Original Research

An empirical capital market rate function for an emerging market economy in international financial crisis

Chris Harmse, Charlotte Du Toit
South African Journal of Economic and Management Sciences | Vol 2, No 3 | a2584 | DOI: https://doi.org/10.4102/sajems.v2i3.2584 | © 2018 Chris Harmse, Charlotte Du Toit | This work is licensed under CC Attribution 4.0
Submitted: 04 July 2018 | Published: 30 September 1999

About the author(s)

Chris Harmse, Department of Economics, University of Pretoria, South Africa
Charlotte Du Toit, Department of Economics, University of Pretoria, South Africa

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After the first democratic election in South Africa in April 1994, South Africa's financial markets became more exposed and vulnerable to international developments, vide the financial crisis of 1998. This vulnerability raises some important questions. Has its greater degree of openness led to a structural change in the South African economy? Are long-term interest rates now primarily determined by international sentiment regardless of domestic economic and political conditions, during periods of international financial market volatility? And, in the event, what is the consequent effect on monetary policy in South Africa? The aim of this paper is to investigate these questions by using a cointegration approach to estimate a long-run interest or bond rate function for South Africa.


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