ECS3709 Assignment 3
(COMPLETE ANSWERS)
Semester 2 2024 - DUE
September 2024
ADMIN
[COMPANY NAME]
, ECS3709 Assignment 3 Semester 2 2024 - DUE September
2024
.Read the South African Reserve Bank Working Paper,
“Identifying Supply and Demand Shocks in the South African
Economy, 1960–2020’’, which is written by Johannes W.
Fedderke. The link to this Working Paper is: After reading the
Working Paper, attempt the following questions: QUESTION 1
[Marks: 15] According to Fedderke (2021), “supply shocks have
declined in magnitude and amplitude since the 1990s, while
demand shocks remain relatively prominent.” Using the AD-AS
model, illustrate graphically and explain how the temporary
demand shocks, experienced during the COVID-19 outbreak,
affected the level of prices, output, and employment in South
Africa. Assume that there is no government intervention and no
monetary policy response to restore the economy to its initial
equilibrium. QUESTION 2 [Marks: 5] Based on the Working
Paper by Fedderke (2021), discuss any five limitations of the
Blanchard and Quah (BQ) identification strategy, which affect its
theoretical coherence in analysing the demand and supply shocks
in South Africa.
To address this question, we will break it down into several
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