Fiscal sustainability in South Africa: Will history repeat itself?

Estian Calitz, Stan Du Plessis () and Franz Siebrits

No 07/2013, Working Papers from Stellenbosch University, Department of Economics

Abstract: Several empirical studies have found that fiscal policy has been sustainable in South Africa since 1960. This paper complements these studies by providing perspective on the manner in which fiscal sustainability was maintained. It discusses two episodes of significant increases and one period of substantial reduction in the public debt burden to show that periods of rising deficits and government debt in South Africa were followed by returns to sustainable levels, thereby preventing major domestic economic crises and external interventions. The paper also provides a projection of the fiscal outlook for South Africa based on a structural VAR model. The results suggest that the discretionary fiscal decisions of 2007 to 2010 might pose a serious threat to the sustainability of fiscal policy unless the authorities respond as they did in the past by checking large budget deficits and concomitant rapid increases in the public debt burden promptly.

Keywords: fiscal policy; fiscal sustainability; South Africa (search for similar items in EconPapers)
JEL-codes: H62 H63 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-afr, nep-his and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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https://www.ekon.sun.ac.za/wpapers/2013/wp072013/wp-07-2013.pdf First version, 2013 (application/pdf)

Related works:
Journal Article: Fiscal Sustainability in South Africa: Will History Repeat Itself? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:sza:wpaper:wpapers183

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