scholarly journals Time series analysis of interaction between aggregate expenditure and job creation in South Africa

2015 ◽  
Vol 4 (4) ◽  
pp. 649-657
Author(s):  
Thomas Habanabakize ◽  
Paul-Francois Muzindutsi
Keyword(s):  
South Africa ◽  
Job Creation ◽  
Var Model ◽  
Government Investment ◽  
Vector Autoregressive ◽  
Integration Approach ◽  
Long Run ◽  
Key Factor ◽  
Short Run ◽  
The Relationship

Jobs are the pillars of the economy and aggregate expenditure is among the key factor used to create an employment stimulating environment. This study scrutinizes the relationship between the component of aggregate expenditure and job creation in South Africa form 1995 to 2014. The Vector Autoregressive (VAR) model and multivariate co-integration approach were employed to examine how household consumption, government, investment and export expenditures affect job creation in South Africa. Findings of this study revealed that there is long-run relationship between aggregate expenditure and job creation with government and investment expenditure being the key determinants of job creation in South Africa. Contrary to priori expectation, consumption and exports do not improve jobs creation in South Africa. In the short-run, there are no significant interactions between components of aggregate expenditure and job creation. This study provided recommendation that may assist in boosting job creation in South Africa.

scholarly journals Analysis of the Keynesian Theory of Employment and Sectoral Job Creation: The Case of the South African Manufacturing Sector

2018 ◽  
Vol 18 (1) ◽  
pp. 123-143
Author(s):  
Thomas Habanabakize ◽  
Paul-Francois Muzindutsi
Keyword(s):  
South African ◽  
Manufacturing Sector ◽  
Job Creation ◽  
The South ◽  
Economic Sectors ◽  
Vector Autoregressive ◽  
Integration Approach ◽  
Long Run ◽  
Short Run ◽  
Investment Spending

Abstract The manufacturing sector is one of the backbones of the South African economy, and yet is one of the economic sectors facing challenges in job creation. This study analysed the long-run and short-run effects of aggregate expenditure components on job creation in the South African manufacturing sector. A Vector Autoregressive (VAR) with Johansen co-integration approach was used to analyse quarterly data from 1994 to 2015. The findings are that there is a long-run relationship between aggregate expenditure and job creation in the South African manufacturing sector, with government and investment spending being the major components of aggregate expenditure that create jobs in the South African manufacturing sector. Conversely, consumption spending destroys jobs in the manufacturing sector, while net exports have no significant effect on job creation. The short-run relationship between variables was not significant. Recommendations are that more effort should be put into investment spending, and government should spend more on investment than on consumption spending - in order to increase job creation in the manufacturing sector.

scholarly journals The Relationship between Household Debt and Consumption Spending in South Africa

2017 ◽  
Vol 9 (2) ◽  
pp. 243
Author(s):  
Patience Nkala ◽  
Asrat Tsegaye
Keyword(s):  
South Africa ◽  
Well Being ◽  
Household Debt ◽  
Causality Test ◽  
Policy Makers ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Short Run ◽  
The Relationship

Consumption has been and remains the main contributor to gross domestic product (GDP) growth in South Africa. Household debt on the other side has remained high over the years. These two economic indicators are a reflection of the well-being of an economy. This study thus examined the relationship between household debt and consumption spending, for the period between 1994 and 2013. The Johansen cointegration technique and the Vector error correction model (VECM) were utilised to test the long run and short run relationships between the variables. The Granger causality test was also employed to test the direction of causality between the variables. Results from this study have revealed that a relationship exists between household debt and consumption spending in South Africa and they have also showed that this relationship flows from household debt to consumption spending. The implications of these results are that consumption spending may be increased through other measures rather than through increasing debt. The study therefore recommends that policy makers avail more investment opportunities for households and to also create employment in a bid to increase the income of households which can then be used to increase household consumption rather than the use of debt.

