Abstract:
The paper uses a static Computable General Equilibrium (CGE) model of South Africa and
simulates various shocks to the price of electricity. We attempt different closures to the model
and compare their respective effects on the Consumer Price Index. In a CGE model, this is
measuring the real appreciation of the exchange rate, or international trade competitiveness.
In general, we conclude that electricity prices per se does not significantly influence the real
exchange rate, regardless of which closure is used.
