South Africa has one of the highest unemployment rates in the world. This remains one of the key concerns to the policymakers in South Africa. Although there is a vast literature that examines the cause of high unemployment rates from a microeconomic perspective, there is limited work on this issue from a macroeconomic perspective. Exchange rate movements are expected to impact employment (and, indirectly, unemployment) through the profitability of the sector in export-oriented activities. This is so because exchange rate volatility changes the production costs of firms, and thus, causes uncertainty of future earnings. This affects investment decisions as well as employment because hiring workers represents an investment in the sense that there are costs incurred to reversing this decision.
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Research Briefs
Measuring the Financial Cycle in South Africa
This paper sets out to measure the financial cycle in South Africa. Financial cycles provide a broad perspective on the evolution of risks to financial stability, and therefore provide a useful monitoring tool for policymakers who are required to set macroprudential policies. A robust measure of the financial cycle is currently particularly important for South African policymakers, given the renewed emphasis on the financial stability regulatory and supervisory framework provided by the Financial Sector Regulation Act, which was signed into law in September 2017.
Understanding financial cycles is viewed as critical for informing the use of countercyclical macroprudential policy, but there is no consensus regarding the definition of financial cycles nor on the methodology that should be employed to measure them. Despite a large and growing international literature, we are also not aware of published research that assesses the options available for measuring the South African financial cycle.
Family-type Public Goods and Intra-Household Decision-Making by Co-Resident South African Couples
The household is a critical decision-making and consumption unit and various crucial decisions are indeed made within households. These include decisions on day-to-day expenditures, decisions about where to live, who to live with, who should work and how to raise income, as well as where children should attend school, and how to spend the available income. However, perceiving the household as a single ‘glued-together’ unit, whose interests are as that of an individual, suggests that investigations into intra-familial issues are unnecessary, thus neglecting what actually happens within households. Employing resource theory and the theory of assortative mating in the application of the cooperative intra-household bargaining model, the current study examines the sources of bargaining power that informs financial decision-making processes by females within co-resident couples. The study also determines how bargaining power and financial decision-making of female partners in co-resident couples impact on family-type public goods expenditure.
Latest Publications
Factors influencing people’s perceptions towards conservation of transboundary wildlife resources. The case of the Great-Limpopo Trans-frontier Conservation Area
Local people’s perceptions of protected areas greatly determine the success of conservation efforts in Southern Africa as these perceptions affect people’s attitudes and behaviour in respect to conservation.
Teacher Pay and Educational Outcomes: Evidence from the Rural Hardship Allowance in Zambia
This paper studies the effect of unconditional teacher salary increases on teacher and student outcomes. To study the issue, we evaluate the rural hardship allowance in Zambia, which corresponds to a salary increase of 20%.
"The Power of Nudging: Using Feedback, Competition and Responsibility Assignment to Save Electricity in a Non-Residential Setting”
We use behavioural insights to design nudges leveraging social comparison and assignment of responsibility aimed at reducing electricity consumption in a large provincial government office building with 24 floors.
Determinants of tax revenue performance in the Southern African Development Community (SADC)
This paper investigates the determinants of tax revenue performance in all 15 Southern African Development Community countries during 1990-2010, using panel data. The investigation makes use of two estimation techniques in testing for country specificity.
Random Expected Utility Theory with a Continuum of Prizes
This note generalizes Gul and Pesendorfer’s random expected utility theory, a stochastic reformulation of von Neumann-Morgenstern expected utility theory for lotteries over a finite set of prizes, to the circumstances with a continuum of prizes.
Latest Journal Publications
Effect of Financial Development on Economic Growth in sub–Saharan Africa: Does Sectoral Growth Matter?
Journal of Policy Modelling (https://www.sciencedirect.com/science/article/pii/S0161893818301170)
This paper examines the overall economic growth effect when the growth in finance and real sector is disproportionate relying on panel data for 29 sub–Saharan African countries over the period 1980–2014.
The Demand for Reproductive Health Care
Journal of African Economies, 2018 (https://academic.oup.com/jae/article-abstract/27/4/405/4835639)
This research formalizes the interactions between the various determinants of a woman's reproductive health behavior during her reproductive years, and, using nonparametric
Race to the top: Does competition in the DSL market matter for fibre penetration?
Telecommunications Policy (https://www.sciencedirect.com/science/article/abs/pii/S0308596117302045)
High speed broadband creates potential productivity gains and has a positive impact on economic growth.
Impact of macroeconomic announcements on foreign exchange volatility: Evidence from South Africa
South African Journal of Economics (https://onlinelibrary.wiley.com/doi/abs/10.1111/saje.12160)
This study focuses on scheduled macroeconomic news announcements and evaluates their impact on the volatility of the South African rand (ZAR) and US dollar (USD) exchange rate using high frequency data.
Pareto Optimality and Indeterminancy of General Equilibrium under Knightian Uncertainty
Journal of Mathematical Economics 2018 (https://www.sciencedirect.com/science/article/pii/S0304406818300570)
This paper studies general equilibrium theory, for both complete and incomplete markets, under Knightian uncertainty.
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