Fiscal policy, employment, and output in South Africa: An open economy analysis

Mthokozisi Mlilo and Umakrishnan Kollamparambi ()
Additional contact information
Umakrishnan Kollamparambi: Associate Professor, University of the Witwatersrand; Faculty of Commerce, Law and Management.
Authors registered in the RePEc Author Service: Umakrishnan Kollamparambil

Journal of Economic and Financial Studies (JEFS), 2016, vol. 4, issue 3, 11-23

Abstract: We provide strong evidence of a positive shock to government spending on increase in employment (public and private), an appreciation of the real effective exchange rate and deterioration in the trade balance; but it has no effect on output for South Africa during the period 1994:1-2008:4. We also document that positive shocks to net taxes generate an increase in output, private employment and have no effect on public employment; it also leads to a depreciation of the real effective exchange rate and an improvement in the trade balance. An important finding in this study is that the transmission channel between government expenditures and output is not as direct as suggested in the Keynesian doctrine, but is indirectly shown by public employmentâ€™s effects on output. We conclude that classical effects are predominant in the South African economy, i.e., only improvements in the supply-side components can be linked to increases in output.

Keywords: Employment; Fiscal policy shocks, South Africa; VAR. (search for similar items in EconPapers)
JEL-codes: E2 E62 H50 O11 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.journalofeconomics.org/index.php/site/article/view/238/288 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lrc:lareco:v:4:y:2016:i:3:p:11-23

Access Statistics for this article

More articles in Journal of Economic and Financial Studies (JEFS) from LAR Center Press
Bibliographic data for series maintained by S Marjan ().