The dissertation investigates the issues pertaining to China’s fixed exchange rate policy and attempts to appraise the case for greater exchange rate flexibility. The thesis addresses three objectives: First, a critical appraisal of China’s exchange rate policy in the light of theoretical and empirical literature supporting greater flexibility in exchange rate; second, it builds a monetary dual exchange rate model and analyses in a dynamic theoretical framework the impact of nominal demand and price shocks due to over and undervalued currency. Third, using Chinese macroeconomic data it empirically examines the factors determining China’s real exchange rate fluctuations. After presenting a brief history of China’s exchange rate policy in the post-war period, an assessment of China’s fixed exchange rate policy is made, including the costs of maintaining its current peg. It is argued that the literature on China’s exchange rate regime has not reached a consensus, and further theoretical arguments are appraised regarding the reluctance to move to a more flexible exchange rate regime. A theoretical dual exchange rate monetary model, in the spirit of Flood and Marion (1983), is then developed to analyse the dynamics in the responses to nominal and real shocks. This provides a theoretical basis for analysing the underlying working mechanism and policy implications under some degree of capital control, to resemble the Chinese exchange rate regime. In the light of the theoretical analysis, empirical research is conducted using a structural vector auto-regression (SVAR) model to examine the effects of real exchange rate fluctuations to nominal and real shocks (represented by inflation and real GDP), in order to determine the case for exchange rate flexibility. Both the theoretical and empirical analyses complement to inform the ongoing debate on whether the current exchange rate regime in China should be made more flexible, and whether a more flexible regime is appropriate in stabilising the effects of macroeconomic shocks. The empirical findings reveal that the responses of the real exchange rate to nominal IX demand and real supply shocks are consistent with a managed exchange rate system that currently operates in China. In particular, the results show that, as China has been under a fixed exchange rate arrangement for much of the estimation period, the real exchange rate appreciates immediately in response to a positive nominal shock. The use of quarterly Chinese data in this study, which no previous study on China has used, makes it possible to identify to a greater degree the initial appreciation impact of a positive nominal shock on the real exchange rate, although the results are generally consistent with the previous study by Wang (2004) using annual data. The study finds that supply shocks are dominant in the fluctuations of output growth, and while both nominal and real shocks are significant the nominal contributes more than real shocks in real exchange rate fluctuations. Overall, these findings are consistent with other studies for developing countries and support a case for greater exchange rate flexibility for China.

“The charm of history and its enigmatic lesson consist in the fact that, from age to age, nothing changes and yet everything is completely different.” – Aldous Huxley Aldous Huxley perfectly captures the elusive nature of how difficult it is to analyze history to gain insight to the present and future. Especially because the recent exponential growth in information and technology seem to be changing how the world operates. In actuality though, the same patterns continue to reappear. This paper strives to look back and first understand on a macroeconomic level what causes the business cycle of expansion and recession. Particularly, what historically triggers recessions and what are the consequences of those recessions? Using this historical knowledge, this paper will leave the reader with a better understanding of how a company can grow and thrive in the current difficult economic climate. Even though the expansion/recession cycle is still prevalent today, the affects of these swings during the 1980’s and 1990’s were dramatically reduced in what historians call “The Great Moderation”. The potential reasons for this moderation will be examined and their validity evaluated. This historical perspective combined with an understanding of more recent events allows for this paper to create recommendations for companies to help navigate the stormy economic waters ahead as we try to recover from the current recession. These recommendations hinge on policy advisors and politicians heeding the advice of the past. Lastly, I will explore potential alternate outcomes given poor fiscal and legislative policy by the ruling elite. / text

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The fast expansion of the shadow banking industry and its unregulated risks pose great challenges to the People's Bank of China. This paper uses the classic money multiplier and velocity models to investigate the impact of shadow banks on the effectiveness of monetary policies from 2006 to 2016.The time-series regression results show that shadow banks have a positive relationship with the velocity and a negative one with the multiplier. As the non-banks disrupt the traditional credit creation process and the central bank loses control of two important monetary indicators, the paper then discusses possible new intermediate targets and reforms that can alleviate the shadow banking problems.

