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Analysing the Effects of Fiscal Policy Shocks in the South African Economy

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Author Info

  • Charl Jooste

    ()
    (Department of Economics, University of Pretoria)

  • Guangling "Dave" Liu

    ()
    (Department of Economics, University of Stellenbosch)

  • Ruthira Naraidoo

    ()
    (Department of Economics, University of Pretoria)

Abstract

This paper is the first one to analyse the effect of aggregate government spending and taxes on output for South Africa using three types of a calibrated DSGE model and more data driven models such as a structural vector error correction (SVEC) model and a time-varying parameter VAR (TVP-VAR) to capture possible asymmetries and time variation of fiscal impulses. The impulse responses indicate first, that increases in government expenditure have a positive impact, albeit (at times) less than unity, on GDP in the short run; second, over the long run, the impact of government expenditure on GDP is insignificant; and third, increases in taxes decreases GDP over the short run, while having negligible effects over longer horizons.

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Bibliographic Info

Paper provided by University of Pretoria, Department of Economics in its series Working Papers with number 201206.

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Length: 27 pages
Date of creation: Feb 2012
Date of revision:
Handle: RePEc:pre:wpaper:201206

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Keywords: rule-of-thumb consumers; fiscal multiplier; government spending; TVP-VAR; SVECM;

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References

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Citations

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Cited by:
  1. Goodness C. Aye & Mehmet Balcilar & Rangan Gupta & Charl Jooste & Stephen M. Miller & Zeynel Abidin Ozdemir, 2012. "Fiscal Policy Shocks and the Dynamics of Asset Prices: The South African Experience," Working papers, University of Connecticut, Department of Economics 2012-27, University of Connecticut, Department of Economics.
  2. Goodness C. Aye & Mehmet Balcilar & Adel Bosch & Rangan Gupta, 2013. "Housing and the Business Cycle in South Africa," Working Papers, University of Pretoria, Department of Economics 201323, University of Pretoria, Department of Economics.
  3. Alexander Zimper, 2013. "The minimal confidence levels of Basel capital regulation," Working Papers, University of Pretoria, Department of Economics 201305, University of Pretoria, Department of Economics.
  4. Rangan Gupta & Charl Jooste & Kanyane Matlou, 2013. "A Time-Varying Approach to Analysing Fiscal Policy and Asset Prices in South Africa," Working Papers, University of Pretoria, Department of Economics 201303, University of Pretoria, Department of Economics.

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