scholarly journals The impact of a fuel levy on economic growth in South Africa

2018 ◽  
Vol 29 (1) ◽  
pp. 41-49 ◽  
Author(s):  
Thobeka Ncanywa ◽  
Nosipho Mgwangqa
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Government Expenditure ◽  
Negative Relationship ◽  
Petroleum Products ◽  
Tax System ◽  
Vector Autoregressive ◽  
Long Run ◽  
The Government ◽  
The Impact

Government expenditure is one of the factors that could influence economic growth and it depends on borrowing or on the amount of tax revenue. A fuel levy, as an excise tax charged on petroleum products such as petrol, diesel and biodiesel, can be an important source of revenue for the government. It can, however, be a burden on fuel consumers. The present study, as an effort to address this controversy, used the vector autoregressive approach to examine the impact of fuel levies on economic growth in South Africa. The results showed a long-run unidirectional negative relationship between economic growth and fuel levy. The conclusion was that the economy needs to grow at a higher rate so as to boost tax revenues and public expenditure. Strong revenue collection, therefore, depends on highly increasing economic growth and efficient tax administration. The implication of a growth-oriented tax system is to minimise distortions created by the tax system and create incentives for drivers of economic growth.

scholarly journals Relative Impact of Domestic and Foreign Public Debt on Economic Growth in South Africa

2020 ◽  
pp. 193672442098041
Author(s):  
Talknice Saungweme ◽  
Nicholas M. Odhiambo
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Public Debt ◽  
Foreign Debt ◽  
Negative Relationship ◽  
Relative Impact ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
The Impact

This paper investigates the debt-growth nexus by testing both the impact of aggregate public debt on economic growth and the relative impact of domestic and foreign public debt on economic growth using South Africa as the case study—from 1970 to 2017. Based on the autoregressive distributed lag (ARDL) technique, the findings reveal that the impact of aggregated public debt on economic growth in South Africa is statistically significant and negative, both in the short run and in the long run. The results further reveal that domestic public debt and economic growth have a statistically significant and positive relationship in the short run only. Furthermore, foreign public debt has a statistically significant and negative relationship with economic growth but only in the long run. Therefore, the study recommends the government to manage effectively its debt and to finance long-term high-returning productive investments that should translate into economic growth. Finally, the study cautions the country against growing public debt, predominantly foreign debt, to finance its increasing recurrent expenditure needs.

scholarly journals Analysis of the Impact of Fiscal Policy on Economic Growth in South Africa: VECM Approach

2018 ◽  
Vol 10 (2) ◽  
pp. 231
Author(s):  
Tshembhani Mackson HLONGWANE ◽  
Itumeleng Pleasure MONGALE ◽  
Lavisa TALA
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Fiscal Policy ◽  
Negative Impact ◽  
National Development ◽  
Real Gdp ◽  
Long Run ◽  
Fixed Capital Formation ◽  
The Government ◽  
The Impact

Fiscal policy ensures macroeconomic stability as a precondition for growth at the macro level. This study investigates the impact of fiscal policy on economic growth of South Africa from 1960 to 2014 through a Cointegrated Vector Autoregression approach. It seeks to contribute to the existing literature as well as in designing effective fiscal policy programmes which can propel economic performance. Theresults of the long run estimates revealed that government tax revenue has a positive and significant long run influence on economic growth, whereas the government gross fixed capital formation and budget deficit have a negative impact on real GDP. For that reason, the study recommends that some expansionary fiscal policy measures should be strengthened since they play a very important role in the economy so as to meet the government target of the National Development Plan Vision for 2030.

scholarly journals The Effect of Exchange Rate Movements and Economic Growth on Job Creation

2017 ◽  
Vol 62 (2) ◽  
pp. 20-41
Author(s):  
Chama Chipeta ◽  
Daniel Francois Meyer ◽  
Paul-Francois Muzindutsi
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Job Creation ◽  
Vector Autoregressive ◽  
The Real ◽  
Long Run ◽  
Exchange Rate Shocks ◽  
The Impact

