The rest of the paper is structured as follows: Section 2 discusses the con- tribution of the study to the literature and the motivation for choosing the economy under investigation. [...] Essentially, the log of the first difference of the consumer price index is used to proxy for inflation (π), while the supply-side component of the Phillips curve is proxied using the log of the West Texas Intermediate (WTI) crude oil prices. [...] Furthermore, the positive sign on the coefficient on changes in the oil price in the OP-APC predictive model supports the hypothesis of a positive relationship between the oil price and inflation. [...] (2020), the significance of the inflationary impact of changes in the oil price is statistically relatively more significant when the oil price is interacted with the exchange rate in the extended OP-APC predictive model (i.e. [...] Thus, ignoring the exchange rate as the channel through which shocks to the oil price transmits into the economy may bias the accuracy of the Phillips curve forecast of inflation.
Authors
- Pages
- 25
- Published in
- South Africa
