Fiscal Policy Shocks and Macroeconomic Growth in South Africa

Fiscal Policy Shocks and Macroeconomic Growth in South Africa

Author: Eliphas Ndou

Publisher: Palgrave Macmillan

Published: 2023-10-01

Total Pages: 0

ISBN-13: 9783031377549

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This book explores the disconnect between fiscal policy and macroeconomic development in South Africa. It analyses the factors that have contributed to the lack of economic growth in the country over recent decades and outlines an improved fiscal policy framework that increases investment and employment. Particular attention is given to the impact of government debt and its relationship with GDP, the connection between budget deficits and interest rates, and how economic policy uncertainty affects employment dynamics and inflation. This book provides practical fiscal policy suggestions to increase economic growth in South Africa and Africa more generally. It will be relevant to researchers and policymakers interested in African economics and economic policy.


Book Synopsis Fiscal Policy Shocks and Macroeconomic Growth in South Africa by : Eliphas Ndou

Download or read book Fiscal Policy Shocks and Macroeconomic Growth in South Africa written by Eliphas Ndou and published by Palgrave Macmillan. This book was released on 2023-10-01 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book explores the disconnect between fiscal policy and macroeconomic development in South Africa. It analyses the factors that have contributed to the lack of economic growth in the country over recent decades and outlines an improved fiscal policy framework that increases investment and employment. Particular attention is given to the impact of government debt and its relationship with GDP, the connection between budget deficits and interest rates, and how economic policy uncertainty affects employment dynamics and inflation. This book provides practical fiscal policy suggestions to increase economic growth in South Africa and Africa more generally. It will be relevant to researchers and policymakers interested in African economics and economic policy.

Labour Market and Fiscal Policy Adjustments to Shocks

Labour Market and Fiscal Policy Adjustments to Shocks

Author: Nombulelo Gumata

Publisher: Springer

Published: 2017-12-18

Total Pages: 599

ISBN-13: 3319665200

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This book focuses on the implications of the South African labour market dynamics including labour market reforms and fiscal policy for monetary policy and financial stability. Evidence suggests there are benefits in adopting an approach that coordinates labour market policies and reforms, fiscal policy, price and financial stability. In particular, the benefits of coordinating policies present policymakers with policy options in cases where they are confronted by binding policy trade-offs and dilemmas, such as in cases when there is divergence in price and financial and economic growth outcomes. The empirical insights and policy recommendations are based on different techniques that include the counterfactual and endogenous-exogenous approaches, non-linearities introduced by thresholds and the impact of persistent and transitory shock effects. Themes covered in the book include various aspects of labour market conditions and reforms and their link to inflation and inflation expectations, the impact of the national minimum wage, the interaction between public and private sector wage inflation, economic policy uncertainty and employment, government debt thresholds, sovereign yields and debt ratings downgrades, labour productivity, the impact of inflation regimes on expansionary fiscal and monetary policy multipliers, the increase in government cost of funding on price and financial stability and the link between fiscal policy and credit dynamics.


Book Synopsis Labour Market and Fiscal Policy Adjustments to Shocks by : Nombulelo Gumata

Download or read book Labour Market and Fiscal Policy Adjustments to Shocks written by Nombulelo Gumata and published by Springer. This book was released on 2017-12-18 with total page 599 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book focuses on the implications of the South African labour market dynamics including labour market reforms and fiscal policy for monetary policy and financial stability. Evidence suggests there are benefits in adopting an approach that coordinates labour market policies and reforms, fiscal policy, price and financial stability. In particular, the benefits of coordinating policies present policymakers with policy options in cases where they are confronted by binding policy trade-offs and dilemmas, such as in cases when there is divergence in price and financial and economic growth outcomes. The empirical insights and policy recommendations are based on different techniques that include the counterfactual and endogenous-exogenous approaches, non-linearities introduced by thresholds and the impact of persistent and transitory shock effects. Themes covered in the book include various aspects of labour market conditions and reforms and their link to inflation and inflation expectations, the impact of the national minimum wage, the interaction between public and private sector wage inflation, economic policy uncertainty and employment, government debt thresholds, sovereign yields and debt ratings downgrades, labour productivity, the impact of inflation regimes on expansionary fiscal and monetary policy multipliers, the increase in government cost of funding on price and financial stability and the link between fiscal policy and credit dynamics.