Abstract Job creation is at the centre of economic development and remains a source of sustenance for social and human relations. The creation of a job-enabling economic environment is imperative in promoting social and economic cohesiveness in the macro and microeconomic environment. Any shocks to the economy, particularly those of exchange rate shocks and changes in economic growth, may negatively affect the labour market and job creation. This study made use of quarterly observations, from the first quarter of 1995 to the fourth quarter of 2015, to investigate the effect of the real exchange rate and economic growth on South Africa’s employment status. South Africa, a developing country, was selected as a case study due to its high unemployment rate that is still increasing. The Vector Autoregressive (VAR) model and multivariate co-integration techniques were used in assessing the impact and responsiveness of employment to the real exchange rate and real economic growth in South Africa. Findings of this study revealed that employment responds positively to economic growth and negatively to the real exchange rate in the long-run. The short-run displays a positive relationship between real economic growth and employment, while the relationship between employment and the real exchange rate is also negative. However, the effect of economic growth in creating jobs is not significant enough in stimulating job creation in South Africa, as indicated by results in variance decomposition. Movements in the exchange rate exerted a significant short and long-run negative effect on employment dynamics; implying that a depreciation of the rand against the U.S. dollar is associated with decrease in overall employment. Exchange rate stability is thus important for economic growth and job creation in South Africa. The study provided further recommendations on promoting job creation in South Africa and other developing countries.

scholarly journals DÉFICIT FISCAL, CRECIMIENTO ECONÓMICO E INFLACIÓN, ¿UNA RELACIÓN EXÓGENA?

2020 ◽  
Vol 79 (312) ◽  
pp. 89
Author(s):  
Federico Novelo Urdanivia ◽  
Nancy Muller Durán
Keyword(s):  
Economic Growth ◽  
Government Expenditure ◽  
Negative Relationship ◽  
Sole Source ◽  
Output Growth ◽  
Fiscal Deficit ◽  
Economic Growth Rate ◽  
Long Run ◽  
The Government ◽  
The Relationship

<p>En este artículo analizamos la relación entre el crecimiento económico, el déficit fiscal y la inflación en México, considerando el periodo en que ha estado vigente la autonomía del Banco de México respecto del gobierno. Estimamos dos modelos CVAR para demostrar que si el gasto de gobierno es endógeno al crecimiento económico, entonces el déficit fiscal no es necesariamente la única causa de la inflación. Nuestros resultados muestran que, aún sin causalidad en el sentido de Granger, existe una relación negativa de largo plazo entre el gasto de gobierno y la inflación. De manera conjunta, ambos modelos revelan que a mayor crecimiento económico, mayor gasto fiscal y menor inflación.</p><p> </p><p align="center">FISCAL DEFICIT, ECONOMIC GROWTH AND INFLATION, AN EXOGENOUS RELATIONSHIP?</p><p align="center"><strong>ABSTRACT</strong><strong></strong></p><p>This paper deals with the relationship between output growth, fiscal deficit and the rate of inflation in Mexico for the period of the independence of Banco de México. A couple of CVAR models are estimated with the aim of testing whether the government expenditure is endogenous to economic growth, in which case the fiscal deficit will not necessarily be the sole source of inflation. According to our empirical results, it is shown that there is a long-run negative relationship between government spending and inflation, without involving a Granger causality. Both models jointly reveal that the higher the economic growth rate, the larger government expenditure and the lower the rate of inflation.</p>

scholarly journals The role of government spending on economic growth in a developing country

2017 ◽  
Vol 7 (2) ◽  
pp. 140-146
Author(s):  
M.F. Oladele ◽  
Gisele Mah ◽  
Itumeleng Mongale
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Significant Relationship ◽  
Government Spending ◽  
Industrial Development ◽  
Government Expenditure ◽  
Negative Relationship ◽  
Annual Data ◽  
Role Of Government ◽  
Long Run

