Kariena Strydom, Abiola John Asaleye, Kai-Uwe Wellner
Abstract
South Africa has undergone significant changes in its monetary policy framework, primarily oriented toward ensuring economic stability with limited attention to employment outcomes. The study investigates both the short and long-run impact of monetary policy on output and gender-specific employment using the autoregressive distributed lags (ARDL) framework. The vector error correction model (VECM) was used to examine the shock effect. The short-run ARDL results show that when employment serves as the dependent variable, money supply is positively related to employment, and interest rate is negatively related to employment. Conversely, when output is considered the dependent variable, the money supply is not statistically significant in the short run. However, domestic credit to the private sector has a positive relationship with output, while the interest rate is negatively related. In the long run, money supply has a positive relationship with output, but domestic credit to the private sector is negatively linked to productivity. Notably, the forecast error shock of the monetary policy indicators has greater variability in influencing productivity than employment. Furthermore, the monetary policy indicators affect female employment more than male employment. The study recommends improving techniques for capital management employing monetary policy instruments, especially money supply, to promote both short and long-term employment. Additionally, the implementation of targeted policies to promote female employment.