Abstract
ABSTRACT The research employs Bayesian Vector Autoregressions with hierarchical priors to analyze the intricate economic implications of fiscal policy shocks on inflation, monetary policy, and fiscal authorities in the context of South Africa. The study explores data spanning from 1979 to 2022. Contrary to conventional economic theories, our analysis demonstrates that unexpected increases in national government expenditure led to counterintuitive initial decreases in inflation. This highlights the complexity of inflation dynamics and challenges existing paradigms. Moreover, the lagged response of inflation to changes in government revenue emphasizes the role of inflation expectations and market dynamics. Clear communication by fiscal authorities is crucial for shaping these expectations and understanding their impact on inflation.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
