scholarly journals An investigation into the ability of the reverse yield gap to forecast inflation and economic growth in South Africa

2018 ◽  
Vol 21 (1) ◽  
Author(s):  
Keren A. Gossman ◽  
Mark G. Hayes
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Monetary Policy ◽  
Linear Relationship ◽  
South African ◽  
Core Model ◽  
Target Range ◽  
The South ◽  
Yield Gap ◽  
Inflation Forecasting

Background: Monetary policy in South Africa is carried out by the South African Reserve Bank (SARB) with the aim of keeping inflation within a target range of 3% – 6%. The SARB uses a variety of models to aid them, with the core model being the most significant. Aim: The primary aim of this research is to determine whether the reverse yield gap (RYG) contains information that could be useful to the SARB when making monetary policy decisions. Setting: The authors found no evidence that similar studies on the RYG have previously been done in the South African context. Since the yield curve has been found to be significant in South Africa at forecasting economic growth, yet insignificant in Europe, the results for this research may too be different to the global experience. Methods: The authors tested for linear relationships between the RYG and economic growth and inflation over the period 1960–2014. Results: The results indicate that a slight linear relationship may exist in the case of economic growth, with the RYG based on earnings yields showing better out-of-sample forecasting abilities. Further investigation indicates that the linear relationship is stronger during times of economic upturn. The results for inflation forecasting, however, show no signs of a reasonable linear relationship. Conclusion: There is evidence for the SARB to consider whether the RYG can replace other economic variables in its core model without loss of predictive ability. Interestingly, this study found evidence to suggest that the RYG has an inverse relationship to future economic growth in South Africa, which is not what was expected.

scholarly journals Inflation Targeting Monetary Policy and Unemployment in South Africa

2018 ◽  
Vol 10 (4(J)) ◽  
pp. 88-96 ◽  
Author(s):  
Harris Maduku ◽  
Irrshad Kaseeram
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Monetary Policy ◽  
Exchange Rate ◽  
South African ◽  
Inflation Targeting ◽  
Annual Data ◽  
The South ◽  
Reserve Bank ◽  
The Impact

We analyze the impact of inflation, growth and exchange rate on unemployment in South Africa using annual data spanning 1980- 2017. Using the ARDL methodology we find that there is a negative longrun relationship between inflation and unemployment in South Africa and inflation is significant in explaining unemployment. Other variables of interest, economic growth and exchange rate are also significant in explaining unemployment. We use the findings of our study to propose that the South African Reserve Bank(SARB) should consider revising its objectives so that they can consider getting involved in targeting unemployment so that they help nurse the economy from the wounds of high inequality and poverty. 

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.

South Africa’s Foreign Policy and the BRICS Formation: Reflections on the Quest for the ‘Right’ Economic-diplomatic Strategy

2017 ◽  
Vol 9 (1) ◽  
pp. 39-61
Author(s):  
Theo Neethling
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Foreign Policy ◽  
South African ◽  
Special Importance ◽  
South African Government ◽  
The South ◽  
African Government ◽  
Economic Diplomacy ◽  
The Right

South Africa’s foreign policy has recently been gravitating away from an appeal to Western powers towards the establishment of new friendships in the Global South, especially with Asia and Latin America. Moreover, the favouring of the Brazil, Russia, India, China and South Africa (BRICS) partnership and a rising tone of anti-Western sentiments have increasingly been evidenced in South Africa’s contemporary foreign policy, which are of major significance to the nature and direction of its economic-diplomatic strategy. Three broad perspectives or main arguments from this article are of special importance: First, most members of BRICS are troubled by slower economic growth, which should be of concern to South Africa’s current foreign policy stand. Second, anti-Western ideological concerns and related presumptions on the part of the South African government that the BRICS formation could potentially assume a counter-hegemonic character vis-à-vis the West are questionable and dubious. Third, South Africa stands to benefit from many networks and opportunities provided by BRICS membership. At the same time, because of its low economic growth, high levels of poverty and lack of employment opportunities, South Africa cannot afford to follow an approach of narrow interest concerning the BRICS formation and to constrain itself in its economic diplomacy. This article argues that the South African government will therefore have to consider the opportunities offered by a more nuanced and pragmatic foreign policy designed on multiple identities.

