Explaining the Growth of Government Spending in South Africa

James Alm () and Abel Embaye ()

No 1105, Working Papers from Tulane University, Department of Economics

Abstract: What determines government spending in South Africa? The paper estimates the determinants of real per capita government spending in the Republic of South Africa, using annual data for the period 1960 to 2007, a tumultuous period during which South Africa experienced a variety of internally imposed changes (e.g., the abolition of apartheid, changes in political institutions) and externally generated shocks (e.g., war, oil shocks). Using multivariate cointegration techniques, we find that per capita government spending, per capita income, the tax share, and the wage rate are cointegrated, a result that supports the notion that government spending is associated not only with per capita income and the true cost of government service provision as given by the wage rate but also to the fiscal illusion caused by budget deficits. We also find evidence that per capita government spending was positively affected by external shocks. These external shocks seem to play a significant role in explaining the dynamics of government spending growth.

Keywords: median voter theorem; government spending; cointegration; unit roots; error correction method (search for similar items in EconPapers)
JEL-codes: C22 H50 H60 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2011-04
New Economics Papers: this item is included in nep-afr
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://repec.tulane.edu/RePEc/pdf/tul1105.pdf First version, 2011 (application/pdf)

Related works:
Journal Article: EXPLAINING THE GROWTH OF GOVERNMENT SPENDING IN SOUTH AFRICA (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:tul:wpaper:1105

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