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Monetary and Fiscal Policy Interactions on the Inflation Process: The Role of the Fuel Levies Channel

  • Eliphas Ndou
  • Nombulelo Gumata
  • Mthokozisi Mncedisi Tshuma
Chapter

Abstract

Evidence shows that fuel levies amplify the effect of the rand per United States of America dollar (R/US$) exchange rate depreciation and oil price increases on petrol price inflation. At the same time, fuel levies also amplify the impact of petrol price inflation on headline inflation. In addition, we assess the role of fuel levies on the repo rate responses to headline inflation, the results show that fuel levies propagate the increase in the repo rate due to positive inflation shocks.

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Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Eliphas Ndou
    • 1
  • Nombulelo Gumata
    • 2
  • Mthokozisi Mncedisi Tshuma
    • 3
  1. 1.South African Reserve BankPretoriaSouth Africa
  2. 2.PretoriaSouth Africa
  3. 3.National Planning Commission SecretariatPretoriaSouth Africa

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