Background

South Africa’s economy has proven resilient through recent global turbulence but its growth and productivity performance has remained poor. Real output growth is projected to be 1.3 to 1.4 percent in 2025 and 2026, rising gradually to around 1.8 percent in the medium term. These rates will not generate the necessary jobs or close the gap with South Africa economic peers. This growth slowdown is driven by well-understood constraints, including entrenched structural rigidities, inadequate infrastructure, governance weaknesses, and a rising public debt burden. . 

The fiscal position is critical, with rising government debt levels, high sovereign risk premia, and repeated fiscal slippage eroding policy credibility. Public expenditure has expanded without commensurate gains in productivity, and the growth costs of misallocated capital spending during the state-capture period remain visible in the country’s capital stock. Tax revenue mobilisation faces pressure from behavioural responses to high marginal rates, emigration of high-skilled workers, and intensifying global tax competition. Municipal fiscal arrangements are under acute strain damaging public service delivery and local infrastructure. Within this environment, the South African Reserve Bank has adopted a 3% inflation target to strengthen macroeconomic stability and lower the borrowing costs. However, monetary policy transmission and target credibility are still challenged by external vulnerability, financial frictions and intense fiscal-monetary interactions that influences the credibility of the inflation target and the transmission of policy. Moreover, the distributional consequences of inflation remain insufficiently understood.  

There is broad agreement among economists that monetary and fiscal stability are necessary conditions for economic growth and that the cost of macroeconomic mismanagement falls disproportionally on the most vulnerable in our society. However, the specific policy designs required to balance growth and macroeconomic stability remain highly uncertain and debated.  

Project Overview

Economic Research Southern Africa (ERSA) is launching a research initiative under its Fiscal and Monetary Policy Research Programme to build a body of empirical and theoretical research on the macroeconomic foundations of growth and productivity in South Africa. The Programme’s interest extends from research that traces direct channels from policy choices to investment, productivity, and growth, to research on the foundational conditions – fiscal sustainability, sovereign risk, monetary credibility, and financial stability – that sustained growth requires. The initiative also welcomes work on the distributional consequences of macroeconomic policy, which sit alongside the growth agenda as a complementary concern of the Programme. 

Researchers are encouraged to propose work that focuses on (i) fiscal sustainability, public expenditure productivity, revenue mobilisation, and the sovereign-financial nexus; and (ii) monetary policy, inflation dynamics, financial stability, growth and distributional outcomes. 

The themes below reflect input from researchers, policymakers, and other relevant stakeholders, who offered valuable suggestions for potential research topics at a recent ERSA Policy Roundtable on Fiscal and Monetary Policy. 

Call for Proposals

ERSA invites proposals from South African and international researchers for working papers that provide in-depth analysis of research questions that fit within the four themes. Research covering other emerging markets are also welcome.

Proposals must articulate a specific, narrow, and empirically tractable research question, together with a defined methodological or analytical strategy and a clear plan for data and evidence. The objectives above are intended to indicate the territory in which research is sought; the formulation of the research question is the responsibility of the proposer and will be a significant basis on which proposals are evaluated.

While no restrictions are imposed on data and empirical methods used, studies that use novel data, including survey data, and provide credible insights on causal associations will be prioritised. That said, descriptive, qualitative, and case study research remain highly valued, particularly where they illuminate sector-specific dynamics, specific reform episodes, or the political economy of policy design.

For research questions on the political economy of decision-making, ERSA welcomes proposals using qualitative and mixed methodologies from the political science tradition — including process tracing, structured comparative case study, elite interviewing, content analysis, and network analysis — alongside proposals using formal or empirical methods from economics. Proposals using political-science methodologies will be evaluated against the standards of those traditions, including the strength of case selection logic, the systematicness of evidence collection, the transparency of inference, and the explicitness of scope conditions.

Compelling proposals that require primary data collection will also be considered, although the budget for this type of research is limited and such projects also need to be completed within 12 months.

To summarise, proposals should demonstrate:

• A specific, narrow, and empirically tractable research question
• A defined methodological or analytical strategy appropriate to the question
• Clear policy relevance
• Academic novelty
• Feasible use of available data sources

Alignment with one or more of the priority themes:

Theme 1. The Fiscal and Financial Foundations of Growth and Productivity 

Sub-themes: 

• Examine the structure of South Africa’s public debt — including currency, maturity, and instrument composition — and assess how public debt management affect fiscal sustainability, sovereign risk, and borrowing cost. 

• Examine how fiscal rules and fiscal institutions affect fiscal discipline, borrowing costs, and fiscal credibility. Identify and discuss fiscal rules design and their feasibility in the economic and political-economy context of South Africa 

• Assess the channels and magnitude of fiscal crowding-out of private investment in South Africa.  a Evaluate the crowing in effect of credible fiscal framework and expectations of fiscal consolidation. 

• Examine the role of forecast errors and data revisions in macro-fiscal planning, particularly how uncertainty around key macroeconomic variables affects fiscal projections, budget credibility and policy choices. 

• Assess the macroeconomic effects of tax expenditures and tax incentives in South Africa, including their impacts on investment, productivity, employment, innovation, fiscal revenues, resource allocation, and long-run growth, and evaluate the fiscal and welfare trade-offs associated with alternative incentive designs. 

• Estimate the productivity of public expenditure in South Africa across levels of government, and identify the institutional factors that explain variation in outcomes. 

• Estimate tax and spending multipliers for South Africa, with attention to how they vary across instruments, economic conditions, and time horizons, and to the role of household and firm heterogeneity in shaping aggregate fiscal effects.  

• Assess the fiscal risks posed by contingent liabilities in the energy sector and other state-owned enterprises, and analyse the macroeconomic and fiscal implications of large-scale energy transition financing for debt sustainability, external position, and the broader policy mix. 

