M.Sc. / The aim of this study will be to analyse the functioning and evolution of the South African monetary policy system since the Second World War. We are particularly interested in how international events, developments and experiments have influenced and been influenced by changes in economic sentiment and insight and how this has moulded South African monetary policy into the system in operation at the present day. Moreover, this study will highlight the fact that monetary policy in South Africa as well as abroad has in deed been an 'instrument of the times.'

M.Com. (Economics) / The theoretical principle of the Report is by no means clearly outlined by the Commission although the Report states that it was compiled by experts. The study tried to identify the position of the Report within the broad spectrum of beliefs on monetary policy. For the purpose of analysis, the Monetaristic School, the Keynesian School as well as the ultra free market approach of the Austrian School of Economists were looked at specifically. The study yielded interesting results such as: * The disparagement of the Report of a fixed money supply rule and interest rates which are not allowed to find their own levels at all times, forms an unbridgeable gap between the monetarists and the Commission. Of the most important incidences between the two viewpoints is the fact that inflation is regarded as a monetary phenomenon and that direct control measures are rejected. * The fact that the Report recommends that the money supply be controlled from the demand side and that we therefore, at least in the short term, have to do with an endogenous money supply which is determined by the demand therefore, supports the view of the Keynesian School. * No definite incidences between the Report and the ultra free market approach could be identified. * A more functional approach implies that discretionary decision making power of the monetary authorities ought to be scaled down and altered as the approach of the Commission with regard to control over the money supply is being questioned. The reason for this is that behavourial variables that the Commission tries to influence are not known variables. * A money supply rule in South Africa can presently not be applied effectively as a result of the fact that all markets in the economy are not fully competitive. * It is recommended that more freedom can be g,ranted to the private banking sector in the form of the denationalization of money. It can for example take place through extensive scaling down in discount rendering by the Reserve Bank. Banks are consequently forced to keep their own reserves and to create money on the basis of their current reserves. That alone forms a control mechanism over the creation of money because of the fact that competition between banks will ensure that no bank would like its currency to depreciate against the currencies of the other banks as a result of excessive money creation.

M.Com. (Economics) / Please refer to full text to view abstract

This dissertation applies vector autoregression approaches to assess the effects of the monetary policy in South Africa. First, the dissertation quantified declines in the consumption expenditure attributed to the combined house wealth and credit effects due to the contractionary monetary policy shocks. The results at the peak of interest rates effects on consumption on the sixth quarter provide little support that the indirect house wealth channel is the dominant source of monetary policy transmission to consumption. Second, the dissertation assessed how real interest rate reacts to positive inflation rate shocks, exchange rate depreciation shocks and the existence of Fisher effect over longer periods. Evidence confirmed the Fisher effect holds over longer horizons and the real interest rate reacts negatively to the inflation and exchange rate shocks. In addition, findings show that the strict inflation-targeting approach is not compatible with significant real output growth. The results show that only the real effective exchange rate is growth enhancing under flexible inflation targeting approach. Third, the dissertation investigated and compared the effects of contractionary monetary policy and exchangerate appreciation shocks on trade balance in South Africa. Evidence suggests that the exchange rate appreciation shocks worsen the trade balance for longer periods than contractionary monetary policy shocks in South Africa. In addition, the findings indicate that monetary policy operates through the expenditure switching channel rather than the income channel in the short run to lower net trade balance. Finally, the dissertation investigated the effect of contractionary monetary policy shocks on output in South Africa and Korea. The chapter compared what the estimated structural shocks suggested about policy shocks relative to bank systematic responses. Evidence shows that a contractionary monetary policy shock reduces output persistently in South Africa compared to transitory declines in Korea. The estimated monetary policy shocks suggest that Korean monetary policy was expansionary during the recession in 2009 unlike the South Africa counterparty. I attribute the differences to monetary policy intervention tools such as swap arrangement, in addition to interest rate reductions used to deal with recession in Korea.

