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Analysing the effects of fiscal policy shocks in the South African economy

Charl Jooste (), Guangling Liu () and Ruthira Naraidoo ()

Economic Modelling, 2013, vol. 32, issue C, 215-224

Abstract: This paper is the first one to analyse the effect of aggregate government spending and taxes on output for South Africa using three types of a calibrated DSGE model and more data driven models such as a structural vector error correction model (SVECM) and a time-varying parameter VAR (TVP-VAR) to capture possible asymmetries and time variation of fiscal impulses. The impulse responses indicate first, that increases in government expenditure have a positive impact, albeit (at times) less than unity, on GDP in the short run; second, over the long run, the impact of government expenditure on GDP is insignificant; and third, increases in taxes decrease GDP over the short run, while having negligible effects over longer horizons.

Keywords: Rule-of-thumb consumers; Fiscal multiplier; Government spending; TVP-VAR; SVECM (search for similar items in EconPapers)
JEL-codes: C54 D58 E32 E62 H31 (search for similar items in EconPapers)
Date: 2013
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Working Paper: Analysing the Effects of Fiscal Policy Shocks in the South African Economy (2013) Downloads
Working Paper: Analysing the Effects of Fiscal Policy Shocks in the South African Economy (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:32:y:2013:i:c:p:215-224

DOI: 10.1016/j.econmod.2013.02.011

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