Single-Digit Inflation Targeting: Does it Promote Economic Growth?

Abstract

The paper investigates whether single-digit inflation promotes economic growth with annual time series data from South Africa (1965-2010). Evidence from the analysis suggests that single-digit inflation undermines economic growth in the long run. The paper, therefore, submits that inflation targeting in the single-digit threshold may not be in the best interest of a developing economy like South Africa.

Keywords: Inflation, South Africa, Economic Growth, financial intermediary, Size