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Fiscal policy in times of fiscal stress: Or what to do when r > g

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  • Roy Havemann
  • Hylton Hollander

Abstract

South Africa runs a primary fiscal deficit and the long-term interest rate on government borrowing, r , is greater than the long-term economic growth rate, g . Without intervention, debt will continue to rise until there is a disorderly fiscal stop. Reforms to raise growth have not materialized, leaving fiscal consolidation as the second-best solution to achieve fiscal sustainability.

Suggested Citation

  • Roy Havemann & Hylton Hollander, 2022. "Fiscal policy in times of fiscal stress: Or what to do when r > g," WIDER Working Paper Series wp-2022-52, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2022-52
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    References listed on IDEAS

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    Cited by:

    1. Hylton Hollander, 2024. "Debt-financed fiscal stimulus in South Africa," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 48(1), pages 87-112, January.
    2. Erasmus, Ruan & Steenkamp, Daan, 2022. "South Africa’s yield curve conundrum," MPRA Paper 115398, University Library of Munich, Germany.
    3. Hylton Hollander, 2024. "Debt-financed fiscal stimulus in South Africa," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 48(1), pages 87-112, January.

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    Keywords

    Fiscal sustainability; Fiscal consolidation; Policy coordination; Optimal policy; Fiscal policy;
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