scholarly journals Reforming the health sector in South Africa – Post 1994

2015 ◽  
Vol 5 (3) ◽  
pp. 167-179
Author(s):  
Melody Brauns ◽  
Anne Stanton
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
South African ◽  
Health Sector ◽  
South African Government ◽  
The South ◽  
African Government

This article reviews the efforts of the South African government in recognising development challenges of the post-apartheid era and assesses the approaches employed to bring about economic growth and to address inherited inequalities.

scholarly journals Incentives for the manufacturing sector: what South Africa can learn from Malaysia and Singapore

2015 ◽  
Vol 8 (1) ◽  
pp. 105-124
Author(s):  
Lenatha Wentzel ◽  
Kerry De Hart
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
South African ◽  
Foreign Investment ◽  
Manufacturing Sector ◽  
South African Government ◽  
Manufacturing Companies ◽  
The South ◽  
African Government ◽  
Similarities And Differences

The expansion of the manufacturing sector is one of the South African government’s focus areas for economic growth and employment creation. The research on which this article is based identified additional incentives, applicable to the manufacturing sector, which the South African government could introduce to encourage investors to choose the South African manufacturing sector as a desired investment destination. The incentives provided to manufacturing companies by the governments of Malaysia and Singapore and those provided by the South African government are compared in order to examine the similarities and differences between these incentives. In the light of these findings, recommendations are made for additional incentives in South Africa to promote investment in South African manufacturing companies and reduce some of the barriers that prevent local and foreign investment in the country.

scholarly journals A CGE Simulation Of A Flat Tax As A Possibility For Tax Reform In South Africa

2014 ◽  
Vol 30 (6) ◽  
pp. 1693
Author(s):  
Lumengo Bonga-Bonga ◽  
Martin Perold
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
South African ◽  
Tax Reform ◽  
Empirical Investigation ◽  
The South ◽  
Flat Tax ◽  
Cge Modelling ◽  
Tax Systems ◽  
Widespread Interest

During recent years, there has been widespread interest in South Africa for the so-called flat tax systems that appear to have been implemented successfully in Eastern Europe. This paper applied a CGE modelling technique to compare the performance of the South African economy in case alternative tax systems, namely the progressive and the flat tax systems, are applied. The counterfactual situation whose effects are tested in this paper is a 10% decrease in the VAT rate consistent with some popular call for the reduction of the degree of the regressiveness of VAT. The key performances of the South African economy are assessed in terms of economic growth, the welfare of households, equity and employment. On the basis of this empirical investigation the flat tax has a slight edge over the current progressive system.

South Africa in the Contemporary World

1973 ◽  
Vol 3 (3) ◽  
pp. 17-27
Author(s):  
Colin Legum ◽  
Margaret Legum
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
South African ◽  
The South ◽  
Contemporary World ◽  
Rapid Economic Growth ◽  
External Relations ◽  
The World ◽  
The Republic

Two great changes have been brought by twenty-five years of apartheid rule in South Africa. Its internal contradictions have been sharpened by the simultaneous attempts to divide the country along even more rigid color lines and to stimulate more rapid economic growth; and its external relations have declined to the point where the Republic today has become the “polecat of the world.” These two developments are inextricably linked so that it makes little sense to try and describe the South African situation without focussing on their interrelationship.

