Do the Effects of Expansionary Monetary Policy Shocks on Output Persistence Depend on Inflation Regimes?

  • Eliphas Ndou
  • Thabo Mokoena


Evidence shows that expansionary monetary policy shocks raise output persistence more when inflation is below or equal to 6 % than when it is above 6 %. Output persistence rises more to a scenario of successive policy rate cuts of varying magnitude than a constant policy rate change scenario. The findings indicate that low economic policy uncertainty magnifies the output persistence response to expansionary monetary policy shocks. By contrast, high economic policy uncertainty lowers the output persistence response to an expansionary monetary policy shock. In policy terms, this implies that a larger expansionary monetary policy shock than expected will raise output persistence significantly and the amplification effects will be enlarged when inflation is in the low inflation regime.


  1. Hlatshwayo, S., & Saxegaard, M. (2016). The consequences of policy uncertainty: Disconnects and dilutions in the South African real effective exchange rate-export relationship (IMF Working Paper No. 16/113).Google Scholar

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© The Author(s) 2019

Authors and Affiliations

  • Eliphas Ndou
    • 1
    • 3
    • 4
  • Thabo Mokoena
    • 2
  1. 1.Economic Research DepartmentSouth African Reserve BankPretoriaSouth Africa
  2. 2.Department of Economic, Small Business Development, Tourism and Environmental AffairsFree State Provincial GovernmentBloemfonteinSouth Africa
  3. 3.School of Economic and Business SciencesUniversity of the WitwatersrandJohannesburgSouth Africa
  4. 4.Wits Plus, Centre for Part-Time StudiesUniversity of the WitwatersrandJohannesburgSouth Africa

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