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Do fiscal regimes matter for fiscal sustainability in South Africa?: A Markov-switching approach

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  • Gabriel Temesgen Woldu

Abstract

This paper empirically examines South Africa's fiscal sustainability through a Markov-switching model which utilizes quarterly datasets for the period from 1960 to 2019. The results show that public debt responds positively, demonstrating a sustainable fiscal policy. Furthermore, considering the regime-specific feedback coefficients of the fiscal policy rule and the durations of fiscal regimes, the study finds that South Africa's fiscal policy satisfies the No-Ponzi game condition.

Suggested Citation

  • Gabriel Temesgen Woldu, 2020. "Do fiscal regimes matter for fiscal sustainability in South Africa?: A Markov-switching approach," WIDER Working Paper Series wp-2020-163, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2020-163
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    File URL: https://www.wider.unu.edu/sites/default/files/Publications/Working-paper/PDF/wp2020-163.pdf
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    References listed on IDEAS

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    Keywords

    Fiscal sustainability; Markov switching; South Africa; Fiscal policy; Public debt; Fiscal regime;
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