Analysis of Government Expenditure and Sectoral Employment in the Post-apartheid South Africa: Application of ARDL Model

The current study has been designed to analyse the interactions between real government spending and job creation in South Africa focusing on five major economic sectors, namely construction, financial, manufacturing, mining, and retail sectors. The main objective of the study was to determine how job creation in different economic sectors responds to changes in real government spending. To achieve this objective, the study used five different autoregressive distributed lag (ARDL) models to analyse the long-run and shot-run relationships between government spending and employment rate in each of the aforementioned five economic sectors. The sample period consisted of quarterly observations starting from the first quarter of 1994 to last quarter of 2015. The study found a long-run relationship between government spending and job creation in the mining sector but there was no evidence of long-run relationships between government spending and jobs creation in construction, financial, manufacturing, and retail sectors. The short-run analysis showed that government spending could create jobs in all five sectors. This paper concluded that increasing government spending can only create short-term jobs but does not create lasting jobs in most sectors, except the mining sector. To increase the number of durable jobs, the South African government should therefore increase spending on mining sector.

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FDI location and exchange rates. is there really a relationship between the two?

Corporate Ownership and Control ◽

10.22495/cocv13i1c6p3 ◽

2015 ◽

Vol 13 (1) ◽

pp. 642-651

Author(s):

Kunofiwa Tsaurai

Keyword(s):

South Africa ◽

Exchange Rates ◽

Coming Out ◽

Causal Relation ◽

Exact Nature ◽

Bounds Testing ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Short Run

The exchange rate led foreign direct investment (FDI), FDI led exchange rates and feedback effect hypotheses summarise the literature around the nature of the relationship between FDI and exchange rates. So many authors on this subject over a long period have been found to generally side with of the above-mentioned hypothesis or another without a consensus. Despite this lack of consensus with regard to the exact nature of the causal relation between these two variables, what is coming out clearly from the literature is that there indeed exist a relationship between FDI and exchange rates. The lack of consensus has prompted this current study that used the ARDL (Autoregressive distributed lag)-bounds testing approach. The study revealed the existence of causality from (1) the rand value to FDI in the long run and (2) FDI to the rand value only in the short run in South Africa. The author recommends that policies which strengthen the value of the rand should be put in place in order to attract FDI in the long run. The flow of FDI into South Africa will in turn not only stabilises the value of the rand.

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The Nexus Between Taxation, Government Expenditure and Economic Growth in South Africa. A fresh evidence from combined cointegration test

Studies of Applied Economics ◽

10.25115/eea.v39i3.3835 ◽

2021 ◽

Vol 39 (3) ◽

Author(s):

Delani Moyo ◽

Ahmed Samour ◽

Turgut Tursoy

Keyword(s):

Economic Growth ◽

South Africa ◽

Government Expenditure ◽

Distributed Lag ◽

Distributed Lag Model ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Integration Test ◽

Lag Model ◽

The Relationship

The relationship between taxation, government expenditure and economic growth. is a widely debated issue in the literature. The aim of this research is to present a fresh evidence from the nexus of taxation, government expenditure and economic growth in for the period 1991-2018 in South Africa, using recently developed combined co-integration test. Autoregressive Distributed Lag model(ARDL) is utilized to examine coefficients between the variables in the short and long-run The newly advanced Bayer-Hacks (BH) combined co-integration approach is employed so as to verify the ARDL bounds result. The empirical results from ARDL model revealed that there is a positive and significant relationship between government expenditure and economic growth in both short and long run. In addition, the study shows that tax revenue has a significant positive relationship with the economic growth. Therefore, levels of taxation and government expenditure are favorable to the growth of economy in South Africa. The research proposed that decision makers in South Africa should pay more attention on Taxation and government expenditure policies and the gains from economic growth such as channel much of its expenditure towards the manufacturing and agricultural sectors, which have great potentials of increasing the supply of the products. Which in turn leads to reduce prices and increase in the rates of employment. This would, also make the country’s exports prices competitive.

