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Impact of fiscal policy in an intertemporal CGE model for South Africa

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dc.date.accessioned 2013-03-11 en
dc.date.accessioned 2016-12-04T15:46:22Z
dc.date.available 2016-12-04T15:46:22Z
dc.date.issued 2015-08-25 en
dc.identifier.uri http://hdl.handle.net/20.500.11910/3083
dc.description.abstract This paper uses an intertemporal computable general equilibrium model to investigate the consequences of an expansive fiscal policy designed to accelerate economic growth in South Africa. A key contribution is made to existing literature on the transmission mechanism of fiscal policy in African economies. To the best of our knowledge, no published study has empirically analyzed the macroeconomic effects of fiscal policy in the context of an open, middle-income sub-Saharan African economy like South Africa using an integrated intertemporal model with such disaggregated production structure. The paper shows that an expansive fiscal policy would have a temporary impact on gross domestic product (GDP) but would translate into higher debt relative to GDP. Using increased taxation to finance the additional spending would lessen this impact but would also negatively affect macroeconomic variables. Increased investment spending would improve long-term GDP, under any financing scheme, and would decrease debt-to-GDP ratio as well as deficit-to-GDP ratio. This outcome is driven by the positive impact infrastructure has on total factor productivity. Sensitivity analysis shows that these conclusions are qualitatively similar for wide values of the elasticity of the total factor productivity to infrastructure. In fact, the conclusions hold even when comparing different financing schemes. en
dc.format.medium Print en
dc.subject FISCAL POLICY en
dc.title Impact of fiscal policy in an intertemporal CGE model for South Africa en
dc.type Journal Article en
dc.description.version Y en
dc.ProjectNumber N/A en
dc.Volume 31 en
dc.BudgetYear 2012/13 en
dc.ResearchGroup Economic Perfomance and Development en
dc.SourceTitle Economic Modelling en
dc.ArchiveNumber 7605 en
dc.PageNumber 775-782 en
dc.outputnumber 6254 en
dc.bibliographictitle Mabugu, R., Robichaud, V., Maisonnave, H. & Chitiga, M. (2013) Impact of fiscal policy in an intertemporal CGE model for South Africa. <i>Economic Modelling</i>. 31:775-782. en
dc.publicationyear 2013 en
dc.contributor.author1 Mabugu, R. en
dc.contributor.author2 Robichaud, V. en
dc.contributor.author3 Maisonnave, H. en
dc.contributor.author4 Chitiga, M. en

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