Reconsidering the business cycle and stabilisation policies in South Africa

This paper applies an alternative dating algorithm - suggested by Harding and Pagan (for example, [Harding, D., and Pagan, A., 2002a. A comparison of two business cycle dating methods. Journal of Economic Dynamics and Control 27, 1681-1690.]) - to uncover the turning points of the South African business cycle. The characteristics of the resulting business cycle are analysed and compared with results obtained for the official cycle in recent papers on the South African business cycle [du Plessis, S.A., and Smit, B.W., 2003. Stabilisation policy. Stellenbosch, Paper presented at the eight annual conference for econometric modelling in Africa.; du Plessis, S.A. 2004. Stretching the South African business cycle. Economic Modelling 21 (1), 685-701.]. The alternative business cycle has plausible characteristics and provides supporting evidence for the thesis that monetary policy has been used more consistently to dampen the cycle of economic activity in South Africa since the early nineties.