Abstract
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.