The effects of monetary policy shocks on inflation: The role of backed and unbacked public debt in a monetary and fiscal policy regime mix
Working Paper 899 The present study evaluates the role played by backed and unbacked public debt in the propagation of a contractionary monetary policy shock to inflation dynamics under three different policy mix regimes. It shows that a coexistence regime with partially unbacked public debt is able to achieve comparatively lower inflation than Regime F, […]
Enhancing Data-Driven Decision-Making for Urban Development: A Call to Action
In a recent study by Turok and Visagie (2025) on the disparities in employment across South Africa, they state: “The metros have a more favourable and diverse economic structure than towns and rural areas. However, most have performed poorly over the last decade, thereby dragging down the national economy.” While cities are often considered engines […]
Unlocking the Potential of Cities as Drivers of Growth
Policy Brief 212 This policy brief is based on papers and discussions from the “The Role of Cities as Potential Drivers of Economic Growth and Prosperity” Conference convened by Economic Research Southern Africa (ERSA) in Muldersdrift, Gauteng, from 31 October to 1 November 2024 in collaboration with the Human Sciences Research Council (HSRC); Spatial Economic Activity […]
The Fiscal Theory of Income Distribution in Action: South African Low-income vs. High-Income Earners Response to Fiscal Policy Shocks
Working Paper 898 This study seeks to test the fiscal theory of income distribution in action in South Africa using low- and high-income earners, covering the period 1979–2022, using the Bayesian Vector Autoregression (BVAR) model with hierarchical priors. The BVAR technique accommodates a wide range of shortcomings in the data, such as the cross-section, without […]
Market Structure, Investment, Network Sharing in Mobile Telecommunications
This keynote presentation was delivered by Prof Marc Ivaldi, from the Toulouse School of Economics, during ERSA’s Conference on Infrastructure for Growth.
Where’s the Evidence? The Case for a Bold Export Strategy in South Africa
South Africa’s export performance underscores the need for an informed, research-driven trade policy that fosters global competitiveness and economic resilience (This article written by Prof. Lawrence Edwards, Dr Matthew Stern, and Jing Chien first appeared in Business Day on 26 November 2024.) South Africa’s 7th administration is now largely settled, and the new multi-party Cabinet […]
Monetary Policy in South Africa: stabilizing the economy, managing the risk
The effectiveness of emerging markets monetary policy in controlling the inflation surge post-pandemic has been one of the policy surprises of the last few years . In many respects, emerging markets have outperformed industrial countries, responding more rapidly and more forcefully to inflation shocks1. This experience shows that monetary policy in emerging markets is worth […]
Trade and Industrial Policy for South Africa’s Future
Policy Paper 31 South Africa is facing an export crisis. Over the past decade, the proportion of real exports to GDP has decreased, the number of exporters has dropped, and the number, diversity and complexity of exported goods has diminished. To foster export-led growth, South Africa must rethink its trade and industrial policies. Current localization […]
Nonlinear Real Exchange Rate Adjustments: Insights from iPad Price Data
Working Paper 897 We investigate nonlinear real exchange rate (RER) dynamics using a high-frequency panel dataset of Apple iPad prices across global markets. Our findings challenge the conventional view of slow RER adjustment by demonstrating that larger mispricings are corrected much faster, while smaller deviations persist for longer periods. We identify a valuation threshold effect, […]
Why South Africa’s Economic Growth is Stalled
With poverty and inequality worsening, fixing microeconomic inefficiencies is key to unlocking growth and opportunity for all South Africa has now endured 15 years of weak economic growth. The 2010s were the worst decade since WWII, with the economy growing by only 16% – in stark contrast to the preceding decade, when output grew by […]
Changing international views of the role of government and fiscal policy in economies and the nature of the South African approach
Over the past hundred years, the role of government in the economy has oscillated in most countries between the individualistic and the collectivist view of the state. The former is associated more with free-market thinking and individual welfare, the latter with socialist thinking and social welfare. The political-economic systems associated with both revealed their strengths […]
How Credit Constrained Are Family-Owned SMEs in Arab Countries?
