Computerised general equilibrium (CGE) modelling of the impact of fiscal policy on economic growth, income redistribution and poverty alleviation in South Africa
- Authors: Bonga-Bonga, Lumengo
- Date: 2011-06-30T08:35:06Z
- Subjects: Economic development - South Africa , Income distribution - South Africa , Fiscal policy - South Africa , Poverty - South Africa
- Type: Thesis
- Identifier: uj:7160 , http://hdl.handle.net/10210/3768
- Description: D.Comm. , This thesis endeavoured to assess whether the government can simultaneously achieve the objectives of sustained economic growth, income redistribution and fiscal discipline, as stated in the Growth, Employment and Redistribution (GEAR) policy. The simultaneous realisation of these objectives of the GEAR policy brings about controversies between the South African government and other interest groups, such as the trade unions and some academics. Empirical analysis such as econometrics and computerised general equilibrium (hereafter referred to as CGE) techniques were used in an attempt to solve the research question. The Kalman filter technique was applied to model total factor productivity and to establish the link between social services expenditure and economic growth in South Africa. The structural vector autoregressive (SVAR) technique was applied to assess the dynamics of fiscal shocks on output growth and determine the type of taxes that are distortionary in financing the increase in social services expenditure. The study’s main contribution is the application of the CGE technique to assess whether the above three objectives can be reached simultaneously. A new CGE model was built, based on the standard CGE model by Thurlow and Van Seventer (2002). In the new CGE model, some taxes were changed to endogenous variables instead of exogenous variables or parameters as in the standard model. The model introduced a number of government macro closure rules to clear the government balance. The research lead to the following conclusion: When constraints on employment are removed across all the labour categories in South Africa, and the government uses compositional shift of its expenditure to finance the continual increase in social services expenditure, the three objectives, namely fair redistribution of iv income, fiscal discipline and sustained economic growth, will be reached simultaneously. It is recommended that the government fix conditions in the labour market to remove impediments to employment in South Africa (such as lack of appropriate skills for specific activities), as this will enable the government to achieve most of its objectives.
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- Authors: Bonga-Bonga, Lumengo
- Date: 2011-06-30T08:35:06Z
- Subjects: Economic development - South Africa , Income distribution - South Africa , Fiscal policy - South Africa , Poverty - South Africa
- Type: Thesis
- Identifier: uj:7160 , http://hdl.handle.net/10210/3768
- Description: D.Comm. , This thesis endeavoured to assess whether the government can simultaneously achieve the objectives of sustained economic growth, income redistribution and fiscal discipline, as stated in the Growth, Employment and Redistribution (GEAR) policy. The simultaneous realisation of these objectives of the GEAR policy brings about controversies between the South African government and other interest groups, such as the trade unions and some academics. Empirical analysis such as econometrics and computerised general equilibrium (hereafter referred to as CGE) techniques were used in an attempt to solve the research question. The Kalman filter technique was applied to model total factor productivity and to establish the link between social services expenditure and economic growth in South Africa. The structural vector autoregressive (SVAR) technique was applied to assess the dynamics of fiscal shocks on output growth and determine the type of taxes that are distortionary in financing the increase in social services expenditure. The study’s main contribution is the application of the CGE technique to assess whether the above three objectives can be reached simultaneously. A new CGE model was built, based on the standard CGE model by Thurlow and Van Seventer (2002). In the new CGE model, some taxes were changed to endogenous variables instead of exogenous variables or parameters as in the standard model. The model introduced a number of government macro closure rules to clear the government balance. The research lead to the following conclusion: When constraints on employment are removed across all the labour categories in South Africa, and the government uses compositional shift of its expenditure to finance the continual increase in social services expenditure, the three objectives, namely fair redistribution of iv income, fiscal discipline and sustained economic growth, will be reached simultaneously. It is recommended that the government fix conditions in the labour market to remove impediments to employment in South Africa (such as lack of appropriate skills for specific activities), as this will enable the government to achieve most of its objectives.
