- University of Pretoria
Department of Economics
Tukkiewerf Building
Lynwood Road
0002 Hatfield
Pretoria
South Africa
Nicola Viegi
University of Pretoria, Economics, Faculty Member
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This paper sets out to investigate the process through which monetary policy affects economic activity in Malawi. Using innovation accounting in a structural vector autoregressive model, it is established that monetary authorities in... more
This paper sets out to investigate the process through which monetary policy affects economic activity in Malawi. Using innovation accounting in a structural vector autoregressive model, it is established that monetary authorities in Malawi employ hybrid operating procedures and pursue both price stability and high growth and employment objectives. Two operating targets of monetary policy are identified, viz., bank rate and reserve money, and it is demonstrated that the former is a more effective measure of monetary policy than the latter. The study also illustrates that bank lending, exchange rates and aggregate money supply contain important additional information in the transmission process of monetary policy shocks in Malawi. Furthermore, it is shown that the floatation of the Malawi Kwacha in February 1994 had considerable effects on the country’s monetary transmission process. In the post-1994 period, the role of exchange rates became more conspicuous than before although its ...
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Economic Research Southern Africa (ERSA) is a research programme funded by the National
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This paper estimates a New Keynesian Wage Phillips Curve for South Africa to investigate the responsiveness of nominal wages to labour market conditions. The estimation is based on a model with staggered nominal wages setting, where all... more
This paper estimates a New Keynesian Wage Phillips Curve for South Africa to investigate the responsiveness of nominal wages to labour market conditions. The estimation is based on a model with staggered nominal wages setting, where all variations in hired labour input is taking place at the extensive margin. First we estimate the model using aggregate data from 1971 to 2013. Aggregate estimation results show that private sector nominal wages are not very responsive to employment conditions, while they also reveal a certain sensitivity to inflation and quite a good correlation with inflation expectations. On the other hand, the relationship between nominal wage inflation and price inflation is quite strong and robust for the whole sample. However, it becomes quantitatively weak for the inflation targeting period. In that period, trade unions inflation expectations are instead strongly correlated with nominal wage inflation. In the second part of the paper we assess the response of n...
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Funding constraints experienced by sub-Saharan Africa (SSA) countries have led to reliance on foreign direct investment (FDI) and foreign aid as alternative sources of finance. Despite the importance of FDI for growth and development,... more
Funding constraints experienced by sub-Saharan Africa (SSA) countries have led to reliance on foreign direct investment (FDI) and foreign aid as alternative sources of finance. Despite the importance of FDI for growth and development, SSA’s share in global FDI inflows trails that of other developing regions. This study examines the role of foreign aid in enhancing FDI inflows to 31 SSA countries from 1995-2012. Using multilevel analysis, the results suggest that productive infrastructure aid is complementary to FDI inflows and socio-economic infrastructure aid has no significant impact on FDI inflows. Additionally, the results indicate that oil producing countries that receive both productive sector and socioeconomic sector aid receive less FDI when compared to non-oil producing SSA countries.
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We study the transmission of monetary policy to credit conditions and aggregate demand in South Africa by employing data on household mortgages issued by non-bank financial institutions. Our results show that monetary tightening in South... more
We study the transmission of monetary policy to credit conditions and aggregate demand in South Africa by employing data on household mortgages issued by non-bank financial institutions. Our results show that monetary tightening in South Africa induces further increase of the share of bank-based credit as compared to market-based credit, what contrasts with the results obtained for advanced economies (Iacoviello and Minetti, 2008). This finding is explained by a strong degree of affiliation of non-banks with the banking sector. The change in composition of credit supply influences the demand for housing implying that bank lending channel is operative.
We study the credit channel of monetary policy in South Africa between 2002 and 2019 using banks’ balance sheets. We show that there is a significant heterogeneity within the banking sector in both the loan and deposit sides of the banks’... more
We study the credit channel of monetary policy in South Africa between 2002 and 2019 using banks’ balance sheets. We show that there is a significant heterogeneity within the banking sector in both the loan and deposit sides of the banks’ balance sheets. In response to a contractionary monetary policy shock, big banks adjust their loan portfolio by lending to businesses and reducing lending to households whereas for small banks we find the opposite. The increase in corporate lending amid declining inventories is consistent with the hypothesis of “hedging and safeguarding the capital adequacy ratio” rather than funding business inventories. This paper highlights the importance of heterogeneity in customers, market power and business models in the banking sector, which characterises the socio-demographics dynamics in South Africa. JEL Codes: E32, E52, G21
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ABSTRACT The role of foreign aid in enhancing economic growth in aid-recipient countries remains much debated. This paper takes an empirical perspective and focusing on non-resource tax revenues in Nigeria, examines whether foreign aid... more
ABSTRACT The role of foreign aid in enhancing economic growth in aid-recipient countries remains much debated. This paper takes an empirical perspective and focusing on non-resource tax revenues in Nigeria, examines whether foreign aid does enhance public domestic resource mobilisation (DRM), with a specific focus on tax revenue mobilisation. Using grants and loans, for the 1981–2015 period, the results indicate that foreign aid in the form of grants can be an effective tool for enhancing tax revenue mobilisation in the long-run. The results suggest that by including measures to ensure adherence to prescripts of greater accountability, foreign aid in the form of grants helps enhance tax revenue compared to loans whose repayments has the potential for policies that may have a negative impact on tax revenues.
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... a.hugheshallett@vanderbilt.edu University of Strathclyde, Vanderbilt University and CEPRNICOLA VIEGI nicola.viegi@strath.ac.uk University of Strathclyde Key words: inflation targeting, policy coordination JEL Classification Numbers:... more
... a.hugheshallett@vanderbilt.edu University of Strathclyde, Vanderbilt University and CEPRNICOLA VIEGI nicola.viegi@strath.ac.uk University of Strathclyde Key words: inflation targeting, policy coordination JEL Classification Numbers: E58, E61, E63 Abstract ...