Working Paper 896 Family-owned firms account for majority of small and medium-sized enterprises (SMEs) in Arab countries, but evidence on the impact of this ownership type on access to credit in the region is scarce. Yet the issue is key for understanding barriers to the emergence of dynamic private sector and growth acceleration. To reduce […]
Enforcement Spillovers under Different Networks: The Case of Quotas for Persons with Disabilities in Brazil
Working Paper 895 This study examines labor law enforcement spillovers in Brazil’s highly informal economy, focusing on disability quota enforcement for formal firms. New inspection procedures increased compliance through heightened inspections and fines, boosting disability hiring. We investigate spillover effects across various firm networks: neighborhood, ownership, and human resources specialists. Results show that spillovers can […]
The effect of temperature on household hourly electricity consumption: Evidence from South Africa
Working Paper 894 Climate change is expected to negatively affect Africa, possibly leading to increased energy needs. However, meeting that need could prove problematic; more than a decade of load-shedding in South Africa is suggestive in that regard. In this research we examine the effect of temperature on electricity consumption, focusing on mainly rural households […]
Financial inclusion effects of engaging with the fintech ecosystem
Working Paper 893 Using the FinAccess Kenya Household Survey dataset, we construct a metric of individual engagement with the fintech ecosystem and examine its linkage with consumption of traditional financial products. Deploying a battery of econometric procedures, we document a pervasive gap in the usage of traditional financial products, ranging from 5.3% to 17.5%, between […]
The Efficiency of State Aid for the Deployment of High-Speed Broadband: Evidence from the French Market
Working Paper 892 In this paper, we develop a framework for assessing the efficiency of public subsidies in developing broadband fiber networks. We estimate a structural model of fiber entry using a rich dataset on fiber deployment for more than 34,000 municipalities in mainland France from 2014 to 2019. We then assess whether private investment […]
Trouble Every Day: Monetary Policy in an Open Emerging Economy
Working Paper 891 Four factors drive the high-frequency impact of monetary policy announcements in South Africa: affecting short-, mid-, and long-term yield curve, as well as country risk. Controlling for information effects, we build IVs to study the transmission of conventional monetary policy, forward guidance, term premia, country risk and information shocks. Our findings reveal […]
Getting South Africa’s Exports Back on Track
South Africa’s 7th administration is now largely settled, and the new multi-party Cabinet is expected to get down to work. A “basic minimum programme of priorities” was set out in the Government of National Unity’s Statement of Intent. These priorities include the need to accelerate economic growth, fixed capital investment, industrialisation and job creation, amongst […]
Trade Policy Research Priorities for South Africa
As a small open economy, export growth is critical to South Africa’s future growth and development. However, despite emphasis on boosting export growth and diversification in key policy frameworks, South Africa’s export growth has remained stagnant, lagging behind that of other developing economies. Moreover, exports remain heavily concentrated in minerals and metal products, despite some […]
Programme: 2nd RISE Workshop
In the wake of an evolving macroeconomic landscape marked by events such as the global financial crisis, European sovereign debt crisis, Covid19 pandemic, geo-political risks, and climate change, a new macroeconomic regime is emerging. As challenges like potential inflation, government debt, limited fiscal space, productivity slowdown, green transition, and capital imbalances emerge, there is a […]
Lower inflation to help unlock credit
South Africa’s inflation rate is usually above trading-partner norms, weighing on economic growth and pushing up sovereign borrowing costs. With public debt at high levels, more inflation makes it impossible to lower interest rates and crowds out private sector investment. This, in turn, makes any fiscal consolidation efforts more challenging and reduces the purchasing power […]
Unleashing International Trade through Financial Integration: Evidence from a Cross- Border Payment System
Working Paper 890 Leveraging administrative firm-level data on the universe of South African exporters between 2010–2019, we document that cross-border payment integration catalyzes international trade by as much as standard tariff reductions. Using the staggered implementation of a Real-Time Gross Settlement (RTGS) system across 14 Southern African Development Community countries that facilitated cross-border payments among […]
The Decade of Distraction: The impact of capital flows on economic policy making
The Global Financial Crisis (GFC) ushered in an era of macroeconomic and prudential innovation. While advanced economies tamed excessive risk-taking in financial markets, emerging economies focused more on the financial instability and production distortions caused by large capital inflows. Few emerging economies showed unambiguous gains from these efforts and many grew above their potential rates, […]
Discussion slides – Intervening against the Fed (Pirozhkova)
In this presentation, Ekaterina Pirozhkova (SARB and University of Pretoria) discusses the presentation given by Yannick Timmer on intervening against the Fed at the 2nd ERSA/CEPR Workshop on Macroeconomic Policy in Emerging Markets.