The issue of whether government expenditure helps or hinders economic growth is still debatable. This study examines the contribution of government spending towards economic growth in South Africa using annual data from 1980 – 2014. The cointegration approach and Vector Error Correction Model were used to analyse the data. The cointegration test results indicate that there is long run relationship between government expenditure and economic growth in South Africa. The VECM outcome indicates a positive and significant link between economic growth and expenditure on the long run. There is a positive and significant relationship between exchange rate and economic growth and a significant and negative relationship between economic growth and private consumption. Based on these findings, the correlation between government expenditure and economic growth showed that there is positive relationship on the long run in South Africa, while there is a negative and significant relationship between government spending and economic growth on the short run. More spending should therefore be directed towards important sectors such as infrastructural development and industrial development in order to accelerate economic growth. There is also a need for fiscal policy to be used as an instrument to regulate the amount of money in the economy.

scholarly journals Analysis of the Impact of Fiscal Policy on Economic Growth in South Africa: VECM Approach

2018 ◽  
Vol 10 (2(J)) ◽  
pp. 231-238
Author(s):  
Tshembhani Mackson HLONGWANE ◽  
Itumeleng Pleasure MONGALE ◽  
Lavisa TALA
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Fiscal Policy ◽  
Negative Impact ◽  
National Development ◽  
Real Gdp ◽  
Long Run ◽  
Fixed Capital Formation ◽  
The Government ◽  
The Impact

Fiscal policy ensures macroeconomic stability as a precondition for growth at the macro level. This study investigates the impact of fiscal policy on economic growth of South Africa from 1960 to 2014 through a Cointegrated Vector Autoregression approach. It seeks to contribute to the existing literature as well as in designing effective fiscal policy programmes which can propel economic performance. Theresults of the long run estimates revealed that government tax revenue has a positive and significant long run influence on economic growth, whereas the government gross fixed capital formation and budget deficit have a negative impact on real GDP. For that reason, the study recommends that some expansionary fiscal policy measures should be strengthened since they play a very important role in the economy so as to meet the government target of the National Development Plan Vision for 2030.

scholarly journals Government Expenditure and Economic Growth Nexus: Evidence from Nigeria

2016 ◽  
Vol 5 (4) ◽  
pp. 56
Author(s):  
Oyediran, Leye Sherifdeen ◽  
Sanni, Ibrahim ◽  
Adedoyin, Lukman ◽  
Oyewole Olabode Michael
Keyword(s):  
Economic Growth ◽  
Capital Expenditure ◽  
Government Expenditure ◽  
Least Square ◽  
National Bureau ◽  
Fiscal Discipline ◽  
Secondary Sources ◽  
Economic Development And Growth ◽  
The Government ◽  
The Impact

The need to better the lots of citizens through government expenditure has raised questions on the impact of government expenditure on the economic development and growth of nations. It is against this background that this paper examined the antecedent effect of government spending on the Nigerian economic growth. The general objective of the study is to ascertain the relationship between government expenditure and economic growth in Nigeria; specifically, the study examined: (i) the significance influence of government capital expenditure on economic growth in Nigeria and (ii) the significance influence of government recurrent expenditure on economic growth in Nigeria. The study employed ordinary least square (OLS) multiple regression analysis in estimating the specified model, with the Gross Domestic Product (GDP) as the dependent variable, while Capital Expenditure (CAPEXP) and Recurrent Expenditure (REXP) are the independent variables. Data between 1980 – 2013 were collected from secondary sources through the National Bureau of Statistics (NBS) and Central Bank of Nigeria (CBN). Results showed that in Nigeria, there exist a significant relationship between the government expenditure and economic growth. The study therefore recommends instilling fiscal discipline in government expenditures, and putting in place structural mechanisms to act as surveillance on capital spending so as to boost the nation’s human and social capital.

scholarly journals Impact of Exchange Rate Management on the Nigerian Economic Growth: Empirical Validation