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Assessing the effectiveness of the monetary policy instrument during the inflation targeting period in South Africa
- Authors: Bonga-Bonga, Lumengo
- Date: 2017
- Subjects: Inflation targeting policy , Structural vector error correction model , South Africa
- Language: English
- Type: Articles
- Identifier: http://ujcontent.uj.ac.za8080/10210/379615 , http://hdl.handle.net/10210/242066 , uj:24960 , Citation: Bonga-Bonga, L. 2017. Assessing the effectiveness of the monetary policy instrument during the inflation targeting period in South Africa.
- Description: Abstract: This paper assesses how inflation react to monetary policy shocks in South Africa during the inflation targeting period by making use of the structural vector error correction model (SVECM). The results of the impulse response function obtained from the SVECM show that, on average, contractionary monetary policy that intends to curb inflationary pressure has been impotent in South Africa. However, the contractionary monetary policy shocks managed to reduce output. The paper suggests that it is time a dual target, inflation and output, be considered in South Africa to avoid the harm caused on output growth from monetary policy actions related to the constraint of inflation targeting.
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- Authors: Bonga-Bonga, Lumengo
- Date: 2017
- Subjects: Inflation targeting policy , Structural vector error correction model , South Africa
- Language: English
- Type: Articles
- Identifier: http://ujcontent.uj.ac.za8080/10210/379615 , http://hdl.handle.net/10210/242066 , uj:24960 , Citation: Bonga-Bonga, L. 2017. Assessing the effectiveness of the monetary policy instrument during the inflation targeting period in South Africa.
- Description: Abstract: This paper assesses how inflation react to monetary policy shocks in South Africa during the inflation targeting period by making use of the structural vector error correction model (SVECM). The results of the impulse response function obtained from the SVECM show that, on average, contractionary monetary policy that intends to curb inflationary pressure has been impotent in South Africa. However, the contractionary monetary policy shocks managed to reduce output. The paper suggests that it is time a dual target, inflation and output, be considered in South Africa to avoid the harm caused on output growth from monetary policy actions related to the constraint of inflation targeting.
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Transmission of volatility shocks between the equity and foreign exchange markets in South Africa
- Authors: Bonga-Bonga, Lumengo
- Date: 2013
- Subjects: Stock market volatility , Foreign exchange rates , Equity
- Type: Article
- Identifier: uj:5988 , ISSN 2157-8834 , http://hdl.handle.net/10210/8617
- Description: The paper assesses the dynamic interaction between exchange rates and stock market volatility in South Africa by making use of the generalised impulse response function obtained from a bivariate VAR model. Volatility variables in the VAR system are obtained from a family of GARCH models based on criteria such as covariance stationarity and leverage effects. The findings of the paper show that foreign exchange conditional volatility responds positively to volatility shocks to the equity market. Nonetheless, the response of the equity market conditional volatility to volatility shocks to the foreign exchange market is short-lived and neutral for most of the time horizon periods. The paper attributes this finding mainly to the extent of foreign participation
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- Authors: Bonga-Bonga, Lumengo
- Date: 2013
- Subjects: Stock market volatility , Foreign exchange rates , Equity
- Type: Article
- Identifier: uj:5988 , ISSN 2157-8834 , http://hdl.handle.net/10210/8617
- Description: The paper assesses the dynamic interaction between exchange rates and stock market volatility in South Africa by making use of the generalised impulse response function obtained from a bivariate VAR model. Volatility variables in the VAR system are obtained from a family of GARCH models based on criteria such as covariance stationarity and leverage effects. The findings of the paper show that foreign exchange conditional volatility responds positively to volatility shocks to the equity market. Nonetheless, the response of the equity market conditional volatility to volatility shocks to the foreign exchange market is short-lived and neutral for most of the time horizon periods. The paper attributes this finding mainly to the extent of foreign participation
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Budget deficit and long-term interest rates in South Africa
- Authors: Bonga-Bonga, Lumengo
- Date: 2012
- Subjects: Budget deficit - South Africa , Long-term interest rates - South Africa , Cointegrating vector autoregressive (VAR) , Fisher effect , Inflation - South Africa - Forecasting
- Type: Article
- Identifier: uj:5868 , ISSN 1993-8233 , http://hdl.handle.net/10210/7965
- Description: This paper investigated the extent of the effects of the systematic and surprise changes in budget deficits on the long-term interest rate in South Africa. Use was made of the identified cointegrating vector autoregressive (VAR) techniques whereby cointegrating vectors were identified based on the Fisher effect theory and the expectation hypothesis of the term structure to assess the effect of systematic changes in budget deficit on the long-term interest rate. Moreover, the generalised impulse response functions obtained from the cointegrating VAR were used to assess the effect of the surprise change in budget deficit on the long-term interest rate. The results of the paper showed a positive relationship between the budget deficits and long-term interest rate under different assumptions of price expectations by economic agents.
