Beyond Inflation Targeting

Beyond Inflation Targeting

Assessing the Impacts and Policy Alternatives

Edited by Gerald A. Epstein and A. Erinc Yeldan

This book, written by an international team of economists, develops concrete, country specific alternatives to inflation targeting, the dominant policy framework of central bank policy that focuses on keeping inflation in the low single digits to the virtual exclusion of other key goals such as employment creation, poverty reduction and sustainable development.

Chapter 11: Employment Targeting Central Bank Policy: A Policy Proposal for South Africa

Gerald Epstein

Subjects: development studies, development economics, economics and finance, development economics


Gerald Epstein1 INTRODUCTION 11.1 The story of South Africa’s struggle with apartheid is a dramatic and heroic one, a story that has culminated in a hugely successful political transition from a minority dominated, authoritarian and repressive government organized along racial lines before 1994, to an inclusive, democratic government, in which the majority rules, subject to important protections for minority rights. The story of South Africa’s economic transition, on the other hand, is not such a rosy one. Income and wealth are still highly unequally distributed, largely along ethnic lines with the white population still commanding the bulk of the national income, and still controlling the bulk of the national wealth. Economic growth has been moderate during most of the period since the creation of the new South Africa in 1994, running at an average of 3.4 percent and unemployment rates are hovering somewhere between 25 percent and 36 percent depending on exactly how one counts. Among the black population, in 2006 unemployment was over 30 percent, while among the white population it was less than 5 percent. Such problematic economic trends are in no small part due to the highly unequal economy inherited from the past. But some of the difficulties with the economic transition have been due to the ideologies and the policies, including macroeconomic policies, chosen by the new government in the last decade or so. The government has adopted many pages from the neoliberal play book, including financial liberalization, capital account liberalization, austere fiscal policy and, most...

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