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1 This paper offers a decomposition of output fluctuations into aggregate demand and aggregate supply shocks in South Africa for the period since the early 1960s. Theoretically motivated long-run restrictions are used to identify these shocks in a three-variable vector-autoregressive (VAR) model. The aggregate demand shocks, assumed to be ...
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Downloadable! This paper uses a structural VAR methodology to identify aggregate demand and supply shocks to real output for the South African economy. Demand shocks, in turn, are separated into fiscal and monetary shocks. The model is estimated with quarterly data over two overlapping samples: 1960Q2-2006Q4 and 1983Q4-2006Q4. The identified (structural) shocks …
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affecting aggregate supply in South Africa. 3. DATA The data are seasonally adjusted quarterly time series, starting in the second quarter of 1960 and ending in the fourth quarter of 20063. Table 1 shows the variables used in the model and Figures 1 to 3 plot the three main variables. The reduced form VAR was
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