South Africa

Exploring the nexus of electricity supply and economic growth in South Africa

This paper investigates the causal relationship between electricity supply and economic growth in South Africa using annual data covering the period between 1985 and 2014. This paper used a multivariate framework which included trade openness, electricity price, capital and employment as intermittent variables. The ARDL bound testing was employed to establish the long run relationship between these variables. The Vector Error Correction Model (VECM) was estimated to carry out the test of causality. The results support the existence of co-integration among the variables.

National minimum wage in South Africa: A Computable General Equilibrium Model Analysis

This paper analyses the economy-wide impact of the national minimum wage on the South African economy. The analysis was conducted using a static computable general equilibrium (CGE) model of South Africa, which captured the observed structure of South Africa’s economy. The parameters of the CGE equations were calibrated to observed data from a social accounting matrix (SAM) for 2010. One policy option with three scenarios was considered.

Non-Economic Quality of Life and Population Density in South Africa

The purpose of this study is to investigate the relationship between population density and non-economic quality of life. Popular opinion has generally been that population density can be seen as beneficial for economic growth, as it allows for greater productivity, greater incomes and can be translated into higher levels of quality of life. Recently though, growing evidence tends to suggest the exact opposite in that increases in productivity and incomes are not translated into better quality of life.

The Impact of the COMESA-EAC-SADC Tripartite Free Trade Agreement on the South African Economy

This paper analyses the effects of the COMESA-EAC-SADC Tripartite Free Trade Agreement (TFTA) on the South African economy using a global Computable General Equilibrium (CGE) model. Simulation results show that South Africa’s economy gains from the implementation of the trade agreement with GDP rising by more than 1 per cent relative to the baseline. This win in overall economic activity occurs on the back of a terms of trade increase and a surge in regional trade, which allows for higher levels of both exports and imports.

An Economic Assessment of Bioethanol Production from Sugar Cane: The Case of South Africa

The destabilising economic impact of South Africa’s dependence on imported crude oil is a key motivation behind the country’s drive to develop a biofuel industry. Much concern has been raised over the impact of biofuels production on price of food for the country's poor. It is this concern that has seen the prohibition of maize and the favouring of sugar cane as a feedstock in South Africa's Biofuels Industrial Strategy. This paper sets out to analyse the economic feasibility of producing bioethanol from sugar based on the industry's efforts to diversify its market base.

Inflating our troubles: South Africa’s economic performance and the exchange rate

South Africa’s export performance has been disappointing, and this is likely related to weak growth outcomes. We investigate the effect of the exchange rate on these outcomes, through two possible channels: its level and its volatility. We find little evidence in the literature or in our own tests to suggest volatility has been an important factor. The level of the currency appears to be more important, with currency undervaluation apparently favouring growth and exports. This may justify a policy of asymmetric reserve accumulation.

The Effects of Exchange Rate Volatility on South African Investments

This paper analysed the short- and long-run interactions between the exchange rate and different types of investments in South Africa from 1970 to 2014. The Vector Autoregressive model (VAR), a multivariate Johansen co-integration approach and Granger causality test were conducted to analyse the interactions between the exchange rate and different types of investments. The short-run analysis found that there was a short-run relationship between the exchange rate and different types of investments in South Africa.

Confronting South Africa’s Water Challenge: A Decomposition Analysis of Water Intensity

Water resource intensity measures the intensity of water use in terms of volume of water per unit of value added. It is an internationally accepted environmental indicator of the pressure of economic activity on a country's water resources and therefore a reliable indicator of sustainable economic development.

Inflation in South Africa: An Assessment of Alternative Inflation Models

We consider the relative empirical performance of a range of inflation models for South Africa. Model coverage is of Phillips-curve, New Keynesian Phillips curve, monetarist, and structural models of inflation. Our core findings are that the single most robust covariate of inflation is unit labour cost. We further decompose unit labour cost into changes in the nominal wage and real labour productivity.

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