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Determinants of budget deficit in South Africa: A Bounds cointegration

Author

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  • GISELE MAH

    (NORTH WEST UNIVERSITY)

Abstract

This study examine the determinants of budget deficit in South Africa from 1994Q1 to 2018Q2. Data was collected from the South African reserve bank and Organisation for Economic Co-operation and Development. The Bounds cointegration was employed to analyse the determinants of budget deficit. The findings showed that there is a positive and significant relationship between the lag 4 of national government deficits and national government deficit itself. There is a negative and statistically significant relationship between real exchange rate and national government deficit. Lastly, there is a positive and statistically significant relationship between gross domestic product and national government deficit. It is recommended that, for national government deficit to be reduce, the current national government deficit needs to be reduce, the real exchange rate increased and the growth stabilise.

Suggested Citation

  • Gisele Mah, 2018. "Determinants of budget deficit in South Africa: A Bounds cointegration," Proceedings of Economics and Finance Conferences 6909931, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iefpro:6909931
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    File URL: https://iises.net/proceedings/10th-economics-finance-conference-rome/table-of-content/detail?cid=69&iid=021&rid=9931
    File Function: First version, 2018
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    More about this item

    Keywords

    Budget Deficit; gross domestic product; government expenditure; gross fixed capital formulation; unemployment; South Africa.;
    All these keywords.

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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