IDENTIFICATION AND DICHOTOMIZATION OF LONG- AND SHORT-RUN RELATIONS OF COINTEGRATED VECTOR AUTOREGRESSIVE MODELS

2001 ◽  
Vol 17 (5) ◽  
pp. 889-912 ◽  
Author(s):  
Cheng Hsiao
Keyword(s):  
Prior Information ◽  
Autoregressive Process ◽  
Rank Condition ◽  
Vector Autoregressive ◽  
Long Run ◽  
Vector Autoregressive Process ◽  
Short Run ◽  
Cowles Commission ◽  
Necessary And Sufficient ◽  
The Relationship

We show that the usual rank condition is necessary and sufficient to identify a vector autoregressive process whether the variables are I(0) or I(d) for d = 1,2,.... We then use this rank condition to demonstrate the interdependence between the identification of short-run and long-run relations of cointegrated process. We find that both the short-run and long-run relations can be identified without the existence of prior information to identify either relation. But if there exists a set of prior restrictions to identify the short-run relation, then this same set of restrictions is sufficient to identify the corresponding long-run relation. On the other hand, it is in general not possible to identify the long-run relations without information on the complete structure. The relationship between the identification of a vector autoregressive process and a Cowles Commission dynamic simultaneous equations model is also clarified.

scholarly journals Government revenue and expenditure nexus in South Africa

2013 ◽  
Vol 10 (2) ◽  
pp. 256-269 ◽  
Author(s):  
Esman Nyamongo ◽  
Niek Schoeman ◽  
Moses Sichei
Keyword(s):  
South Africa ◽  
Granger Causality ◽  
Government Expenditure ◽  
Unit Roots ◽  
Government Revenue ◽  
Test Results ◽  
Vector Autoregressive ◽  
Seasonal Unit Roots ◽  
Long Run ◽  
Short Run

This paper investigates the nexus between government expenditure and government revenue in South Africa within the framework of a vector autoregressive (VAR) approach. It uses the Hylleberg et al. (1990) method to test for seasonal unit roots and finds that government revenue and government expenditure have unit roots at all frequencies. The Johansen procedure test results reveal that these variables are cointegrated. It is further established that revenue and expenditure are linked bidirectionally by Granger causality in the long-run, while there is no evidence of Granger causalityin the short-run in South Africa.

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 THE LONG-RUN RELATIONSHIP BETWEEN INFLATION AND REAL STOCK PRICES: EMPIRICAL EVIDENCE FROM SOUTH AFRICA

2012 ◽  
Vol 13 (4) ◽  
pp. 600-613 ◽  
Author(s):  
Riona Arjoon ◽  
Mariëtte Botes ◽  
Laban K. Chesang ◽  
Rangan Gupta
Keyword(s):  
South Africa ◽  
South African ◽  
Stock Prices ◽  
Stock Price ◽  
Positive Real ◽  
Vector Autoregressive ◽  
Price Response ◽  
Long Run ◽  
Short Run ◽  
Real Value

The existing literature on the theoretical relationship between the rate of inflation and real stock prices in an economy has shown varied predictions about the long run effects of inflation on real stock prices. In this paper, we present some time series evidence on this issue using South African data, by applying the structural bivariate vector autoregressive (VAR) methodology proposed by King and Watson (1997). Our empirical results provide considerable support of the view that, in the long run real stock prices are invariant to permanent changes in the rate of inflation. The impulse responses reveal a positive real stock price response to a permanent inflation shock in the long run, indicating that any deviations in short run real stock prices will be corrected towards the long run value. It is therefore concluded that inflation does not lower the real value of stocks in South Africa, at least in the long run.

scholarly journals A Provincial Perspective of Nonlinear Okun’s Law for Emerging Markets: The Case of South Africa

2020 ◽  
Vol 30 (3) ◽  
pp. 59-76
Author(s):  
Kambale Kavese ◽  
Andrew Phiri
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Sensitivity Analysis ◽  
Western Cape ◽  
Okun’S Law ◽  
Okun's Law ◽  
Long Run ◽  
Short Run ◽  
The Relationship ◽  
Nonlinear Autoregressive

AbstractA provincial analysis of Okun’s law in South Africa is provided in this article from 1996 to 2016. Empirically, we rely on the nonlinear autoregressive distributive lag (N-ARDL) model whilst the Corbae-Ouliaris filter is used to extract the ‘gap’ variables required for our regression estimates. Okun’s law is found to be significant hold in the long-run exclusively for the Western Cape and Kwa-Zulu Natal provinces whereas the remaining provinces partially display significant short-run effects. Our sensitivity analysis in which panel N-ARDL estimations for all provinces finds insignificant long-run Okun effects for the country as a whole, whilst validating the relationship only in the short-run. Our study hence advises that the epicenter of policy efforts in addressing the country’s high unemployment and low economic growth dilemma should be concentrated at a provincial level.

