Do fiscal regimes matter for fiscal sustainability in South Africa?: A Markov-switching approach

Gabriel Temesgen Woldu

No wp-2020-163, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: This paper empirically examines South Africa's fiscal sustainability through a Markov-switching model which utilizes quarterly datasets for the period from 1960 to 2019. The results show that public debt responds positively, demonstrating a sustainable fiscal policy. Furthermore, considering the regime-specific feedback coefficients of the fiscal policy rule and the durations of fiscal regimes, the study finds that South Africa's fiscal policy satisfies the No-Ponzi game condition.

Keywords: Fiscal sustainability; Markov switching; South Africa; Fiscal policy; Public debt; Fiscal regime (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-mac
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