The current paper models system risk in the South African banking sector and identifies the most vulnerable banks to system risk. Modelling systemic risk enables policy makers and regulators to monitor the build-up of imbalances and vulnerabilities of the financial system. Failure to model system risk can lead to disastrous economic consequences as it was the case in South Africa during global financial crisis that emanated from the US housing market and impaired the private and public sector to easily access financing: South African economy lost almost a million jobs.
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Research Briefs
The Interdependence between the Saving Rate and Technology across Regimes: Evidence from South Africa
A major policy issue in developing economies is whether a faster rate of physical capital accumulation is a key determinant of growth transitions in output per capita, or whether growth shifts are primarily the outcome of an ‘unexplained’ or ‘mysterious’ total factor productivity (TFP)/technology progress component. To shed some new light on the issue, this paper hypothesises that the saving rate and the growth rate of technology are interdependently determined by a common exogenous source across regimes, so that an exogenous shock to the saving rate determines long-run growth transitions. We further advance the idea that in an open-economy setting the saving rate, rather than the investment rate itself, serves as the most suitable measure of the quality or productivity of investment, that is, whether changes in capital investment induce changes in the growth rate of technology.
Will Technological Change Save the World? The Rebound Effect in International Transfers of Technology
Experts in climate change have long stressed the need for a transfer of environmentally friendly technologies from developed to developing countries to help the latter adopt a low-carbon development path. It is typically argued that the spillover of resource-conserving technologies will reduce resource use in both developing and developed economies and hence potentially “save the world”. Policy-makers have seized upon these simple conclusions to advocate straightforward policy prescriptions, such as “the importance of technology improvements, advanced technologies, and....induced technological change for achieving the stabilization targets....” (IPPC 2007). The problem is of course that the interaction between technological choices and environmental policy is not as simple or straightforward as this. Indeed, the manner in which regulated agents (consumers or industries) respond to technological change varies considerably. For this reason, the ultimate outcome of technology-focused policies is highly indeterminate.
Latest Publications
The Measurement of Institutions and Instability in Democratic Republic of Congo, 1880-2010
This paper introduces a new database for Property Rights, Political and Civil Rights and Political Instability for the Democratic Republic of Congo (DRC) for the 1880-2010 period. Following the methodology used by Fedderke et al.
Naturally Available Pollinator Decline Will Decrease Household Food and Increase Gender-Gap in Nutrition between Men and Women Who Head Smallholder Farm Households in Sub-Saharan Africa
This multi-country analysis studies the food security implications of natural pollinator populations in sub-Saharan Africa, where smallholder farmers rely on wild pollinators in the absence of commercial pollination services.
Imported Inputs, Government Support and Performance of Manufacturing Exporters
We evaluate the effectiveness of trade policy incentive that promotes the use of imported intermediate inputs. Specifically, we examine the performance differences in firm export outcomes for the beneficiaries relative to the non-beneficiaries to Kenya’s duty exemption scheme on imported inputs.
Regional disparities in income-independent quality of life in South Africa: convergence or divergence?
The purpose of this study is to add to the empirical literature regarding quality of life convergence dynamics.
To what extent does socio-economic status still affect household access to water and sanitation services in South Africa?
It is publically acknowledged that South Africa has recently met is Millennium Development Goal of halving water and sanitation services (WSS) backlogs. However, significant deficits remain, especially in the case of sanitation.
Latest News
Faculty of Commerce Awards for Excellence was held on Friday 5 May 2017 at the New Lecture Theatre on UCTs Upper Campus. Professor Lawrence Edwards from the School of Economics represented ERSA at the function. View the award gallery page here.
Latest Journal Publications
Pricing electricty blackout among South African households
Journal of Commodity Markets (https://dx.doi.org/10.1016/j.jcomm.2018.03.001)
South African households, like households in many other developing countries, are faced with regular power outages. This is a big problem, since the outages that the households experience are both frequent and long in duration.
Using a Natural Experiment to Examine Tobacco Tax Regressivity
Social Science & Medicine (https://doi.org/10.1016/j.socscimed.2017.11.004)
We take advantage of a tobacco tax hike that occurred during the collection of the South African Income and Expenditure Survey to examine the regressivity of tobacco taxes. We are also able to examine the relative change in regressivity following the tax increase.
Price-setting Behavior and Competition in Developing Countries: An Analysis of Retail Outlets in Lesotho
Journal of Industry, Competition and Trade (https://doi.org/10.1007/s10842-018-0275-6)
We study the relationship between price-setting behavior and the degree of competition in a setting where markets and information flows are relatively imperfect.
Exploring Unbalanced Growth in South Africa: Understanding the Sectoral Structure of the South African Economy
Economic Modelling, (2018) 1 – 13 (https://www.sciencedirect.com/science/article/pii/S0264999317309811)
This paper explores the reasons for the unbalanced growth structure of South Africa.
The Interdependence between the Saving Rate and Technology across Regimes: Evidence from South Africa
Empirical Economics Journal (https://link.springer.com/article/10.1007/s00181-017-1354-y)
This paper hypothesises that the saving rate and technological progress are interdependently determined by a common exogenous source, so that an exogenous shock to the saving rate determines long-run growth transitions.
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