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- Authors: Bonga-Bonga, Lumengo
- Date: 2012
- Subjects: Budget deficit - South Africa , Long-term interest rates - South Africa , Cointegrating vector autoregressive (VAR) , Fisher effect , Inflation - South Africa - Forecasting
- Type: Article
- Identifier: uj:5868 , ISSN 1993-8233 , http://hdl.handle.net/10210/7965
- Description: This paper investigated the extent of the effects of the systematic and surprise changes in budget deficits on the long-term interest rate in South Africa. Use was made of the identified cointegrating vector autoregressive (VAR) techniques whereby cointegrating vectors were identified based on the Fisher effect theory and the expectation hypothesis of the term structure to assess the effect of systematic changes in budget deficit on the long-term interest rate. Moreover, the generalised impulse response functions obtained from the cointegrating VAR were used to assess the effect of the surprise change in budget deficit on the long-term interest rate. The results of the paper showed a positive relationship between the budget deficits and long-term interest rate under different assumptions of price expectations by economic agents.
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The relationship between savings and economic growth at the disaggregated level
- Guma, Nomvuyo, Bonga-Bonga, Lumengo
- Authors: Guma, Nomvuyo , Bonga-Bonga, Lumengo
- Date: 2017
- Subjects: Savings , Corporates , Households
- Language: English
- Type: Articles
- Identifier: http://hdl.handle.net/10210/241427 , uj:24855 , Citation: Guma, N. 2017. The relationship between savings and economic growth at the disaggregated level.
- Description: Abstract: While the literature, both international and in South Africa, is relatively rich in studies on the determinants of foreign direct investment as well as the determinants of savings, none of the work done on South Africa has made use of disaggregated savings data to understand whether there is an observable difference in the marginal propensity to save of the different economic sectors. Thus, this paper attempts to assess the marginal propensity to save by the household, corporate and government sectors in South Africa. The results of the econometric analysis demonstrate that the greatest responsiveness of savings to GDP growth occurs amongst corporates. These findings should inform the South African government on how to regulate sectoral taxation that intends to encourage savings, given the low level of savings in the country.
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- Authors: Guma, Nomvuyo , Bonga-Bonga, Lumengo
- Date: 2017
- Subjects: Savings , Corporates , Households
- Language: English
- Type: Articles
- Identifier: http://hdl.handle.net/10210/241427 , uj:24855 , Citation: Guma, N. 2017. The relationship between savings and economic growth at the disaggregated level.
- Description: Abstract: While the literature, both international and in South Africa, is relatively rich in studies on the determinants of foreign direct investment as well as the determinants of savings, none of the work done on South Africa has made use of disaggregated savings data to understand whether there is an observable difference in the marginal propensity to save of the different economic sectors. Thus, this paper attempts to assess the marginal propensity to save by the household, corporate and government sectors in South Africa. The results of the econometric analysis demonstrate that the greatest responsiveness of savings to GDP growth occurs amongst corporates. These findings should inform the South African government on how to regulate sectoral taxation that intends to encourage savings, given the low level of savings in the country.
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