scholarly journals The Effect of Financial Development on Productivity, Corporate Tax, Foreign Reserve & Export Vector Autoregressive (Var) Model Approach Case Study on Ireland

2021 ◽  
Author(s):  
Abraham Zewdu Ararso
Keyword(s):  
Granger Causality ◽  
Financial Development ◽  
Export Performance ◽  
Var Model ◽  
Corporate Tax ◽  
Causality Test ◽  
Vector Autoregressive ◽  
Foreign Reserve ◽  
Long Run ◽  
Short Run

Abstract The development financial sector plays indispensable role in accelerating economic growth and improving countries welfare system. Robust financial sector can keep the momentum of economic growth with providing substantial financial support and preserving macroeconomic balance. Given the importance of this sector, this research tried to evaluate the role of Irish financial development on productivity, corporate tax, foreign reserve and export. The research comprises a time period between 1980 until 2016 and used Vector autoregressive (VAR) model. Financial development consists of advancement both in financial institutions as well as in financial markets structure of Ireland. The estimation consists of granger causality test, impulse response estimation and variance decomposition along with VAR estimation result. VAR estimation revealed that financial development caused significant positive effect on Ireland export performance in the short run. Conversely, financial development doesn’t have significant effect on Ireland productivity level, foreign reserve, and corporate tax in the short run. The Granger causality test for the study variables indicates that corporate tax rate in Ireland can cause financial development in the short run, while the remaining variables can’t cause effect on financial development in the short run. The granger causality Wald tests also demonstrates that Irish financial development and productivity can unilaterally cause change in the level of Ireland export performance in the short run. The variance decomposition estimation revealed that financial development is strongly exogenous both in the short run and long run. This indicates that financial development is weak in predicting the fluctuation of productivity, foreign reserve, and corporate tax. Nevertheless, financial development is endogenous both in the short and long run in predicting the fluctuation of Ireland export.

scholarly journals Do Graduates from Arts-Related Disciplines have a Higher Impact on Unemployment than Graduates from the Science-Related Disciplines?

2019 ◽  
Vol 8 (4) ◽  
pp. 52
Author(s):  
Victoria Kakooza ◽  
Robert Wamala ◽  
James Wokadala ◽  
Thomas Bwire
Keyword(s):  
Developing Countries ◽  
Education Sector ◽  
Var Model ◽  
Vector Autoregressive ◽  
Science Technology ◽  
The Arts ◽  
Long Run ◽  
Short Run ◽  
The Impact

There have been several attempts in developing countries to reduce both graduate and overall unemployment; with the majority attempts centered on changes in the education sector. To better understand this avenue, this study intends to comparatively establish the impact of the two broad discipline categories of- Arts and science related disciplines- on the overall unemployment. The study employed the Vector autoregressive (VAR) model to analyse Uganda’s data between 1991 and 2017. The findings of the study showed that the arts/humanities graduates have a slightly higher impact on unemployment than their counterparts from the science/technology disciplines in the short run in Uganda; with both groups of graduates having no significant effect on unemployment in the long run. 

scholarly journals The credit consumption pattern in South Africa: A trend analysis

2015 ◽  
Vol 5 (3) ◽  
pp. 194-204
Author(s):  
Ashley Teedzwi Mutezo
Keyword(s):  
South Africa ◽  
Interest Rates ◽  
Developed Countries ◽  
Disposable Income ◽  
Consumption Pattern ◽  
Household Debt ◽  
Long Run ◽  
Short Run ◽  
The Developed Countries ◽  
The Relationship

While the developed countries witnessed a significant contraction in credit consumption in response to the financial crisis in 2008, South Africa’s household debt continues to be on the increase. This article is based on empirical research on the relationship between household debt and disposable income, net wealth, interest rates and inflation for the period between 1975 and 2013. Using regression analyses, the study examines the linkage between household debt and consumption spending in South Africa to capture the short-run and long-run dynamics. The results show that there is a significant relationship between household debt and disposable income, net wealth and inflation. Further tests indicate that there is a bidirectional causality running from economic growth to household debt and vice versa. However, it is revealed that there is no direct relationship between household debt and lending rates

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