M.Comm. (Econometrics) / Please refer to full text to view abstract

Please read the abstract in the section 00front of this document / Thesis (DCom (Economics))--University of Pretoria, 2006. / Economics / unrestricted

Please read the abstract in the section 00front of this document / Thesis (DCom (Economics))--University of Pretoria, 2006. / Economics / unrestricted

M.Com. (Econometrics) / The main objective of this study was to formulate and evaluate a set of equations that adequately represents the South African monetary system. The analytical framework of the study is based on a theoretical examination of the process of formulating monetary policy. The main objectives of monetary policy was identified as price stability, a high rate of economic growth, exchange rate stability and an acceptable balance of payments situation. The achievement of these goals is dependent on the central bank's choice of target variables and policy instruments. The monetary system of South Africa was analysed by examining the various goals, target variables and policy instruments that constitute the South African Reserve Bank's monetary policy. The nature and impact of the new banking legislation which was introduced in South Africa on 1 February 1991 when the Deposit-taking Institutions Act of 1990 came into effect, was also discussed in the study. As a result of the high level of abstraction of the monetary phenomenon and the dynamic and interdependent nature of monetary policy, econometric and statistical techniques and criteria were used to evaluate certain aspects of the South African monetary system.

Ph.D. (Economics) / The purpose of this study is to analyse the impact of monetary impulses on the South African economy. In analogy with the exact sciences, which use a laboratory to test hypotheses, this work will rely on a economic laboratory in the form of an econometric model. With the aid of this model, we will attempt to explore the dynamics of the various monetary impulses. In other words, this study will attempt to trace the flow over time of these monetary impulses through various channels toward the real economy. We will try to identify the main channels through which the monetary impulses flow and which convey their impact on the real economy. The system transmitting these impulses to the economy will be called the monetary transmission mechanism. This has always been viewed as a mysterious phenomenon as it is not yet clear how the money stock affects the economy, whether it affects the economic system directly or does so indirectly, via other channels. Nor is it clear whether money should be seen as a unique asset which affects the economic system, or whether it should be treated like any other asset. The importance attached to the money stock by the monetarists, for example, is defended by them on the grounds that the supply of money, which is controlled by the central authorities, affects the economy, because the authorities abuse their monopoly over the money supply. In our research we will evaluate this hypothesis concerning the exogeneity of the money stock. We will show that money should be classified like any other asset, as it is endogenous in nature. This endogeneity of the money stock is determined through the interaction of the money multiplier and the liquidity base, both of which contain endogenous elements.

M.Comm. / The aim of this study is to examine the appropriateness of inflation targeting as the future monetary policy strategy of South Africa. In keeping with international trends, South Africa needs to recognise the changing financial environment in which the Reserve Bank must now operate. The purpose of this study is to show whether South Africa's economic environment and the SARB as the monetary authorities, are indeed ready for implementing inflation targeting in South Africa. Given the limited experience with inflation targeting, the theoretical analysis has formed the foundation that has shaped and influenced the thinking on this strategy monetary policy. The rationale for price stability as the long-term goal of monetary policy is pivotal to all the strategies for controlling inflation: exchange rate pegging; monetary targeting; nominal GDP targeting; the "Just Do It" policy; and lastly, inflation targeting. This study examines the key features and concepts of inflation targeting in order to determine their relevance in a framework for South Africa. Transparency and accountability are central to the inflation-targeting regime and depend largely on the independence of the central bank. It is important to establish the credibility and flexibility of the inflation-targeting framework through frequent communication and by ensuring the accountability of the central bank to the government and the public. Policymakers are faced with many issues and choices when designing the inflation targeting strategy and the potential benefits of the framework will depend on how effectively the strategy is formulated and implemented. It is vital that the design of the strategy attempt to effectively balance both the transparency and the flexibility of the framework. Once we have the theoretical basis we do a detailed analysis of the international experience with inflation targeting. The 1990's saw a number of countries adopting explicit inflation targets as the goal of monetary policy: New Zealand, Canada, the United Kingdom, Sweden, Australia, Finland, Israel, Spain and the Czech Republic. Each country had its own challenges and issues with designing the inflation-targeting framework. We draw on the lessons from the international experience to assess the applicability of inflation targeting for South Africa. After looking at a brief history of South African monetary policy we consider whether the institutional framework in South Africa is appropriate for effectively implementing inflation targeting. We also take a look at the issues of design and implementation that are relevant to the South African situation while considering the central question of whether South Africa is indeed ready for inflation targeting. Finally, we show that the success of an inflation-targeting framework in South Africa will depend on the ability of the Reserve Bank to ensure the transparency of monetary policy and the reliability of the inflation forecasts. At the same time, the credibility of the inflation-targeting regime will depend, not only on a political commitment by the government, but also on the unfailing support of the labour market and the general public. Thus, the biggest challenge facing the Reserve Bank is to prepare itself and the South African market for the new age of direct inflation targeting as an anchor for monetary policy.