Research

Our team is extensively involved in technical research work
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The Nexus between Consumer Confidence and Economic Growth in South Africa: An ARDL Bounds Testing Approach

– Khayelihle Madlopha (2019)

Madlopha notes that consumption expenditure contributed a total of 2.2% to economic growth in 2017. Hence, the South African economy is consumption driven. Therefore, there is a need to understand the growth-economic confidence relationship within the South African context. In this spirit, this paper set to explore the short-and long-run relationship between consumer confidence and economic growth in South Africa for the sample period 1994Q1 to 2017Q4. The method applied, chiefly because our variables were I (0) and I (1) and that we sought short-and long-run estimates were the Autoregressive Distributed Lag (ARDL) model using the bounds testing procedure. The results showed that consumer confidence contributed about 0.025% to economic growth in the short-run, and about 0.4% in the long-run. The results suggest that boosting consumer confidence should be keys for South African policy-makers to boost growth in the short-and long-run. In particular, we recommend policy certainty and political stability as some of the ways to attract consumer confidence. The original article was published in the Journal of Economics and Behavioral Studies and can be downloaded  here

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Disciplined Fiscal Policy: Does such exist in South Africa? Why not and what can be done?

– Baneng Naape (2019)

The study aimed to innovatively assess the current stance of fiscal credibility in South  Africa,  thereby generating robust  thoughts as to how it can  be strengthened if not  restored. By means of a desktop approach, we find that the factors hindering fiscal credibility include, among others: poor performance of SOEs, policy and political uncertainty, revenue under collection and fiscal  projection errors. The proposed measures, which include, but not limited to: resolving SOEs  crisis through good  governance and financial practices, stabilizing debt  through hands on approaches, enhancing efficiency of the tax system, minimizing  political and policy uncertainty and better policy coordination, have the potential to restore  fiscal credibility in SA. However, the  successful implementation of these measures depends on the  willingness and  commitments by government. Fiscal policy should be transparent, realistic, prudent and responsible. The general public needs to know what the government intends to do, how they intend to do it and how this will affect their overall well being. For fiscal policy to be credible, it must be prudent by allowing a reasonable amount of insurance to hedge against economic defaults and forecasting errors. Furthermore, the government should be dedicated towards the establishment and maintenance of sustainable medium and long term fiscal goals. The full essay was published by Nedbank and Old Mutual and can be downloaded here

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Can Public Debt and Investment Stimulate Economic Growth in South Africa?

– Marius Masoga and Thobeka Ncanwya (2018)

This research paper analyzed how the level of public debt can affect public investment and economic growth. The South African economy has been growing after the transition of the country into democracy. However, as time goes on, the global economy was hit by economic and financial crisis in 2007 until 2009. Because of that economic and financial crisis, many countries experienced technical recessions including South Africa. Despite weak levels of economic growth and discouraged investment activities, South Africa had to borrow money to keep the economy functioning. Therefore, it became a concern for this study to revisit the period starting after apartheid regime, to investigate how the growing level of public debt triggered low levels of investment and economic growth. The study, therefore, used the data after apartheid and applied several econometrics techniques to analyze data and come up with certain conclusions and policy recommendations, in the interest of improving policy certainty for better economic performance in future. The full article  was published in Cogent Economics Journal and can be downloaded here

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Corruption: Economic and Fiscal Costs

– Khayelihle Madlopha (2018)

This essay discussed the economic and fiscal costs of corruption with reference to international and local studies. The economic costs of corruption discussed were low investment and poor service delivery. The fiscal costs on the other hand, were low government revenue, distortion of the composition of public spending, cost inflation, large fiscal deficits and debt accumulation. The result of thriftless public expenditure and lower state revenue collection can be excessive fiscal deficits and considerable debt accumulation. This is because off-budget spending creates budget deficits and government borrows to curb these deficits, hence debt accumulation. A country with high corruption and public debt can find itself in a woeful circle of corruption and fiscal wastefulness, resulting in a debt crisis. Since corruption increases government spending and reduces government revenue in South Africa, it can be concluded that corruption has some contribution to the large budget deficit (3.9% in 2016) and government debt (51% of GDP in 2017). This essay’s discussion was based on political corruption. Corruption is a chronic that we must fight. Through collaborative work and dedication, we can do this. We must free our country from corruption and ‘economic gangsters’. The essay was published by Nedbank and Old Mutual and can be downloaded here.