This paper uses a Dynamic Stochastic General Equilibrium (DSGE) model to estimate the South African Reserve Bank's (SARB) policy reaction rule. We find that the SARB has a stable rule very much in line with those estimated for Canada, UK, Australia and New Zealand. Relative to other emerging...

Embedded in canonical macroeconomic models is the assumption of frictionless financial markets, implying that the composition of borrowers' balance sheets has no effect on their spending decision. As a result, these models have a difficult time accounting for the feedback effects between...

This paper addresses the positive implications of indexing risky debt to observable aggregate conditions. These issues are pursued within the context of the celebrated financial accelerator model of Bernanke, Gertler and Gilchrist (1999). The principal conclusions include: (1) the estimated...