Abstract
M.Com. (Economics)
The purpose of this dissertation was to investigate the contribution of the
world economy to instability in the South African economy via inflation.
Double digit inflation in the South African economy remains the most important
and' sole major problem influencing stabilization policy in the country. This
study concentrated on the instability of the economic growth path in South
Africa since the recession period of 1976.
From a multiplier-accelerator model the conclusion is reached that two of the
main endogenous variables in the economy, namely private consumption and total
investment have adapted to behaviour patterns since 1977, in such a way that
an economic growth path which deviates monotonically from the equilibrium paths
has been guaranteed. The. reason for this is found in the values of two main
coefficients namely the propensity to consume and the propensity to invest.
The openness of the South African economy is an exogenous threat to stability
in the South African economy if a high inflation rate persists.