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Aggregate Outbound Tourism Demand in South Africa: an Econometric Analysis

Journal of Economics and Behavioral Studies ◽

10.22610/jebs.v5i5.402 ◽

2013 ◽

Vol 5 (5) ◽

pp. 260-267 ◽

Cited By ~ 2

Author(s):

Emmanuel Ziramba

Keyword(s):

South Africa ◽

Income Elasticity ◽

Cointegration Analysis ◽

Annual Data ◽

Tourism Demand ◽

Relative Prices ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Short Run

This paper, with the use of annual data covering the period 1975 to 2008, seeks to identify the determinants of outbound tourism demand (outbound tourist outflows) in South Africa. We employ cointegration analysis by utilising an autoregressive distributed lag (ARDL) approach proposed by Pesaran et al. (2001) to make inferences about the long run and short run relationships. The results indicate that in the long run, outbound tourism demand is influenced by the real domestic income and the relative prices. Our results indicate that outbound tourism demand is a luxury good with an income elasticity of 3.5. In the short run, only relative prices have an impact on outbound tourism demand in South Africa. Outbound tourism demand was found to be price inelastic in both periods.

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Defence Spending and Economic Growth in South Africa: Evidence from Cointegration and Co-Feature Analysis

Peace Economics Peace Science and Public Policy ◽

10.1515/peps-2021-0017 ◽

2021 ◽

Vol 0 (0) ◽

Author(s):

Charles Shaaba Saba

Keyword(s):

Economic Growth ◽

South Africa ◽

Granger Causality ◽

Growth Series ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Defence Spending ◽

Short Run ◽

The Business Cycle

Abstract The paper revisits the causality relationship between defence spending and economic growth for South Africa during the period 1960–2018. The results of our estimation show that defence spending and economic growth are cointegrated and that there is bidirectional Granger causality running between defence spending and economic growth in the long run. We then applied a Hodrick-Prescott filter to decompose the trend and the fluctuation components of the defence spending and economic growth series. The findings from the autoregressive distributed lag bounds test estimations show that in the long- and short-run, the trends and cyclicality of defence spending retard economic growth. The estimation results show that there is cointegration between the trends and the cyclical components of the two series, which suggests that the Granger causality possibly relates to the business cycle. This study suggests that investing more and reducing inefficiency spending in the defence sector during fluctuations can further stimulate economic growth in South Africa.

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Causality Between Public Debt, Public Debt Service and Economic Growth in an Emerging Economy

Studia Universitatis Babe-Bolyai Oeconomica ◽

10.2478/subboec-2020-0001 ◽

2020 ◽

Vol 65 (1) ◽

pp. 1-19

Author(s):

Talknice Saungweme ◽

Nicholas M. Odhiambo

Keyword(s):

Economic Growth ◽

South Africa ◽

Public Debt ◽

Debt Service ◽

Bounds Testing ◽

Causality Test ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Short Run

AbstractThis paper explores the causality between public debt, public debt service and economic growth in South Africa covering the period 1970 – 2017. The study employs the autoregressive distributed lag (ARDL) bounds testing approach to cointegration and the multivariate Granger-causality test. The empirical results indicate that there is unidirectional causality from economic growth to public debt, but only in the short run. However, the study fails to establish any causality between public debt service and economic growth, both in the short run and long run. In line with the empirical evidence, the study concludes that it is economic growth that drives public debt in South Africa, and that the causal relationship between public debt and economic growth is sensitive to the timeframe considered. The paper recommends policymakers in South Africa to consider growth-enhancing policies in the short run, since poor economic performances may lead to high public debt levels.

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Democracy and Corruption Causality in Indonesia

Budapest International Research and Critics Institute (BIRCI-Journal) Humanities and Social Sciences ◽

10.33258/birci.v3i3.1157 ◽

2020 ◽

Vol 3 (3) ◽

pp. 2241-2254

Author(s):

Azwar Iskandar ◽

Achmat Subekan

Keyword(s):

Government Expenditure ◽

Control Variable ◽

Cointegration Test ◽

Multivariate Approach ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Short Run ◽

Multivariate Cointegration ◽

Model Approach

The objective of this study is to analyze the causality between democracy and corruption in Indonesia for the period of 1995 to 2017. This study perform a multivariate cointegration test with government expenditure as a control variable and cross-check this long-run relationship with an Autoregressive Distributed Lag (ARDL) model approach to cointegration beside multivariate approach proposed by Johansen & Juselius. The results show that there is cointegration among the variables specified in the model of corruption equation when government expenditure is taken into account. Indeed, for corruption and democracy to move together in the long run, they need to be associated with government expenditure. The tests for Granger Causality conducted show a long-run causality running from democracy and government expenditure to corruption. In other word, the democracy and government expenditure Granger cause corruption and not the reverse. In short-run, there is neutrality causation between democracy and corruption.

