Abstract
Evidence shows that loose and tight monetary policy shocks exerts different effects on the inflation by expenditure deciles and rural areas. At peak response expenditure deciles two, six and the rural areas’ inflation rates are more responsive to the repo rate loosening compared to the responses of expenditure decile ten. A similar pattern of responses is evident with respect to policy tightening.
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Notes
- 1.
The cash flow channel encompasses the effects of monetary policy changes on (i) the interest payments and receipts and (ii) employment and wage growth and their effects on stimulating or dampening demand. Literature shows that the impact on households is likely to vary by age and education and whether the households are borrowers or savers.
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Ndou, E., Gumata, N., Tshuma, M.M. (2019). Monetary Policy and Inflation Rates by Expenditure Deciles and Rural Areas. In: Exchange Rate, Second Round Effects and Inflation Processes. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-13932-2_23
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DOI: https://doi.org/10.1007/978-3-030-13932-2_23
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Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-030-13931-5
Online ISBN: 978-3-030-13932-2
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