How does the South African government react to changes in its debt position? In investigating this question, this paper estimates fiscal reaction functions using various methods (ordinary least squares, threshold autoregressive, state‐space modelling and vector error‐correction model). This paper finds that since 1946, the South African government has run sustainable fiscal policy by reducing the primary deficit or increasing the surplus in response to rising debt. Looking ahead, this paper considers the use of fiscal reaction functions to forecast the debt/gross domestic product (GDP) ratio and gauging the likelihood of achieving policy goals with the aid of probabilistic simulations and fan charts.
The accuracy of the National Treasury's projections of GDP and key fiscal aggregates is comparable to that of the projections of private sector economists, other reputable organisations and the fiscal authorities of other countries. The errors in the projections of the National Treasury have nonetheless been substantial in some years, and have increased from 2000/01 to 2010/11. This paper argues that the credibility of fiscal policy would have been severely tested if the largest annual errors in respect of the various aggregates had coincided. Against this backdrop, the paper makes the case for structured bi-annual discussions of government's forecasts during public parliamentary hearings as a mechanism for improving the accuracy and credibility of official projections. It also discusses the potential benefits for South Africa of two alternative mechanisms, namely fiscal councils and committees of independent experts.
In order to achieve an 'optimal health system', health policies should not only be focused on the supply of health care, but also take cognisance of the demand for health care. Studies of health care demand in South Africa are scarce due to considerable data limitations. This analysis attempts to fill this gap by combining two data sets (specifically, the GHS 2004 and IES/LFS 2000) in order to be able to utilize the wealth of information regarding health care utilization in the General Household Survey. The aim is to inform and encourage debate on how to incorporate demand side considerations in order to arrive at improved public health care in South Africa. Copyright (c) 2007 The Authors; Journal compilation (c) Economic Society of South Africa 2007.
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