Economics Commons^™

The Effects Of South Africa's Unexpected Monetary Policy Shocks In The Common Monetary Area, Bonang N. Seoela

Boise State University Theses and Dissertations

The Common Monetary Area (CMA) is a multilateral agreement that provides a framework for a fixed exchange rate regime between the South-African Rand and the currencies of Lesotho, Eswatini, and Namibia (LEN). The nature of the arrangement restrains the LEN countries from exercising independent discretionary monetary policy. As a result, they must rely on the South African authorities for policy formulation and implementation. Interest rates in the LEN countries cannot deviate too far from those in South Africa. Given this limited scope for monetary policy in the LEN countries, this study investigates how each member country adjusts to shocks to …