Optimal Monetary Policy with Output and Asset Price Volatility in an Open Economy: Evidence from Kenya
This paper attempts to establish optimal response of monetary policy to output, inflation and asset price volatility in a small open economy, taking into account optimisation behaviour of households and firms. The empirical analysis suggest that monetary policy responds to deviation of interest rate and output growth rate from their targets with greater weight compared […]
South Africa’s real business cycles: The cycle is the trend
It has been argued that business cycles in emerging economies are subject to substantial volatility in trend growth, while the volatility of developed economies’ cycles has moderated in recent decades, and further, that the high volatility in trend growth observed in emerging economies is the result of large and frequent changes in fiscal, monetary and […]
What price level data tells us about consumer price rigidity in Zimbabwe: Evidence from new data
Sometimes countries adopt new currencies which are not their own as a medium of exchange. The reasons for this vary but often this is as a response to a macroeconomic crisis. In January 2009, Zimbabwe adopted a new currency after experiencing a decade of hyperinflation and economic crisis. The change in currency had positive effects […]
A Sticky Information Phillips Curve for South Africa
Mankiw and Reis (2002) propose the Sticky Information Phillips Curve as an alternative to the standard New Keynesian Phillips Curve, to address empirical shortcomings in the latter. In this paper, a Sticky Information Phillips curve for South Africa is estimated, which requires data on expectations of current period variables conditional on sequences of earlier period […]
On the real exchange rate effects of higher electricity prices in South Africa
The paper uses a static Computable General Equilibrium (CGE) model of South Africa and simulates various shocks to the price of electricity. We attempt different closures to the model and compare their respective effects on the Consumer Price Index. In a CGE model, this is measuring the real appreciation of the exchange rate, or international […]
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