Macro-fiscal analysis
Working paper

The influence of United States monetary policy on the South African economy

Aluncedo Ntshuntsha
January 2021

This paper aims to analyse the influence of spillovers into South Africa’s economy from shifts in United States of America’s (US) monetary policy. Often changing, the US interest rate is regarded as an important driving force of economic growth in the world, since several developing economies are strongly dependent on the activity of the US dollar and monetary policy. To fulfil the aim of this study, the model specification examines the relationship and interaction between US interest rates and South Africa’s gross domestic product (GDP), oil prices, all-share index, and bond index. The results from the non-linear autoregressive distributed lag technique employed show that US monetary policy has a negative effect on South Africa’s GDP in both the short and long run. The findings show that the impact of shocks caused by changes in US interest rates on South Africa’s GDP is strong but short-lived.