Monetary Policy and the Economy in South Africa

Monetary Policy and the Economy in South Africa

Author: M. Ncube

Publisher: Springer

Published: 2013-08-30

Total Pages: 259

ISBN-13: 1137334150

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Monetary Policy and the Economy in South Africa covers both modern theories and empirical analysis, linking monetary policy with relating house wealth, drivers of current account based on asset approach, expenditure switching and income absorption effects of monetary policy on trade balance, effects of inflation uncertainty on output growth and international spill overs. Each chapter uses data and relevant methodology to answer empirical and pertinent policy questions in South Africa. The book gives new insights into understanding these areas of economic policy and the wider emerging-markets.


Book Synopsis Monetary Policy and the Economy in South Africa by : M. Ncube

Download or read book Monetary Policy and the Economy in South Africa written by M. Ncube and published by Springer. This book was released on 2013-08-30 with total page 259 pages. Available in PDF, EPUB and Kindle. Book excerpt: Monetary Policy and the Economy in South Africa covers both modern theories and empirical analysis, linking monetary policy with relating house wealth, drivers of current account based on asset approach, expenditure switching and income absorption effects of monetary policy on trade balance, effects of inflation uncertainty on output growth and international spill overs. Each chapter uses data and relevant methodology to answer empirical and pertinent policy questions in South Africa. The book gives new insights into understanding these areas of economic policy and the wider emerging-markets.

Macroeconomics

Macroeconomics

Author: Nicoli Nattrass

Publisher: New Africa Books

Published: 2002

Total Pages: 324

ISBN-13: 9780864865946

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Book Synopsis Macroeconomics by : Nicoli Nattrass

Download or read book Macroeconomics written by Nicoli Nattrass and published by New Africa Books. This book was released on 2002 with total page 324 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Inequality, Output-Inflation Trade-Off and Economic Policy Uncertainty

Inequality, Output-Inflation Trade-Off and Economic Policy Uncertainty

Author: Eliphas Ndou

Publisher: Springer

Published: 2019-08-13

Total Pages: 507

ISBN-13: 3030198030

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This book focuses on income inequality, output-inflation trade-off and economic policy uncertainty in South Africa. Tight monetary and macroprudential policies raise income inequality. Income inequality transmits monetary policy and macroprudential policy shocks to real economic activity. Economic policy uncertainty influences the dynamics in the lending rate margins, inflation expectations, credit, pass-through of the repo rate to bank lending rates and companies’ cash holdings. The trade-off between output and inflation and output growth persistence vary with inflation regimes. Stimulatory demand policy shocks are less effective in high inflation regime. High income inequality raises consumption inequality, which raises demand for credit, but price stability matters in this link. Increased bank concentration raises income inequality, lowers economic growth and employment rate. Elevated economic policy uncertainty lowers output growth, lowers capital formation, reduces credit and raises companies’ cash holdings. Increased companies’ cash holdings reduce capital formation and impact the transmission of expansionary monetary policy shocks to real economic activity. This book shows there is an inflation level within the target band below it which lowers income inequality, while raising GDP growth and employment. Thus price stability, economic policy uncertainty and income inequality matter for the efficient transmission of policy shocks.


Book Synopsis Inequality, Output-Inflation Trade-Off and Economic Policy Uncertainty by : Eliphas Ndou

Download or read book Inequality, Output-Inflation Trade-Off and Economic Policy Uncertainty written by Eliphas Ndou and published by Springer. This book was released on 2019-08-13 with total page 507 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book focuses on income inequality, output-inflation trade-off and economic policy uncertainty in South Africa. Tight monetary and macroprudential policies raise income inequality. Income inequality transmits monetary policy and macroprudential policy shocks to real economic activity. Economic policy uncertainty influences the dynamics in the lending rate margins, inflation expectations, credit, pass-through of the repo rate to bank lending rates and companies’ cash holdings. The trade-off between output and inflation and output growth persistence vary with inflation regimes. Stimulatory demand policy shocks are less effective in high inflation regime. High income inequality raises consumption inequality, which raises demand for credit, but price stability matters in this link. Increased bank concentration raises income inequality, lowers economic growth and employment rate. Elevated economic policy uncertainty lowers output growth, lowers capital formation, reduces credit and raises companies’ cash holdings. Increased companies’ cash holdings reduce capital formation and impact the transmission of expansionary monetary policy shocks to real economic activity. This book shows there is an inflation level within the target band below it which lowers income inequality, while raising GDP growth and employment. Thus price stability, economic policy uncertainty and income inequality matter for the efficient transmission of policy shocks.

