Long run determination of inflation in South Africa

Scordilis, Steven

Long run determination of inflation in South Africa

Master Thesis

2008

Publisher

University of Cape Town

Department

School of Economics

Faculty

Faculty of Commerce

Abstract

This paper employs multivariate estimation techniques in an expectations augmented Phillips curve framework to investigate long run determinants of inflation. By separating unit labour costs in nominal wages and labour productivity in an extension of the work by Fedderke and Schaling (2005), the labour productivity effect is shown to impact prices negatively and nominal wages positively. In addition, the implicit assumption of nominal wages and labour productivity moving in a one-for one fashion made in using unit labour costs is a poor one. The paper makes a further contribution by comparing mark-ups of the non-agricultural sectors to the manufacturing sector and evidence of a reduced mark-up in the non-agricultural sectors is apparent.

Description

Includes bibliographical references (leaves 23-25).

Keywords

Economics

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