The Higher Educational and Industrial Challenges Facing South Africa

1995 ◽  
Vol 9 (2) ◽  
pp. 105-114
Author(s):  
Thomas G. Whiston
Keyword(s):  
Higher Education ◽  
Economic Growth ◽  
South Africa ◽  
South African ◽  
National Policy ◽  
Policy Agenda ◽  
The South ◽  
African Higher Education ◽  
Global North ◽  
South African Higher Education

South Africa, following the dismantling of Apartheid, now faces enormous educational, industrial and economic challenges. Simultaneously it must address gargantuan social and infrastructural problems, attend to the most urgent basic needs while also encouraging significant economic growth. The author has recently completed an extensive survey and analysis of the South African higher education challenge within the context of the critical, social, industrial and environmental dilemmas which must be ameliorated. In this article, he provides an overview of the problems to be faced and suggests a national policy agenda to address those challenges and dilemmas. In one sense the South African ‘dilemma’ is a microcosm of the global ‘North–South’ divide.

scholarly journals Market barriers for voluntary climate change mitigation in the South African private sector

2014 ◽  
Vol 17 (5) ◽  
pp. 639-652 ◽  
Author(s):  
Derick De Jongh ◽  
Carmen Möllmann
Keyword(s):  
Climate Change ◽  
Economic Growth ◽  
South Africa ◽  
Private Sector ◽  
South African ◽  
Climate Change Mitigation ◽  
Voluntary Action ◽  
The South ◽  
Bottom Line ◽  
Change Mitigation

A key challenge in the twenty-first century is to enable economic growth and increase both environmentalquality and social inclusiveness, while mitigating and adapting to the impacts of climate change. The need for a transition to more sustainable consumption and production patterns is undeniable and sustainable economic growth must be placed at the heart of future development for all citizens. The South African private sector is under enormous pressure to remain globally competitive while balancing the interests of society, the environment and its shareholders. It has been suggested that there are discrepancies between what companies say and what they actually do, as they are challenged to move from policy to action. This paper evaluates the extent to which the private sector in South Africa adheres to voluntary climate change mitigation mechanisms and identifies potential market barriers impeding the large-scale uptake of such mechanisms. The research findings suggest that the private sector in South Africa has adopted a “take position, wait and see approach” which places them in a position to take advantage of and influence the opportunities and risks associated with climate change without having a negative impact on the bottom line. The primary barrier to voluntary climate change action is the vagueness of local and international policy frameworks. The different rules and resultant uncertainty around local and international frameworks appear to impede consistent and meaningful action. Although this uncertainty does not prevent the private sector from taking voluntary action, it does appear to negatively affect the overall scale and type of climate change mitigation efforts. While companies are continually improving the quality of sustainability reporting and public disclosure, the challenge still lies in translating these strategies into daily operations and sustainable practice that goes beyond ad hoc mitigation actions.

scholarly journals The Effects of South Africa's Unexpected Monetary Policy Shocks in the Common Monetary Area

2020 ◽  
Author(s):  
Bonang N. Seoela
Keyword(s):  
South Africa ◽  
Monetary Policy ◽  
South African ◽  
Member Country ◽  
The South ◽  
Economic Output ◽  
Lending Rate ◽  
Domestic Credit ◽  
The Common ◽  
Repo Rate

The Common Monetary Area (CMA) is a multilateral agreement that provides a framework for a fixed exchange rate regime between the South-African Rand and the currencies of Lesotho, Eswatini, and Namibia (LEN). The nature of the arrangement restrains the LEN countries from exercising independent discretionary monetary policy. As a result, they must rely on the South African authorities for policy formulation and implementation. Interest rates in the LEN countries cannot deviate too far from those in South Africa. Given this limited scope for monetary policy in the LEN countries, this study investigates how each member country adjusts to shocks to the South African monetary policy instrument. Specifically, this paper uses a structural vector autoregressive (SVAR) model to examine how economic output, inflation, narrow money supply, domestic credit, and lending rate spread in each member country react to shocks experienced in the South African repo rate using monthly data from the period 2000M2 to 2018M12. The main findings indicate that a positive shock to the South African repo rate tends to be followed by a decline in economic output and an appreciation in price levels at the 90 percent confidence interval for all CMA countries. Our results have also shown that there is an asymmetric response in money supply, domestic credit and lending rate spread between the LEN countries and South Africa, to a positive repo rate shock. These results suggest that policymakers in LEN countries must implement additional policy measures to circumvent the negative impact of South Africa's monetary policy on their financial sectors.

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