Presentation slides – Intervening against the Fed (Timmer)
This presentation by Yannick Timmer (Federal Reserve Board) is on Intervening against the Fed. It explores this topic by using a US monetary surprise and analysing the daily FXI, exchange rate, firm-level stock prices and currency denominations of the balance sheet in a panel of multiple countries. It identifies FXI via deviation from estimated FXI […]
Discussion slides – The Macroeconomic Effects of Cash Transfers: Evidence from Brazil (Naidoo)
In this presentation, Jesse Naidoo (University of Pretoria) discusses the presentation given by Arthur Galego Medes on the macroeconomic effects of cash transfers: evidence form Brazil at the 2nd ERSA/CEPR Workshop on Macroeconomic Policy in Emerging Markets.
Tumisang Loate-Ntsoko – the Unintended consequences of tax cuts in South Africa
Abstract This paper provides evidence on the macroeconomic effects of personal income tax changes in South Africa. We identify episodes of policy changes using narrative in- formation from legislative documents. Analysis of quarterly macro data in 1996-2019 shows that personal income tax cuts have an initial contractionary impact on output, consumption, investment, and employment. These […]
Presentation slides – The Macroeconomic Effects of Cash Transfers: Evidence from Brazil (Mendes)
This presentation by Arthur Galego Mendes (World bank) is on The Macroeconomic Effects of Cash Transfers: Evidence from Brazil. The paper uses a two stage least squares methodology to explore the macroeconomic effects of cash transfers in Brazil. How does Brazil’s Bolsa Familia transfer program impact state – level GDP, formal employment and informal employment? […]
Yannick Timmer – Intervening against the Fed
Abstract This paper studies the effectiveness and mechanism of foreign exchange interventions (FXIs) for mitigating US monetary policy spillovers. For identification, we combine deviations from a daily FXI policy rule with high-frequency US monetary policy shocks, daily exchange rates, firm-level stock prices, and firm-level balance sheet variables across multiple countries. We first present evidence that, […]
Arthur Galego Mendes – The Macroeconomic Effects of Cash Transfers: Evidence from Brazil
Abstract This paper provides new evidence on the macroeconomic impact of cash transfers in devel- oping countries. Using a Bartik-style identification strategy, we document that Brazil’s Bolsa Familia transfer program leads to a large, significant and persistent increase in relative state- level GDP, formal employment and informal employment. A state receiving 1% of GDP in […]
Discussion slides – Unintended consequences of tax cuts in South Africa (Diaz)
In this presentation, Augustin Diaz (Bank of Chile) discusses the presentation given by Tumisang Loate-Ntsoko on the unintended consequences of tax cuts in South Africa at the 2nd ERSA/CEPR Workshop on Macroeconomic Policy in Emerging Markets. The discussion slides will be updated shortly.
Presentation slides – Unintended consequences of tax cuts in South Africa (Loate-Ntsoko)
This presentation by Tumisang Loate-Ntsoko (University of Pretoria) is on the Unintended consequences of tax cuts in South Africa. Personal Income Tax represents a substantial share of total government revenue in South Africa. However, with South Africa being one of the most unequal countries in the world, a limited share of the population pays the […]
Ganesh Viswanath-Natraj – FX Interventions, Signalling and Intermediation Constraints
Abstract We study the impact of unanticipated foreign exchange (FX) intervention in the Brazilian market. Our identification exploits over 20 years of announcements of Brazilian Central Bank (BCB) at an intra-day (tick-level) frequency since 2000. We combine our auction data with intra-day spot and futures prices. We find that surprise sales of USD reserves by […]
Discussion slides – FX Interventions, Signalling and Intermediation Constraints (Karagedikli)
In this presentation, Ozer Karagedikli (Asian School of Business) discusses the presentation given by Ganesh Viswanath-Natraj on FX Interventions, Signalling and Intermediation Constraints at the 2nd ERSA/CEPR Workshop on Macroeconomic Policy in Emerging Markets.
Presentation slides – FX Interventions, Signalling and Intermediation Constraints (Viswanath-Natraj)
This presentation by Ganesh Viswanath Natraj (Warwick University) is on Foreign Exchange Interventions, Signalling and Intermediation Constraints. While there is extensive empirical literature on foreign exchange intervention (FXI) and its impact on currency markets, the effect of FXI during periods of constrained USD liquidity supply by global intermediaries is less explored. This research tests the […]
Serra Pelin – Effectiveness of Sterilized Foreign Exchange Intervention under Imperfect Financial Markets
Abstract Emerging market (EM) central banks are known to intervene in the foreign exchange rate market during times of financial risk and currency devaluation. This paper develops an open- economy New Keynesian DSGE model with imperfect financial markets and dollar-denominated debt in EM banking sector to test the effectiveness of sterilized foreign exchange intervention policy. […]
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