Capital Flows, Credit Markets and Growth in South Africa

Capital Flows, Credit Markets and Growth in South Africa

Author: Nombulelo Gumata

Publisher: Springer Nature

Published: 2019-12-11

Total Pages: 385

ISBN-13: 303030888X

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This book examines the dynamics in capital flows, credit markets and growth in South Africa. The authors explore the role of global economic growth, policy shifts and various economic policy uncertainties. Central banks in advanced economies are engaged in unconventional monetary policy tools such as balance sheet policies, negative interest rates and extended forward guidance to assist them to meet their price, financial and macro-economic stability objectives. This book determines whether BRICS GDP growth is a source of shocks or an amplifier of global growth shocks. The authors find that global economic growth and policy uncertainty reinforce each other via capital flows, credit conditions and business confidence on the domestic economy. Furthermore, they demonstrate that there is momentum in the changes in the spread between the repo rate and federal funds rate. In addition, global real policy rates impact domestic GDP growth and labor market conditions. The authors examine the economic costs of capital flow surges, sudden stops and elevated portfolio volatility shocks and their interaction with GDP growth and credit. They show that equity and debt inflows matter in the attainment of the price stability mandate. Moreover, business confidence transmits sovereign credit ratings upgrades and downgrades shocks to the real economy via GDP growth, the cost of government debt and borrowing to impact credit growth. High GDP growth increases the likelihood of sovereign credit ratings upgrades, hence policymakers should implement pro-growth policies. Inflation regimes impact the transmission of positive nominal demand shocks to the price level. Low and stable inflation (inflation below 4.5 per cent) reduces the pass-through of positive nominal demand shocks to inflation.


Book Synopsis Capital Flows, Credit Markets and Growth in South Africa by : Nombulelo Gumata

Download or read book Capital Flows, Credit Markets and Growth in South Africa written by Nombulelo Gumata and published by Springer Nature. This book was released on 2019-12-11 with total page 385 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book examines the dynamics in capital flows, credit markets and growth in South Africa. The authors explore the role of global economic growth, policy shifts and various economic policy uncertainties. Central banks in advanced economies are engaged in unconventional monetary policy tools such as balance sheet policies, negative interest rates and extended forward guidance to assist them to meet their price, financial and macro-economic stability objectives. This book determines whether BRICS GDP growth is a source of shocks or an amplifier of global growth shocks. The authors find that global economic growth and policy uncertainty reinforce each other via capital flows, credit conditions and business confidence on the domestic economy. Furthermore, they demonstrate that there is momentum in the changes in the spread between the repo rate and federal funds rate. In addition, global real policy rates impact domestic GDP growth and labor market conditions. The authors examine the economic costs of capital flow surges, sudden stops and elevated portfolio volatility shocks and their interaction with GDP growth and credit. They show that equity and debt inflows matter in the attainment of the price stability mandate. Moreover, business confidence transmits sovereign credit ratings upgrades and downgrades shocks to the real economy via GDP growth, the cost of government debt and borrowing to impact credit growth. High GDP growth increases the likelihood of sovereign credit ratings upgrades, hence policymakers should implement pro-growth policies. Inflation regimes impact the transmission of positive nominal demand shocks to the price level. Low and stable inflation (inflation below 4.5 per cent) reduces the pass-through of positive nominal demand shocks to inflation.

Monetary Policy, Inflation, and Distributional Impact: South Africa’s Case

Monetary Policy, Inflation, and Distributional Impact: South Africa’s Case

Author: Mr. Ken Miyajima

Publisher: International Monetary Fund

Published: 2021-03-19

Total Pages: 24

ISBN-13: 1513574353

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The South African Reserve Bank has continued to fulfill its constitutional mandate to protect the value of the local currency by keeping inflation low and steady. This paper provides evidence that monetary policy tightening aimed at maintaining low and stable inflation could at the same time reduce consumption inequality over a 12–18 month horizon, commonly understood as the transmission lag of monetary policy action to the real economy, and similar to the distance between survey waves used in the analysis. In response to “exogenous” monetary policy tightening, the real consumption of individuals at lower ends of the consumption distribution declines relatively modestly, or even increases. With greater reliance on government transfers, thus smaller reliance on labor income, and relatively larger food consumption, these individuals appear to benefit mainly from lower inflation. By contrast, the real consumption of individuals at higher ends of the consumption distribution is more likely to decline due to lower labor income, weaker asset price performance, and higher debt service cost.