M.Litt. et Phil. / The fundamental purpose of this dissertation is a descriptive analysis and theoretical evaluation of the economic implications of the completion of the Uruguay Round of trade negotiations on South Africa's industrial and macro-economic performance. The study is an attempt to determine the impact of lower protection on the economy in general, which industrial sectors will gain/lose and how the anti-export bias inherent in South Africa's economy be influenced. A tariff is defined as a tax imposed on commodity imports. There are several types of tariffs, for instance ad valorem tariffs, specific tariffs and composite tariffs. The rationales for levying tariffs may be solely for raising revenue, in which case the home-produced product corresponding to the import would bear on equivalent compensatory tax. However, import duties are generally applied for the purpose of carrying out a particular economic policy, and in this context may be used to serve many functions, amongst others, the improvement of the terms of trade for the country levying the duty, strategic purposes and the protection of infant industries. The anti-export bias of 2,16 for total manufacturing shows the severe bias in South African policy in favour of inward industrialisation if export promotion policies are excluded from the calculations. Even the inclusion of GEIS does not bring about policy neutrality in terms of the inward and outward orientation. GEIS reduces the anti-export bias by approximately 33 percent for manufacturing from 2,16 to 1,44. Summary Page xi Although the South African tariff structure is among the most complex in the world, the level of protection is not exceptionally high. The average statutory tariff in South Africa is 27,5 per cent, which is approximately equal to the mean for a sample of 32 developing countries for which comparable data exist. The implications of the Uruguay Round for South Africa are clear cut: the country will, as a contracting party to the GATT, have to adhere to the commitments stemming from the Uruguay Round in order to benefit from the more market-oriented international trading environment. The rationale for the overall structure of South Africa's GATT offer is the desire to encourage the manufacture of potentially competitive, higher value-added products, which are either consumer products or capital goods. Beyond this, the relative neutrality of the offer is intended to encourage specialisation in fields in which South Africa has some comparative advantage. Although the GATT agreement will cause some casualties, notably in textiles, clothing and motor assembly, the economy as a whole will benefit from trade reform. The macro-economic success of trade reform should be evaluated in terms of how well the goals of reform have been attained and at what costs to the economy. Although some short term costs in terms of employment, balance of payments and income distribution could be of some concern in managing the policy changes facing South Africa, the overall findings indicate that the positive effects of the Marrakesh Agreement provide both constraints and opportunities for South Africa's effort to grow competitive industries.

In this study the prediction capabilities of Artificial Neural Networks and typical econometric methods are compared. This is done in the domains of Finance and Economics. Initially, the Neural Networks are shown to outperform traditional econometric models in forecasting nonlinear behaviour. The comparison is extended to indicate that the accuracy of share price forecasting is not necessarily improved when applying Neural Networks rather than traditional time series analysis. Finally, Neural Networks are used to forecast the South African inflation rates, and its performance is compared to that of vector error correcting models, which apparently outperform Artificial Neural Networks. / Prof. D.J. Marais

Les entreprises sont l’unité de production d’une économie moderne. Les matières premières y sont transformées en biens destinés à la consommation ou en biens utilisés par d’autres entreprises. Ces entreprises sont nombreuses et très différentes. Certaines sont très grandes, tandis que d’autres sont de petite taille. Ces entreprises hétérogènes font face à l’évolution de leur demande et de leur productivité qui façonnent leur dynamique. Le produit intérieur (PIB) est la somme de la valeur ajoutée des entreprises hétérogènes qui composent une économie. Il semble donc naturel de penser que la dynamique du PIB est l’agrégation de la dynamique des entreprises. Cependant, la littérature macroéconomique traditionnelle, par exemple la théorie des cycles réels (RBC), suppose une entreprise représentative. La dynamique de l’agrégat est seulement déterminée par un choc qui affecte cette entreprise représentative. Ceci est équivalent à supposer que des chocs parfaitement corrélés affectent toutes les entreprises d’une économie de la même manière. [...] / Firms are the productive unit of a modern economy. It is where inputs are transformed in goods used for consumption or as inputs for other firms. These firms are numerous and very different from one another. Some are very large, while others are small. These heterogeneous firms face changes in their demand and productivity that shape their dynamics. The growth domestic product (GDP) is the sum of the value added of all the heterogeneous firms that compose an economy. It thus seems natural to think that the dynamics of the GDP is the aggregation of the dynamics of firms. However, the conventional wisdom in the macroeconomics literature, for example the real business cycle (RBC) theory, assumes one representative firm. The dynamics of the aggregate is only driven by a shock that affects the representative firm. This is equivalent to assuming perfectly correlated shocks that affect all the firms of an economy in the same way. […]

Thesis submitted in partial fulfilment of the requirements for the degree of Master of Management in Finance and Investments in the Faculty of Commerce, Law and Management Wits Business School at the University of the Witwatersrand February 2017 / For developed economies, it has been shown that the slope of the yield curve is a good indicator of the future path of real output and inflation. This paper investigates the predictive abilities of the yield curve slope for domestic growth and inflation in emerging market economies. Given the sovereign risk premia in these economies, it also assesses whether adding the sovereign risk spread to the yield curve spread improves the predictive content of the yield curve. It finds that the yield curve can predict real output at both the short and long forecasting horizons in emerging economies, the extent of which differs across countries. It also finds that the predictive performance for inflation is weaker than that of output growth, especially in the shorter forecasting horizons, and that the sovereign risk spread has additional predictive content for growth and inflation. This suggests that market participants and monetary policy makers in these economies should supplement their forecasting models with information contained in the yield curve to forecast domestic growth and inflation. / MT2017