periodical:South African Journal of Economics
Geographic term:South Africa
Subjects:economic development
monetary policy
External link:https://onlinelibrary.wiley.com/doi/10.1111/j.1813-6982.2008.00198.x/pdf
Abstract:During the last decade economic literature explored the presence of and reasons for what became known as 'the great moderation' in the US and other G7 countries. 'The great moderation' describes the decrease in economic volatility experienced in many of the G7 countries. Taking the overall period 1960-2006 into consideration, this paper finds that in South Africa volatility is also not constant (it even finds that there are autoregressive conditional heteroskedastic effects present) and that volatility also decreased, particularly since 1994. Following the literature, the paper explores several reasons for this decrease and finds that smaller shocks, better monetary policy and improvements in the financial sector that place less liquidity constraints on individuals and allow them to manage their debt better are some of the main reasons for the reduction in the volatility of the South African economy. The literature on the G7 also suggests that better inventory management contributed to the lower volatility. However, this seems not to be true for South Africa. Bibliogr., notes, ref., sum. [Journal abstract]