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Page 127. Andrew Hughes Hallett, Nicola Viegi On the Need for Inter-institutional Coordination in EMU: a re-evaluation of the theory of optimal currency areas I. Introduction 118 II. ... Page 132. 122 Andrew Hughes Hallett, Nicola Viegi... more
Page 127. Andrew Hughes Hallett, Nicola Viegi On the Need for Inter-institutional Coordination in EMU: a re-evaluation of the theory of optimal currency areas I. Introduction 118 II. ... Page 132. 122 Andrew Hughes Hallett, Nicola Viegi control or deficit control. ...
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... Andrew J Hughes Hallett Cardiff University Business School, UK And Nicola Viegi University of Natal. South Africa Abstract: Most economists argue that transparency in monetary policy is desirable because it helps the private sector... more
... Andrew J Hughes Hallett Cardiff University Business School, UK And Nicola Viegi University of Natal. South Africa Abstract: Most economists argue that transparency in monetary policy is desirable because it helps the private sector make better informed decisions. ...
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Most of the literature on the independence of the Central Bank assumes only one policy instrument is available: monetary policy. If we introduce fiscal policy as well, when preferences may differ among policy-makers, the situation is... more
Most of the literature on the independence of the Central Bank assumes only one policy instrument is available: monetary policy. If we introduce fiscal policy as well, when preferences may differ among policy-makers, the situation is radically different. In this case fiscal policy will substantially weaken the impact of the Central Bank's actions, and may annihilate them altogether. The Stability
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Research Interests: Decolonisation, Social Science Research Network, Decolonization, Eurocentrism, I, and 3 moreC, N, and F
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Research Interests: History, Economics, Development Economics, Political Economy, Political Philosophy, and 15 moreDevelopment Studies, Social Sciences, Political Theory, Postcolonial Studies, Political Science, Politics, Apartheid, Democracy, Fiscal policy, Representation, South Africa, Public Debt, Representative Democracy, Routledge, and Public Policy
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... m.demertzis@dnb.nl Nicola Viegi University of Pretoria and ERSA nicola.viegi@up.ac.za Abstract This paper analyses the external effects of fiscal uncertainty, and the way in which they are affected by the level of economic integration... more
... m.demertzis@dnb.nl Nicola Viegi University of Pretoria and ERSA nicola.viegi@up.ac.za Abstract This paper analyses the external effects of fiscal uncertainty, and the way in which they are affected by the level of economic integration between nations. ...
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ABSTRACT The international financial crisis manifests itself in Ireland not only as a crisis of the banking system, but also as a major fiscal crisis, aggravated by years of soft revenue policy and a housing bubble that has burst... more
ABSTRACT The international financial crisis manifests itself in Ireland not only as a crisis of the banking system, but also as a major fiscal crisis, aggravated by years of soft revenue policy and a housing bubble that has burst spectacularly. The severe drop in economic output results in a crisis of employment and a definitive end to the ‘Celtic Tiger’ era of rapid growth and nearfull employment. Although the political system has proven resilient thus far, with membership of the Euro preventing the catastrophic political crises that affected Latvia and Iceland, for example, the crisis has revealed significant weaknesses in political system. This paper considers institutional shortcomings in three arenas through which policies to deal with the crisis must be managed: the parliamentary system, the public administration, and social partnership structures.
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This paper estimates the Bayesian dynamic stochastic general equilibrium (DSGE) model and uses the model to account for the short-run monetary policy response to increased aid inflows in Malawi. The estimates reveal that the monetary... more
This paper estimates the Bayesian dynamic stochastic general equilibrium (DSGE) model and uses the model to account for the short-run monetary policy response to increased aid inflows in Malawi. The estimates reveal that the monetary authorities reacted to increased foreign aid inflows the same way as was experienced in other African countries. The model also suggests that there was non-existence of the threats of the ‘Dutch Disease’ in contrast to what was found in Mozambique. The country can continue to receive aid by targeting the supply side of the economy with an aim of improving the competiveness of the export sector. Evidently, the conduct of monetary policy performs better under the assumption of full accessibility of financial assets. In addition, the impact of aid inflows on depreciation and inflation are much smaller when monetary authorities indulge in money targeting other than following the Taylor rule and incomplete sterilisation. On the small note, the study suggests that actual spending of aid should be aligned with the actual absorption of increased aid. Nevertheless, the outcome of the aid effects has been clouded out by the limitation of the exchange rate management in Malawi.
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TIPS Small Grant Scheme Research Paper Series 2009 Economic Policy in Turbulent Times Michael Perusel and Nicola Viegi May 2009 indigenous growth Page 2. ... Michael Parusel The University of Cape Town Nicola Viegi The University of Cape... more
TIPS Small Grant Scheme Research Paper Series 2009 Economic Policy in Turbulent Times Michael Perusel and Nicola Viegi May 2009 indigenous growth Page 2. ... Michael Parusel The University of Cape Town Nicola Viegi The University of Cape Town and ERSA May 2009 ...
... Please use this identifier to cite or link to this item: http://hdl.handle.net/10068/580141. Title: The risks of interdependence An analysis of fiscal imbalance in a monetary union. Authors: Viegi, N. Strathclyde Univ., Glasgow... more
... Please use this identifier to cite or link to this item: http://hdl.handle.net/10068/580141. Title: The risks of interdependence An analysis of fiscal imbalance in a monetary union. Authors: Viegi, N. Strathclyde Univ., Glasgow (United Kingdom). Dept. of Economics. ...