We are pleased to welcome Professor Nicol Viegi, South African Reserve Bank Chair in Monetary Policy Studies at the University of Pretoria, South Africa, as a visiting professor at CREST with Prof. Giovanni Ricco.

Professor Viegi, along with Giovanni Ricco, has been collaborating for several years on an ongoing project focused on the analysis of monetary policy in emerging markets. Their research leverages state-of-the-art technologies that are traditionally used to study monetary policy in developed economies, particularly in the United States. The first significant outcome of this collaboration, co-authored with Ekaterina Pirozhkova (EM Normandie and SARB), is the paper “Trouble Every Day: Monetary Policy in an Open Emerging Economy” (CEPR Discussion Paper DP19094). In this paper, event study and high-frequency identification techniques are applied to South Africa to explore two primary aspects: first, how monetary policy communication affects the yield curve and other assets, and second, how these effects are transmitted throughout the economy. One of the key goals of Professor Viegi’s visit to CREST is to refine this analysis and co-author a VOXEU article to further explore the broader policy implications of this research.

In addition to this, Professor Viegi is embarking on a new research project that will investigate the macroeconomic effects of central bank balance sheets and their operating frameworks. There is a burgeoning literature, spearheaded by scholars like Ricardo Reis, examining the “new-style central banking,” which entails changes in the size, composition, and remuneration rules of central bank balance sheets, initially developed in response to financial crises. This new operating framework is increasingly being promoted by the IMF as a model for separating financial stability interventions from interest rate policies in emerging markets. South Africa has adopted a similar framework, and Professor Viegi’s research will aim to delve into its effectiveness, macroeconomic impacts, and critical aspects in the context of an emerging market economy. His visit to CREST will allow him to advance this project, developing a theoretical framework to support the analysis.

Finally, Professor Viegi plans to take advantage of his time at CREST to author a policy paper titled “The Past, Present, and Future of Monetary Policy in South Africa.” This reflective piece will summarize the lessons learned from over two decades of inflation targeting in South Africa, while also considering the role monetary policy can play in overcoming the current economic stagnation and supporting the country’s growth and development. The paper will be presented at a national policy conference early next year, where academic and policy experts will gather to discuss the future trajectory of the South African economy.