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Article: Inflation targeting a failure; The fulcrum of the Reserve Bank's policy has achieved nothing and is not at all suited to a developing economy like ours.(News)
- Article from:
- The Star (South Africa)
- Article date:
- May 5, 2008
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BYLINE: Michael Power
I told you so. Inflation targeting is wrong for South Africa. Why? Because, as a developing country burdened with high unemployment, premature adoption of inflation targeting (IT) has been like putting a cast on a broken leg before realigning the fractured bone and thereby condemning the patient to a permanent limp.
Before IT should be considered, the most important relative price structures in a country - and critically, in the case of South Africa, the US dollar wage of the unemployed semi-skilled labour trapped in our Second Economy, the blight which represents our most "fractured bone" - needs to be more closely aligned to the ...