Answer to Question #96394 in Macroeconomics for Kathryn

Question

Your prescribed text explains that the money stock (M) can be determined endogenously or exogenously. Explain which approach is used in the South Africa macroeconomy

Answer 1

 

                                  South Africa Monetary Policy.

Empirical studies shows that irrespectively of the monetary system at the time, the money supply process in South Africa is endogenously determined. The inability of the South Africa Reserve Bank to reach predetermined M3 monetary growth targets in consistency since 1980s is the direct result of an endogenous money supply and not because of unstable M3 velocity.

                       Reference

Kevin.S.Nell;03November2015<https://www.tandfonline.com/doi/ads/10.1080/01603477.2000.11490283>