Debt sustainability and financial crises in South Africa
This study assesses debt sustainability in South Africa allowing for possible nonlinearities in the form of threshold behaviour by fiscal authorities. A long historical data series on the debtto- GDP ratio and models with fixed and time-varying thresholds allowing the level of debt to vary relative to its recent history and the occurrence of financial crises are used in the analysis. First, the results reveal that fiscal consolidation occurs at a much lower debt-to-GDP ratio of 46 percent in the period 1946 to 2010 compared to 65 percent in the period 1865 to 1945. Secondly, the results provide evidence of a statistically insignificant fiscal consolidation below these threshold levels. Thirdly, the results reveal that fiscal consolidation occur at a higher debt-to-GDP ratio during financial crises periods.
|Date of creation:||Sep 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (+2712) 420 2413
Fax: (+2712) 362-5207
Web page: http://www.up.ac.za/economics
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chang, Tsangyao & Chiang, Gengnan, 2012. "Transitional Behavior of Government Debt Ratio on Growth: The Case of OECD Countries," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 24-37, June.
- Samuel S Jibao & Niek Schoeman & Ruthira Naraidoo, 2010.
"Fiscal Regime Changes and the Sustainability of Fiscal Imbalance in South Africa: A Smooth Transition Error-Correction Approach,"
201023, University of Pretoria, Department of Economics.
- Samuel S. Jibao & Niek Schoeman & Ruthira Naraidoo, 2011. "Fiscal regime changes and the sustainability of fiscal imbalance in South Africa; a smooth transition error-correction approach," Working Papers 228, Economic Research Southern Africa.
- Lin, Chien-Fu Jeff & Terasvirta, Timo, 1994. "Testing the constancy of regression parameters against continuous structural change," Journal of Econometrics, Elsevier, vol. 62(2), pages 211-228, June.
- Baum, Anja & Checherita-Westphal, Cristina & Rother, Philipp, 2012.
"Debt and growth: new evidence for the euro area,"
Working Paper Series
1450, European Central Bank.
- Charl Jooste & Alfredo Cuevas & Ian C. Stuart & Philippe Burger, 2011. "Fiscal Sustainability and the Fiscal Reaction Function for South Africa," IMF Working Papers 11/69, International Monetary Fund.
- Gabriella Legrenzi & Costas Milas, 2011.
"Debt Sustainability and Financial Crises: Evidence from the GIIPS,"
Working Paper Series
42_11, The Rimini Centre for Economic Analysis.
- Gabriella Deborah Legrenzi & Costas Milas, 2011. "Debt Sustainability and Financial Crises: Evidence from the GIIPS," CESifo Working Paper Series 3594, CESifo Group Munich.
- Dick van Dijk & Timo Terasvirta & Philip Hans Franses, 2002.
"Smooth Transition Autoregressive Models — A Survey Of Recent Developments,"
Taylor & Francis Journals, vol. 21(1), pages 1-47.
- van Dijk, D.J.C. & Terasvirta, T. & Franses, Ph.H.B.F., 2000. "Smooth transition autoregressive models - A survey of recent developments," Econometric Institute Research Papers EI 2000-23/A, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
- van Dijk, Dick & Teräsvirta, Timo & Franses, Philip Hans, 2000. "Smooth Transition Autoregressive Models - A Survey of Recent Developments," SSE/EFI Working Paper Series in Economics and Finance 380, Stockholm School of Economics, revised 17 Jan 2001.
- Bohn, Henning, 2007. "Are stationarity and cointegration restrictions really necessary for the intertemporal budget constraint?," Journal of Monetary Economics, Elsevier, vol. 54(7), pages 1837-1847, October.
- Balázs Égert, 2012.
"Public debt, economic growth and nonlinear effects: Myth or reality?,"
EconomiX Working Papers
2012-44, University of Paris West - Nanterre la Défense, EconomiX.
- Balázs Égert, 2012. "Public Debt, Economic Growth and Nonlinear Effects: Myth or Reality?," OECD Economics Department Working Papers 993, OECD Publishing.
- Balázs Égert, 2013. "Public debt, economic growth and nonlinear effects: Myth or reality?," William Davidson Institute Working Papers Series wp1042, William Davidson Institute at the University of Michigan.
- Balazs Egert, 2013. "Public Debt, Economic Growth and Nonlinear Effects: Myth or Reality," CESifo Working Paper Series 4157, CESifo Group Munich.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2010.
"From Financial Crash to Debt Crisis,"
NBER Working Papers
15795, National Bureau of Economic Research, Inc.
- Georgios Chortareas & George Kapetanios & Merih Uctum, 2008. "Nonlinear Alternatives to Unit Root Tests and Public Finances Sustainability: Some Evidence from Latin American and Caribbean Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(5), pages 645-663, October.
- Tito Cordella & Luca Antonio Ricci & Marta Ruiz-Arranz, 2005. "Debt Overhang or Debt Irrelevance? Revisiting the Debt Growth Link," IMF Working Papers 05/223, International Monetary Fund.
- Carmen M. Reinhart & Vincent R. Reinhart & Kenneth S. Rogoff, 2012.
"Public Debt Overhangs: Advanced-Economy Episodes since 1800,"
Journal of Economic Perspectives,
American Economic Association, vol. 26(3), pages 69-86, Summer.
- Reinhart, Carmen M. & Rogoff, Kenneth S., 2010.
"Growth in a Time of Debt,"
11129154, Harvard University Department of Economics.
- Sarno, Lucio, 2001. "The behavior of US public debt: a nonlinear perspective," Economics Letters, Elsevier, vol. 74(1), pages 119-125, December.
- Arghyrou, Michael G & Kul B Luintel, 2003.
"Government Solvency: Revisiting some EMU Countries,"
Royal Economic Society Annual Conference 2003
8, Royal Economic Society.
- Arghyrou, Michael G. & Luintel, Kul B., 2007. "Government solvency: Revisiting some EMU countries," Journal of Macroeconomics, Elsevier, vol. 29(2), pages 387-410, June.
- Michael G. Arghyrou & Kul B Luintel, 2002. "Government Solvency: Revisiting some EMU Countries," Economics and Finance Discussion Papers 02-24, Economics and Finance Section, School of Social Sciences, Brunel University.
- Michael G. Arghyrou & Kul B Luintel, 2002. "Government Solvency: Revisiting some EMU Countries," Public Policy Discussion Papers 02-24, Economics and Finance Section, School of Social Sciences, Brunel University.
- Lusine Lusinyan & John Thornton, 2009. "The sustainability of South African fiscal policy: an historical perspective," Applied Economics, Taylor & Francis Journals, vol. 41(7), pages 859-868.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "This Time Is Different: Eight Centuries of Financial Folly," Economics Books, Princeton University Press, edition 1, volume 1, number 8973, April.
- Carmen M. Reinhart, 2010. "This Time is Different Chartbook: Country Histories on Debt, Default, and Financial Crises," NBER Working Papers 15815, National Bureau of Economic Research, Inc.
- Thomas Herndon & Michael Ash & Robert Pollin, 2013. "Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogo ff," Working Papers wp322, Political Economy Research Institute, University of Massachusetts at Amherst.
- Gabriella Deborah Legrenzi & Costas Milas, 2010. "Spend-and-Tax Adjustments and the Sustainability of the Government's Intertemporal Budget Constraint," CESifo Working Paper Series 2926, CESifo Group Munich.
When requesting a correction, please mention this item's handle: RePEc:pre:wpaper:201352. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rangan Gupta)
If references are entirely missing, you can add them using this form.