Janine Aron

Janine Aron has had a long association with the Centre for the Study of African Economies, Department of Economics, Oxford University, and held an ESRC Research Fellowship there during 1994–1998. For the last six years she has been principal researcher with John Muellbauer (Nuffield College, Oxford), in a research programme on Monetary Policy in Southern Africa, based at the CSAE, and funded by the Department for International Development, UK. Research papers and non-technical summaries for the South African Macroeconomic Research Programme can be found at http://www.csae.ox.ac.uk. Two years ago she founded the African Central Banking Network, which regularly meets in Oxford for research under this programme. She lectures in Oxford in the area of International Economics, and has held Lectureships in Economics at Merton and Jesus Colleges in Oxford. She has done extensive research consultancy on Africa, particularly for the World Bank and WIDER. She is a Research Associate of the Centre for the Study of Economics and Finance in Southern Africa, London School of Economics.

Papers Published in World Economics:

Monetary Policy, Macro-stability and Growth

There is greater appreciation now amongst economists of the negative effect of uncertainty on investment, growth and equality, especially when credit constraints are widespread. This implies an important linkage between the transparency and predictability of the policy environment, and growth and equality. The paper begins with a literature survey on the inflation and inflation volatility link, the uncertainty and investment link and the inflation volatility and growth link. This framework is used to examine the experience of South Africa’s new monetary policy regime (inflation targeting, IT) in achieving greater macrostability. South Africa is an interesting case study, being one of the more advanced of the emerging markets with its deep and sophisticated financial system, and yet with around 35 percent unemployment and a legacy of developmental problems from the Apartheid era. The authors demonstrate using evidence from three sources of micro-data that the new monetary regime is more credible, transparent and predictable. They examine the performance of monetary policy and argue IT has not resulted in real interest rate levels that are a hindrance to growth. They explore the better response under IT to big external shocks like exchange rate depreciation, as compared with the monetary regime prior to IT. The paradox is examined of success in achieving macro-stability, where greater household acquisition of debt and increased demand is both inflationary and limits saving, hence constraining corporate investment. The paper concludes with lessons from South Africa’s recent successful monetary policy experience for other emerging market countries and for less developed countries’ central banks e.g., in Africa.

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