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Oil prices and the South African economy: A macro-meso-micro analysis

  • Fofana, Ismaél
  • Chitiga, Margaret
  • Mabugu, Ramos

Three levels of analysis are used to track the channels by which South Africa and its people are impacted by an increase of oil prices, namely the macro-economic level, the meso-economic level and the micro-economic/household level. The paper uses an economy and energy integrated approach to quantify these different channels. The approach combines a household survey dataset and an input-output dataset to implement the models. Results indicate that the impacts on the macroeconomy are negative, with gross domestic product falling and the current account balance worsening. All of the industries falling into the high intensive oil - use group witness an increase of their input cost that is above the economy - wide average. The impact of doubling paraffin prices results in poor households in rural areas and among the "Black" population, in particular, witnessing an increase of their cost of living which is much higher than their corresponding highest expenditure quintile groups. An increase of transport fuel hits the richer households much harder. The distributional impacts of rising transport cost as a consequence of high oil and oil-products prices shows that median quintile expenditure groups observe the highest impact both in urban and rural areas and especially among the "Black" population.

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File URL: http://www.sciencedirect.com/science/article/B6V2W-4X6DBPB-3/2/8417f9d55b429e0f82387ba1636ed79b
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Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 37 (2009)
Issue (Month): 12 (December)
Pages: 5509-5518

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Handle: RePEc:eee:enepol:v:37:y:2009:i:12:p:5509-5518
Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

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  1. Jan van Heerden & Reyer Gerlagh & James Blignaut & Mark Horridge & Sebastiaan Hess & Ramos Mabugu & Margaret Mabugu, 2006. "Searching for Triple Dividends in South Africa: Fighting CO2 Pollution and Poverty while Promoting Growth," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 113-142.
  2. Hamid Faruqee & Douglas Laxton & Bart Turtelboom & Peter Isard & Eswar Prasad, 1998. "Multimod Mark III: The Core Dynamic and Steady State Model," IMF Occasional Papers 164, International Monetary Fund.
  3. Essama-Nssah, B. & Go, Delfin S. & Kearney, Marna & Korman, Vijdan & Robinson, Sherman & Thierfelder, Karen, 2007. "Economy-wide and distributional impacts of an oil price shock on the south African economy," Policy Research Working Paper Series 4354, The World Bank.
  4. Stan du Plessis & Ben Smit, 2006. "Economic growth in South Africa since 1994," Working Papers 01/2006, Stellenbosch University, Department of Economics.
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