Book Synopsis Monetary Policy, Inflation, and Distributional Impact: South Africa’s Case by : Mr. Ken Miyajima

Download or read book Monetary Policy, Inflation, and Distributional Impact: South Africa’s Case written by Mr. Ken Miyajima and published by International Monetary Fund. This book was released on 2021-03-19 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: The South African Reserve Bank has continued to fulfill its constitutional mandate to protect the value of the local currency by keeping inflation low and steady. This paper provides evidence that monetary policy tightening aimed at maintaining low and stable inflation could at the same time reduce consumption inequality over a 12–18 month horizon, commonly understood as the transmission lag of monetary policy action to the real economy, and similar to the distance between survey waves used in the analysis. In response to “exogenous” monetary policy tightening, the real consumption of individuals at lower ends of the consumption distribution declines relatively modestly, or even increases. With greater reliance on government transfers, thus smaller reliance on labor income, and relatively larger food consumption, these individuals appear to benefit mainly from lower inflation. By contrast, the real consumption of individuals at higher ends of the consumption distribution is more likely to decline due to lower labor income, weaker asset price performance, and higher debt service cost.

South Africa: Macro Policy Mix and Its Effects on Growth and the Real Exchange Rate--Empirical Evidence and GIMF Simulations

South Africa: Macro Policy Mix and Its Effects on Growth and the Real Exchange Rate--Empirical Evidence and GIMF Simulations

Author: Mr.Jorge I Canales Kriljenko

Publisher: International Monetary Fund

Published: 2011-08-25

Total Pages: 36

ISBN-13: 1475510152

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This paper examines whether a mix of tighter fiscal policy, looser monetary policy, and greater reserve build-up would increase growth and depreciate the rand in real terms. The experience of South Africa over the last twenty years is looked at using a number of econometric techniques that control for the external environment.


Book Synopsis South Africa: Macro Policy Mix and Its Effects on Growth and the Real Exchange Rate--Empirical Evidence and GIMF Simulations by : Mr.Jorge I Canales Kriljenko

Download or read book South Africa: Macro Policy Mix and Its Effects on Growth and the Real Exchange Rate--Empirical Evidence and GIMF Simulations written by Mr.Jorge I Canales Kriljenko and published by International Monetary Fund. This book was released on 2011-08-25 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines whether a mix of tighter fiscal policy, looser monetary policy, and greater reserve build-up would increase growth and depreciate the rand in real terms. The experience of South Africa over the last twenty years is looked at using a number of econometric techniques that control for the external environment.

Global Economic Uncertainties and Exchange Rate Shocks

Global Economic Uncertainties and Exchange Rate Shocks

Author: Eliphas Ndou

Publisher: Springer

Published: 2018-01-08

Total Pages: 509

ISBN-13: 3319622803

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This book examines the macroeconomic and regulatory impact of domestic and international shocks on the South African economy resulting from the 2009 financial crisis. It also assesses the impact of the US economy’s eventual recovery from the crisis and the prospect of higher US interest rates in future. Told in three parts, the book explores associations between economic growth, policy uncertainty and the key domestic and international transmission channels, and transmission effects, of global financial regulatory and domestic macro-economic uncertainties on subdued and volatile economic recovery, financial channels, lending rate margins, and credit growth. The book concludes by extending its focus to the role of US monetary policy, capital flows and rand/US dollar volatility on the South African economy.


