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

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  • Charl Jooste, Guangling (Dave) Liu and Ruthira Naraidoo

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 model (SVECM) 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 Economic Research Southern Africa in its series Working Papers with number 351.

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Length: 26 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:rza:wpaper:351

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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. Aye, Goodness C. & Balcilar, Mehmet & Bosch, Adél & Gupta, Rangan, 2014. "Housing and the business cycle in South Africa," Journal of Policy Modeling, Elsevier, vol. 36(3), pages 471-491.
  2. Rangan Gupta & Charl Jooste & Kanyane Matlou, 2013. "A Time-Varying Approach to Analysing Fiscal Policy and Asset Prices in South Africa," Working Papers 201303, University of Pretoria, Department of Economics.
  3. 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 1211, University of Nevada, Las Vegas , Department of Economics.
  4. Alexander Zimper, 2013. "The minimal confidence levels of Basel capital regulation," Working Papers 201305, University of Pretoria, Department of Economics.

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