Impact of Money Supply in Different States of Inflation and Economic Growth in South Africa

Round 1

Reviewer 1 Report

This paper examines the effects of money supply on inflation and economic growth in South Africa. In this study, authors used Markov-switching dynamic regression (MSDRM) and time-varying parameter structural vector auto-regression (TVP-VAR) models for estimation. The following are some of the major comments that have been made:

-   1) In abstract, you summarized your findings by considering results in two states, state 1 and state. Your reader doesn’t have any idea about what you mean by States. Before writing results in the Abstract section, please add a line note about States.

-    2) In lines 72-74, you mentioned that “The gross domestic product is found to have 91% and 93% changes in moving and returning to 1 and 2, respectively. The gross domestic product is found to have 84% and 80% changes in moving and returning to 1 and 2, respectively”. It's not clear to me what these sentences mean! Please elaborate them.

You should also explain what these findings mean in practice. There are lots of studies that have examined the effect of money supply on inflation of GDP.  What is the significance of your findings? What’s the policy implication of your research?

-   3) Again, please specify State 1 and State 2 in Introduction. What these states mean in your study? Why didn’t you consider 3 states or something else? You need to explain each section.

-   4) Literature Review – There are many studies undertaken to analyse the effect of supplying money on inflation and GDP. Lots of them focused on Africa or other regions. Like what you found, these studies found a positive or a negative effects of money supply on economies. What distinguish your study from others? Your study is not new and lots of studies are undertaken previously. What is innovation or novelty of your research?

-    5) Literature Review – Authors must improve this section. 30 reference is not enough to provide a clear pathway of research context.

-    6) Structure – There is no order in sections of your study. All are Section 1. Please enhance the structure.

-   7) Why you used “Cobb‒Douglas and the classical quantity theory of money” in your study instead of other theories? Please specify your reasons. Why didn’t you consider another theory?

-   8) It is necessary to improve the conclusion section.

Author Response

Good Day 

Kindly find the attached report. 

Thanks 

Msizi 

Author Response File: Author Response.docx

Reviewer 2 Report

This paper quantify the effects of monetary policy (money supply) on inflation and economic growth by using Markov-switching dynamic regression and time varying parameter structural vector auto-regression methods for South Africa over the period 1990-2021. The study is very interesting but I found no originality and contribution toward literature as there are many studies who analyzed the same relationship with said variables for South Africa. Though, the study is not interesting but can be considered for publication by addressing following comments:

1. There is not need to mention the analysis period in title of the study, author(s) should remove the period under analysis and regression techniques from the title. 

2. The headings' numbering of the sections are not in orders. Pls put the sections in order (1, 2, 3...) for the Introduction, Literature, Theoretical Background, so on. 

3. Why the results of the analysis are there in introduction part? Author (s) should remove the paragraph (line69-line80) containing the results of your study. It is simply the abstract of your paper and you are repeating the same thing again and again. 

4. Author(s) should mention their contribution in introduction part of the study, as it is completely missing. 

5. Author(s) didn't mentioned the gap between literature to which this study is going to fill up, as I said earlier that this study does not make any sense as there is plethora of studies to discuss the same variables for the same country. 

6. There is no theoretical background to use Time-Varying Vector Autoregressive (TA-VAR) model for such kind of analysis. Pls put some theoretical background or logical reasoning to use this method for your analysis. 

7. What means by positive correction at line 356, page 10? It is raising serious questions about the author(s)' understanding for the said topic.

8. Which Table author(s) are talking about at line 368, page 10?

9. Author(s) need to study the properties of Markov-switching dynamic regression because of the data-period. It may have some drawbacks with currents time span of the analysis. 

10. Second paragraph of the conclusion part is the same as the abstract of the study is, so author(s) needs to rewrite the whole conclusion part of the paper to make it relevant with the findings of the study. 

11. An intensive English language editing is mandatory for this paper. 

I am looking forward to hear from the author(s) to address these issues.

Author Response

Good Day

Kindly the attached report.

Thanks 

Msizi 

Author Response File: Author Response.docx

Round 2

Reviewer 1 Report

Please find the attachement

Comments for author File: Comments.pdf

Author Response

Good Day 

Kindly find that attached document with the comment addressed. I addressed the comment for the second round starting on page 8. 

Thanks 

Eugene 

Author Response File: Author Response.docx

Reviewer 2 Report

Thank you for the revised version of the paper. Author(s) have addressed most of the comments from the previous review but still there are some major mistakes that needed to be readdressed again. 

1. From introduction part(line69-line77), this paragraph is not meant to be here in introduction. How can a part of methodology is to be there in introduction? Introduction is purely about the background, study gap and contribution of current study. Don't explain your methodology here.

2. My second comment is also from the introduction part- line 78-95, is the simply about the findings of the study. I am repeating it again, don't put your findings in introduction. 

3. Mention the data sources of the variables. From where did you collected data for your analysis? 

4. There is repetition of paragraphs in paper, avoid to repeat same things in your paper. 

Author Response

Good Day 

Kindly note that I have addressed the comment. Please note the comment on the second round starting from page 6. 

Thanks 

Msizi 

Author Response File: Author Response.docx

Round 3

Reviewer 2 Report

The comments have been addressed and the said changes have been made. I have no further comments.