Book Synopsis Global Economic Uncertainties and Exchange Rate Shocks by : Eliphas Ndou

Download or read book Global Economic Uncertainties and Exchange Rate Shocks written by Eliphas Ndou and published by Springer. This book was released on 2018-01-08 with total page 509 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book examines the macroeconomic and regulatory impact of domestic and international shocks on the South African economy resulting from the 2009 financial crisis. It also assesses the impact of the US economy’s eventual recovery from the crisis and the prospect of higher US interest rates in future. Told in three parts, the book explores associations between economic growth, policy uncertainty and the key domestic and international transmission channels, and transmission effects, of global financial regulatory and domestic macro-economic uncertainties on subdued and volatile economic recovery, financial channels, lending rate margins, and credit growth. The book concludes by extending its focus to the role of US monetary policy, capital flows and rand/US dollar volatility on the South African economy.

Dynamics of Macroeconomic Uncertainty on Economic Growth in the Presence of Fiscal Consolidation in South Africa from 1994 to 2022

Dynamics of Macroeconomic Uncertainty on Economic Growth in the Presence of Fiscal Consolidation in South Africa from 1994 to 2022

Author: Eugene Msizi Buthelezi

Publisher:

Published: 2023

Total Pages: 0

ISBN-13:

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This paper investigates the effects of macroeconomic uncertainty on economic growth in the presence of fiscal consolidation in South Africa. Markov-switching dynamic regression (MSDR) and time-varying parameter vector autoregression (TVP-VAR) were performed using time series data from 1994 to 2022. Less attention has been given directly to the investigation of macroeconomic uncertainty in different regimes of economic growth in South Africa. Three states are found for economic growth, with mean growth rates of negative 6.29% and positive 3.90% and 1.47%, respectively. Macroeconomic uncertainty was found to have a negative impact of 6.72%, 4.38%, and 3.08% in states 1 to 3, respectively. Fiscal consolidation provided an accommodative policy, as it reduced the negative impact of macroeconomic uncertainty by 3.17%, 1.80%, and 0.92% in states 1 to 3, respectively. However, fiscal consolidation does not completely reduce the negative impact of macroeconomic uncertainty. The transition probabilities of economic growth moving and returning to the same states are 29.46%, 34.07%, and 58.02%, in each state, respectively. The time-varying impulse response functions showed that the shock of macroeconomic uncertainty harms economic growth. Nevertheless, the multiplier effect is not large; however, the economy operates below equilibrium and does not restore equilibrium after the effect of macroeconomic uncertainty. This reflects that it takes time for macroeconomic uncertainty to filter out of the South African economy. It is recommended that fiscal consolidation be considered as an accommodative fiscal policy to reduce macroeconomic uncertainty but not as a main policy for economic growth.


Book Synopsis Dynamics of Macroeconomic Uncertainty on Economic Growth in the Presence of Fiscal Consolidation in South Africa from 1994 to 2022 by : Eugene Msizi Buthelezi

Download or read book Dynamics of Macroeconomic Uncertainty on Economic Growth in the Presence of Fiscal Consolidation in South Africa from 1994 to 2022 written by Eugene Msizi Buthelezi and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the effects of macroeconomic uncertainty on economic growth in the presence of fiscal consolidation in South Africa. Markov-switching dynamic regression (MSDR) and time-varying parameter vector autoregression (TVP-VAR) were performed using time series data from 1994 to 2022. Less attention has been given directly to the investigation of macroeconomic uncertainty in different regimes of economic growth in South Africa. Three states are found for economic growth, with mean growth rates of negative 6.29% and positive 3.90% and 1.47%, respectively. Macroeconomic uncertainty was found to have a negative impact of 6.72%, 4.38%, and 3.08% in states 1 to 3, respectively. Fiscal consolidation provided an accommodative policy, as it reduced the negative impact of macroeconomic uncertainty by 3.17%, 1.80%, and 0.92% in states 1 to 3, respectively. However, fiscal consolidation does not completely reduce the negative impact of macroeconomic uncertainty. The transition probabilities of economic growth moving and returning to the same states are 29.46%, 34.07%, and 58.02%, in each state, respectively. The time-varying impulse response functions showed that the shock of macroeconomic uncertainty harms economic growth. Nevertheless, the multiplier effect is not large; however, the economy operates below equilibrium and does not restore equilibrium after the effect of macroeconomic uncertainty. This reflects that it takes time for macroeconomic uncertainty to filter out of the South African economy. It is recommended that fiscal consolidation be considered as an accommodative fiscal policy to reduce macroeconomic uncertainty but not as a main policy for economic growth.