Fiscal Sustainability in South Africa: Recent Evidence

Elvis Munyaradzi Ganyaupfu

Journal of Social Economics, 2014, vol. 1, issue 4, 159-167

Abstract: The objective of this study was to analyse how the South African government historically reacted to its public debt position during the sample period 1990-2013. Following diagnostic evaluation of the stationarity and coi ntegration properties of the data series, a fiscal reaction function was estimated to examine whether the government’s fiscal policies were consistent with the intertermporal government budget constraint. A standard three-variable framework of the Vector Error Correction Model (VECM) was applied using E-views. The results provide evidence that the government indeed ran a sustainable fiscal policy during the sample period explored by adjusting the primary deficit or surplus in response to changes in its debt positions.

Keywords: Sustainability; public debt; primary balance; fiscal policy; intertemporal budget constraint (search for similar items in EconPapers)
Date: 2014
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