Capazario, Michele (2022): Developing an IncomeDistribution Sensitive Taylor Rule: An Application to South Africa.

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Abstract
This research has attempted to derive a new Taylortype monetary policy rule which is sensitive to changes in the functional distribution of income proxied for by the labourer’s share of national income. I then apply this new policy rule to South African data between quarter 4 of 2001 and quarter 4 of 2021. This rule, once applied, yields favorable results in terms of goodness of fit relative to other such rules applied to South African data. The application of this rule to South Africa also yields an interesting finding the South African Reserve Bank, most likely as a means to stabilise the South African macroeconomic system, reacts more to changes in the functional distribution of income than to an equivalent change in the inflation rate or output growth. I suggest that this formulation of the Taylor rule, and others like it, be used and developed further in future research.
Item Type:  MPRA Paper 

Original Title:  Developing an IncomeDistribution Sensitive Taylor Rule: An Application to South Africa 
Language:  English 
Keywords:  Taylor Rule; Structuralist; Labour Share 
Subjects:  C  Mathematical and Quantitative Methods > C2  Single Equation Models ; Single Variables > C26  Instrumental Variables (IV) Estimation E  Macroeconomics and Monetary Economics > E0  General > E00  General E  Macroeconomics and Monetary Economics > E5  Monetary Policy, Central Banking, and the Supply of Money and Credit 
Item ID:  112740 
Depositing User:  Mr Michele Capazario 
Date Deposited:  20 Apr 2022 07:04 
Last Modified:  20 Apr 2022 07:04 
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URI:  https://mpra.ub.unimuenchen.de/id/eprint/112740 