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The effect of mining foreign direct investment inflow on the economic growth of Zimbabwe

Journal of Economic Structures ◽

10.1186/s40008-020-00230-4 ◽

2020 ◽

Vol 9 (1) ◽

Author(s):

Plaxedes Gochero ◽

Seetanah Boopen

Keyword(s):

Foreign Direct Investment ◽

Direct Investment ◽

Domestic Investment ◽

Mining Sector ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Full Effect ◽

Short Run ◽

Using Data

Abstract The study employs the autoregressive distributed lag (ARDL) approach to examine the relationship between foreign direct investment (FDI) in the mining sector on the Zimbabwe economy, while controlling for both non-mining FDI and domestic investment. Using data over the period 1988–2018, this research results show that foreign direct investment in the mining sector has a significant positive relationship with the country’s GDP in the long run. Mining FDI is revealed to have relatively higher effects as compared to FDI in non-mining sector and domestic investment. The short-run analysis observed that mining FDI as well as non-mining and domestic investment still has positive and significant impacts on growth but at a relatively lower extent. This implies that it takes some time for such investments to have their full effect on the economy.

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Bank Credit and Aggregate Import Demand in South Africa: An Autoregressive Distributed Lag Approach

European Scientific Journal ESJ ◽

10.19044/esj.2017.v13n16p71 ◽

2017 ◽

Vol 13 (16) ◽

pp. 71 ◽

Cited By ~ 1

Author(s):

Emmanuel Ziramba ◽

Johanna Mumangeni

Keyword(s):

South Africa ◽

Positive Impact ◽

Policy Instrument ◽

Import Demand ◽

Bank Credit ◽

Bounds Testing ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Short Run

This study reformulated the aggregate import demand function for South Africa by incorporating a financial variable, bank credit. The study used the bounds testing approach for cointegration and the autoregressive distributed lag models to estimate short-run and long-run elasticities of aggregate import demand. The cointegration results confirm a long run relationship between the quantity of imports and the explanatory variables. Although bank credit has a positive impact on aggregate imports, it is statistically insignificant. It is statistically significant in the short-run. Our results suggest that bank credit is insufficient as a policy instrument for longterm import demand in South Africa. It can only be useful in managing the South African external balance in the short-run.

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Does Remittance Inflow Granger-Cause Economic Growth in South Africa? A Dynamic Multivariate Causality Test

The Review of Black Political Economy ◽

10.1177/0034644619885348 ◽

2019 ◽

Vol 47 (1) ◽

pp. 86-103

Author(s):

Sheilla Nyasha ◽

Nicholas M. Odhiambo

Keyword(s):

Economic Growth ◽

South Africa ◽

Causal Link ◽

Causality Test ◽

Distributed Lag ◽

Autoregressive Distributed Lag ◽

Long Run ◽

Poverty And Inequality ◽

Short Run ◽

Omission Bias

In this study, we examine the dynamic causal relationship between remittances and economic growth in South Africa during the period from 1970 to 2017. Although South Africa is well-known for being a source of cross-border remittances to various countries, especially in the African continent, remittance inflows to South Africa have grown in the recent past. The growth in remittances, on one hand, and the need to fight against poverty and inequality in South Africa and ultimately improve economic growth, on the other hand, prompted the need for this study. The study uses the autoregressive distributed lag (ARDL) approach within a multivariate Granger-causality setting to examine the remittance-growth causal link—in an effort to address the variable-omission bias. The empirical findings of the study show that remittances and economic growth are not causally related in South Africa, irrespective of whether the estimations are done in the long run or in the short run. This finding, though contrary to the expectation, is not surprising, given the level of financial sector development in South Africa.

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