scholarly journals Budget Deficit-Inflation Nexus in South Africa: VAR Analysis

2013 ◽  
Author(s):  
John Khumalo
Keyword(s):  
South Africa ◽  
Budget Deficit ◽  
Var Analysis

scholarly journals Budget Deficits and Economic Growth: A Vector Error Correction Modelling of South Africa

2017 ◽  
Vol 9 (2(J)) ◽  
pp. 215-223
Author(s):  
Kagiso Molefe ◽  
Andrew Maredza
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Error Correction ◽  
Budget Deficit ◽  
Time Series Data ◽  
Series Data ◽  
Budget Deficits ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run

The primary motivation behind this study was to explore the consequential effects of budget deficit on South Africa`s economic growth. Six variables were used, namely: real GDP, budget deficit, real interest rate, labour, gross fixed capital formation and unemployment. The Vector Error Correction Model (VECM) was used to estimate the long-run equation and also measure the correction from disequilibrium of preceding periods. Using annual time series data spanning the period 1985 to 2015, empirical evidence from the study revealed that budget deficits and economic growth are inversely related. It was therefore concluded that high levels of budget deficit in South Africa have detrimental effects on the growth of the economy. The estimate of the speed of adjustment coefficient found in this study revealed that about 29 per cent of the variation in GDP from its equilibrium level is corrected within one year. The results obtained in this study are favourably similar to those in the literature and are also sustained by previous studies.

scholarly journals The Effects of Foreign Resource Inflow and Savings on the Economic Growth of South Africa: A VAR Analysis

2014 ◽  
Vol 6 (3) ◽  
pp. 232-241
Author(s):  
Temitope L. A.
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
South African ◽  
Impulse Response Function ◽  
Vector Autoregressive ◽  
Var Analysis ◽  
Long Run ◽  
Domestic Savings ◽  
Low Levels ◽  
Using Data

This study adopts both the Vector Autoregressive (VAR) analysis and the Impulse-Response Function (IRF) to examine the importance and the effects of domestic savings and foreign direct investment (FDI) on South African economy, using data spanning over the period 1975 to 2011. While the level of domestic savings is quite low, compared to other emerging economies, South Africa has also been struggling to attract inflow of foreign resources. The form of savings in South Africa is different from the western way of savings; hence the low levels of domestic savings. The variables considered were tested for stationarity and they were all stationary before proceeding to test for cointegration and then estimate and VAR. The cointegration test revealed that there was at least one cointegrating equation; which signifies that there exists a long-run relationship among the variables. The results from the VAR Granger test of causality depicted that domestic savings lead economic growth, while economic growth leads investment. This result of the IRF also showed that while increased domestic savings is important to improve the level of economic growth in South Africa, it also leads FDI. This means that the economic environment needs to be suitable in order to attract foreign investments. The results obtained are reliable and stable as the model passes a battery of diagnostic tests. The study proposes some recommendations for policy.

Trade shocks from BRIC to South Africa: A global VAR analysis

2013 ◽  
Vol 32 ◽  
pp. 190-202 ◽  
Author(s):  
Mustafa Yavuz Çakır ◽  
Alain Kabundi
Keyword(s):  
South Africa ◽  
Trade Shocks ◽  
Var Analysis ◽  
Global Var

scholarly journals Budget Deficits and Economic Growth: A Vector Error Correction Modelling of South Africa

2017 ◽  
Vol 9 (2) ◽  
pp. 215
Author(s):  
Kagiso Molefe ◽  
Andrew Maredza
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Error Correction ◽  
Budget Deficit ◽  
Time Series Data ◽  
Series Data ◽  
Budget Deficits ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run

The primary motivation behind this study was to explore the consequential effects of budget deficit on South Africa`s economic growth. Six variables were used, namely: real GDP, budget deficit, real interest rate, labour, gross fixed capital formation and unemployment. The Vector Error Correction Model (VECM) was used to estimate the long-run equation and also measure the correction from disequilibrium of preceding periods. Using annual time series data spanning the period 1985 to 2015, empirical evidence from the study revealed that budget deficits and economic growth are inversely related. It was therefore concluded that high levels of budget deficit in South Africa have detrimental effects on the growth of the economy. The estimate of the speed of adjustment coefficient found in this study revealed that about 29 per cent of the variation in GDP from its equilibrium level is corrected within one year. The results obtained in this study are favourably similar to those in the literature and are also sustained by previous studies.

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