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Autonomous Expenditure Multipliers and Gross Value Added in South Africa

Author

Listed:
  • Arkadiusz J Derkacza

    (Institute of Economics, University of Social Sciences, Warsaw, Poland)

  • Santos Bila

    (College of Business and Economics, University of Johannesburg)

  • Sodiq Arogundadec

    (College of Business and Economics, University of Johannesburg)

Abstract

This study answers two main questions. What are the South African fiscal, export, and investment multipliers? Is obtaining the impact of autonomous expenditure on gross value-added growth rate possible? In answering these questions, we use the principle of aggregate demand and data spanning 1992 to 2019. The results suggest that autonomous expenditure multipliers exert a positive effect on the change in gross value added. These multipliers are however driven by several factors. First, the import intensity level - the import intensities of each autonomous expenditure reduce their significance. This means that the leakage of aggregate demand in the form of expenditure on the purchase of imported goods increases. Secondly, the value of the fiscal, investment and export multipliers is determined by the propensity for total private consumption. The value of the propensity for total private consumption depends on the household income taxes and the propensity to save. An increase in these two ratios decreases the value of the propensity to private consumption. This indicates that the leakage of aggregate demand is driven by a decline in total private consumption in the economy, and this may be caused by an increase in savings and/or an increase in the average household income tax.

Suggested Citation

  • Arkadiusz J Derkacza & Santos Bila & Sodiq Arogundadec, 2022. "Autonomous Expenditure Multipliers and Gross Value Added in South Africa," Economics Working Papers edwrg-04-2022, College of Business and Economics, University of Johannesburg, South Africa, revised 2022.
    • Handle: RePEc:ady:wpaper:edwrg-04-2022
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    References listed on IDEAS

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    More about this item

    Keywords

    Fiscal multiplier; export multiplier; investment multiplier; GVA; South Africa;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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