• Examine revenue mobilisation in South Africa, including the growth and fiscal implications of shifting the tax mix between income, consumption, wealth, and property taxes, and the empirical basis for claims about behavioural responses, informality, high-skilled emigration, and the location of South Africa on the relevant Laffer-type margins. 

• Examine the sovereign-financial nexus in South Africa: the role of bank holdings of sovereign debt, the propagation of fiscal stress to bank balance sheets and credit allocation, and the implications for financial stability and the cost of capital. 

• Analyse macroprudential policy, balance-sheet risks, and capital-flow vulnerability in South Africa, and assess the implications for financial stability, credit allocation to productive uses, and the macroeconomic policy framework. 

• Apply political economy methods to understand how fiscal policy decisions are made in South Africa — including the adoption and durability of fiscal rules, the politics of consolidation episodes, the restructuring of state-owned enterprises, tax reform, and intergovernmental fiscal relations — and what this implies for the trajectory of policy. 

Theme 2. The Monetary Foundations of Growth and Productivity 

Sub-themes: 

• Examine the channels through which inflation affects household welfare across the income distribution in South Africa, and assess the heterogeneous distributional impacts of lower inflation and a lower inflation target. 

• Investigate how expectations and credibility influence inflation persistence in South Africa and other emerging markets, and assess the implications for the design and communication of the inflation-targeting framework. 

• Examine the channels through which fiscal conditions affect monetary transmission, expectations, and policy credibility in South Africa, and assess whether greater monetary credibility can, in turn, reduce sovereign risk premia and fiscal borrowing costs. 

• Analyse the role of financial frictions and informality in weakening monetary transmission, and the implications for the conduct of monetary policy in South Africa. 

• Assess how energy price shocks and administered electricity prices transmit through to inflation dynamics, expectations, and the monetary policy response, and the implications for the design of monetary policy under the new target. 

• Examine the interaction between monetary policy and macroprudential policy in South Africa, and assess how financial stability considerations should be reflected in the conduct of monetary policy under the new inflation target. 

• Assess how monetary policy should respond to external shocks in a small open economy with limited policy space, with particular attention to fiscal stress, risk premia, and the South African transmission channels under the new inflation target. 

• Apply political economy methods to understand how monetary policy decisions are made in South Africa — including the institutional foundations of central bank independence, the politics of inflation target choice and review, and fiscal-monetary coordination under fiscal pressure — and what this implies for the credibility and conduct of monetary policy. 

• Assess the resilience of South Africa’s monetary policy framework to external shocks in a small open economy with limited policy space, including global financial cycles, geopolitical conflict, trade fragmentation, fiscal stress, sovereign risk premia, financial stability, exchange rate dynamics, and competitiveness, and the implications for the appropriate inflation target and the conduct of monetary policy. 

Call for Proposals 

ERSA invites proposals for working papers that provide in-depth analysis of research questions that fit within the two themes above. 

Proposals must articulate a specific, narrow, and tractable research question, together with a defined methodological or analytical strategy and a clear plan for data and evidence. The objectives above are intended to indicate the territory in which research is sought; the formulation of the research question is the responsibility of the researcher and will be a significant basis on which proposals are evaluated. 

Empirical proposals using novel data — including survey and administrative data — and providing credible insights on causal associations will be prioritised. Theoretical proposals are also welcome, provided the theory is motivated by data and the work directly addresses the research questions in scope. Descriptive, qualitative, and case-study research remain highly valued, particularly where they illuminate sector-specific dynamics, specific reform episodes, or the political economy of fiscal and monetary policy design. 

For research questions on the political economy of fiscal and monetary decision-making, ERSA welcomes proposals using qualitative and mixed methodologies from the political-science tradition — including process tracing, structured comparative case study, elite interviewing, content analysis, and network analysis — alongside proposals using formal or empirical methods from economics. Proposals using political-science methodologies will be evaluated against the standards of those traditions, including the strength of case selection logic, the systematicness of evidence collection, the transparency of inference, and the explicitness of scope conditions. 

Compelling proposals that require primary data collection will also be considered, although the budget for this type of research is limited and such projects also need to be completed within 12 months. 

To summarise, proposals should demonstrate: 

• A specific, narrow, and tractable research question 

• A defined methodological or analytical strategy appropriate to the question — empirical, theoretical, or mixed 

• Clear policy relevance 

• Academic novelty 

• Feasible use of available data sources, including where theoretical work is motivated and disciplined by data 

Alignment with one or more of the priority themes. 

Submission Guidelines

• Click here for proposal template and guidelines
• Proposal Submission Deadline: 31 August 2026
• Evaluation: Proposals will be reviewed by ERSA’s Research Committee, with external feedback as needed. To reduce the risk of impartiality, committee members will be prevented from commenting on proposals from their colleagues.
• Notification of Decisions: 30 September 2026

Expectations Placed on Accepted Proposals

• Present preliminary findings at a researchers’ workshop in February 2027.
• Present near-final findings at a conference in June/July 2027.
• Submit final papers to the ERSA Working Paper Series by September 2027.
• Submit policy brief or executive summary by October 2027.

Ownership and Dissemination

Researchers will retain ownership of their work. ERSA reserves the right to promote and disseminate the research findings to the broader academic and policy community. The Research Committee may request periodic progress reports.

Funding

Final papers will be published in the ERSA Working Paper Series, subject to the formal review process. Papers accepted for publication will receive R50,000. Researchers must also provide a policy brief, executive summary, or economic note summarising their findings. Additional funding of up to R50 000 is available for primary data collection or research assistance, subject to an assessment of value for money.