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Analysing the effects of fiscal policy shocks in the South African economy

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

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 decrease GDP over the short run, while having negligible effects over longer horizons.

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File URL: http://www.sciencedirect.com/science/article/pii/S0264999313000618
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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 32 (2013)
Issue (Month): C ()
Pages: 215-224

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Handle: RePEc:eee:ecmode:v:32:y:2013:i:c:p:215-224
DOI: 10.1016/j.econmod.2013.02.011
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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