2019 ◽  
Vol 1 (2) ◽  
pp. 28-35
Author(s):  
Friday Osaru Ovenseri Ogbomo ◽  
Precious Imuwahen Ajoonu
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Inflation Rate ◽  
Government Expenditure ◽  
Least Square ◽  
Ordinary Least Square ◽  
Exchange Rate Management ◽  
Long Run ◽  
Short Run ◽  
The Impact

This paper examined the impact of Exchange Rate Management on economic growth in Nigeria between 1980 and 2015. The study was set to gauge how the management of exchange rate in Nigeria has impacted the economy. The study employed the Ordinary Least Square (OLS) method in its analysis. Co-integration and Error Correction Techniques were used to establish the Short-run and Long-run relationships between economic growth and other relevant economic indicators. The result revealed that exchange rate management proxy by various exchange rates regimes in Nigeria was not germane to economic growth. Rather, government expenditure, inflation rate, money supply and foreign direct investment significantly impact on economic growth in Nigeria. It is against this backdrop that the Nigerian economy must diversify her export base to create room for more inflow of foreign exchange.  

scholarly journals The Contribution of Foreign Direct Investment (FDI) To Domestic Employment Levels in South Africa: A Vector Autoregressive Approach

2019 ◽  
Vol 11 (1(J)) ◽  
pp. 110-121
Author(s):  
Bongumusa Prince Makhoba, ◽  
Irrshad Kaseeram
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Least Squares ◽  
South African ◽  
Empirical Analysis ◽  
Negative Relationship ◽  
Ordinary Least Squares ◽  
Series Data ◽  
The South ◽  
Vector Autoregressive

Several empirical works have yielded mixed and controversial results with regard to the effects of FDI on employment and economic growth. The primary focus of this study is to investigate the contribution of FDI to domestic employment levels in the context of the South African economy. The analyses of the study were carried out using the annual time series data from 1980 to 2015. The macroeconomic variables employed in the empirical investigation include employment, FDI, GDP, inflation, trade openness and unit labour costs. The study used secondary data from the South African Reserve Bank and Statistics South Africa database. The study estimated a Vector Autoregressive/ Vector Error Correction Mechanism (VAR/VECM) approach to conduct empirical analysis. However, the study also employed single equation estimation techniques, including the Ordinary Least Squares (OLS), Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS) and Canonical Cointegrating Regression (CCR) models as supporting tools to verify the VAR/VECM results. This study provides strong evidence of a significant negative relationship between FDI and employment levels in the South African economy. Empirical analysis of the study suggests that the effect of economic growth on employment is highly positive and significant in South Africa’s economy. The study recommends that policymakers ought to invest more in productive sectors that aim to promote economic growth and development to boost employment opportunities in South Africa.

scholarly journals The impact of education tax and investment in human capital on economic growth in Nigeria

2020 ◽  
Vol 3 (2) ◽  
pp. 77-86
Author(s):  
Abubakar Aminu ◽  
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Tertiary Education ◽  
Distributed Lag ◽  
Distributed Lag Model ◽  
Long Run ◽  
Lag Model ◽  
The Government ◽  
Capital Development ◽  
The Impact

This paper investigated the impact of education tax and investment in human capital on economic growth in Nigeria utilizing the Non-Linear Autoregressive Distributed Lag Model of cointegration covering the period of 25 years from 1995 to 2019. The findings reveal that education tax and investment in human capital have positive and significant effect on the growth of the Nigerian economy over the sampled period. The paper recommends that in order to boost the economy, Nigeria would need to, among other policy frameworks, provide a suitable environment for ensuring macro-economic stability through effective utilization of income from education tax that will encourage increased investment in human capital in the public sector. In addition to income from education tax, for effective and speedy economic growth and development in Nigeria, the government, beneficiaries (students/parents), employers of labor and other stakeholders in the society should share the responsibility for financing primary, secondary and tertiary education, so as to provide a solid foundation for human capital development. However, as revealed in this paper, the contribution of education tax and investment in human capital is most likely to be realized over a long-run period than in the short term. Keywords: Education Tax; Investment; Human capital; Economic growth

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