Download or read book Three Essays on Monetary Policy, Inflation Targeting Rules, and Aggregate Shocks written by Ronald Mayembe Simwinga and published by . This book was released on 2014 with total page 211 pages. Available in PDF, EPUB and Kindle. Book excerpt: Finally, the third chapter focuses on the role of IT in offsetting exogenous shocks to aggregate demand and supply in South Africa. The key question is whether inflation, output, and the short-term interest rate have become more resilient in the face of amplified aggregate shocks. South Africa is susceptible to unique exogenous shocks as a result of fluctuations in global commodity demand, which presents serious challenges for monetary policy. While direct first-round effects from such shocks have been large, second round effects which manifest through wage markup demands and sharp rises in inflation expectations exert huge pressures on prices and output. We estimate a structural Vector Autoregression (SVAR) system identified via a small open-economy New Keynesian Model. We find evidence that pass-through of shocks to inflation, output and the short-term policy interest rate is resilient in the inflation targeting period and these variables have been stable relative to the size of aggregate shocks.