Inflation targeting in South Africa

2. Literature review
For what concerns the main features of an inflation targeting framework, literature draws from the 
works of Heenan, Roger and Peter (2006), offering an overview of the main features in designing a 
monetary policy framework, Coletti, Wilkins and Selody (2006), for what concerns  the target 
horizon, G.A. Kahn (2007), for what concerns communication and transparency of monetary policy, 
Roberts (2005), about underlying inflation measurement, and referral to the work of Barro (1995) 
and Sarel (1996) for the  relationship between inflation and growth. The work of Tuladhar (2005) 
sums up all the major features of inflation targeting framework used till now.
The issues preceding and following the design of an inflation targeting framework draw  results 
mainly from the works of Svennsson (1996) and Vestin (2000), for what concerns price level 
targeting as a policy often proposed as an alternative to inflation targeting, Ball and Sheridan  
(2003) and Neumann and V on Hagen (2002) for results obtained in the implementation of inflation 
targeting.
Comments on both the first and second parts are drawn from Mishkin's work (2000).
Concerning results obtained in South Africa by inflation targeting policy, the publications released 
by South African Reserve Bank (SARB), including Monetary Policy Reviews, have been  essential 
in order to obtain information on inflationary trends and monetary policy responses in the years 
2000- 2007.
Different contributions can be mentioned regarding the measurement of results achieved by 
inflation targeting in South Africa:
 concerning transparency of the central institutions: the work of Aron and Muellbauer (2005) 
apply the method to South Africa for institutions' transparency measurement employed by 
Ejiffinger and Geraats (2002).
 regarding inflationary expectations, the work of Kershoff and Smit (2002)  and the 
observation of variations in inflationary expectations through Monetary Policy Reviews. In 
addition, the work of Rigobon (2007) conveys a sort of “certification” for credibility 
achieved by the SARB through observing how the pass-through of exogeneous shocks to 
prices has been reduced over time;
 concerning output and interest rates variability, Smit and Du Plessis (2002) shed light on the 
importance of counterciclicality of inflation targeting in order to achieve less variability in 
output and interest  rates.
Occasional papers written for the South  African Reserve Bank, as those of Der Merwe (1996 and 
5