Reconsidering the business cycle and stabilisation policies in South Africa

Plessis, Stan Du

doi:10.1016/j.econmod.2005.10.006

Cited by 34 publications

(30 citation statements)

References 14 publications

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“…The empirical literature has identified 1 A recent IMF Staff Report (IMF 2003) commended the South African authorities for maintaining "strict fiscal discipline", managing the currency, and controlling inflation. For a quantitative analysis of macroeconomic stabilization in South Africa, see Du Plessis (2002Plessis ( , 2004; Du Plessis and Smit (2003). 2 See Gelb (2004) for a review of recent macroeconomic developments.…”

Section: Introductionmentioning

confidence: 99%

Can macroeconomic policy stimulate private investment in South Africa? New insights from aggregate and manufacturing sector‐level evidence

Ndikumana

2008

J of Intl Development

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This study explores the determinants of investment using both aggregated industry-level data and disaggretated data on 27 sub-sectors of the manufacturing sector for the period 1970-2001. According to the results in this study, the government has potentially powerful means at its disposal to stimulate private investment. In particular, a domestic demand stimulus and public investment expansion will produce large gains in private investment. While the direct effects of lowering the interest rate appear to be quantitatively small, indirect effects operating notably through domestic demand and cheaper credit are likely to be large. The evidence in this study also indicates that it is important to minimize exchange rate instability to encourage investment. JEL classification: E22; E52; E62

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Section: Introductionmentioning

confidence: 99%

Can macroeconomic policy stimulate private investment in South Africa? New insights from aggregate and manufacturing sector‐level evidence

Ndikumana

2008

J of Intl Development

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“…Current research is largely focused on the works of du Plessis (). He uses a non‐parametric dating algorithm (henceforth BBQ index) described by Harding and Pagan (), first suggested by Bry and Boschan (), to date turning points in the South African business cycle.…”

Section: Literature Reviewmentioning

confidence: 99%

An Alternative Business Cycle Dating Procedure for South Africa

Bosch

Ruch

2013

South African J Economics

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This paper applies a factor‐augmented Markov‐switching model to the South African economy to provide an alternative classification of the business cycle and its turning points. In the principal components step, 123 variables are used to establish the aggregate cyclicality in all sectors of the economy with the number of factors chosen using a modified Bai and Ng method. By exploiting the rich nature of the dataset, we provide a model with well‐defined statistical properties that compares favourably with the South African Reserve Bank (SARB) dating points. Combining the results of the parametric approach followed in the Markov‐switching model and the non‐parametric approach followed by the SARB should allow for a robust turning point analysis. A Markov‐switching model of real gross domestic product is also estimated because this variable is commonly used in the literature and provides a benchmark for the factor models.

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“…finds monetary policy has been mostly anti‐cyclical, but not always effectively coordinated with fiscal policy. Du Plessis (2006) finds monetary policy more anti‐cyclical since the early 1990s, while fiscal policy has been only modestly counter‐cyclical. (This latter result is in itself significant as it would show that fiscal policy has escaped the general tendency for pro‐cyclicality common in emerging economies.)…”

Section: The Fiscal and Monetary Policy MIX In South Africamentioning

confidence: 99%

“…2 2 See among others Du Plessis and Smit (2003), Du Plessis (2006), Swanepoel and Schoeman (2003), and Swanepoel (2004). …”

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Fiscal and monetary policy in a commodity‐based economy¹

Frankel¹,

Smit²,

Sturzenegger³

2008

Economics of Transition

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A rough description of macroeconomic policy in South Africa would be that monetary policy concentrates on building nominal credibility through focusing on inflation, while the brunt of the responsibility for output stabilization rests on fiscal policy. This aricle discusses the convenience of such a policy mix. First, we estimate the business cycle impact of fiscal and monetary policy to find that so far fiscal policy has been mostly pro-cyclical, whereas monetary policy has been, over the last couple of years, mildly counter-cyclical. We argue that fiscal policy should be made significantly more counter-cyclical than it has been -a strategy that would deliver more macroeconomic stability and potentially higher growth. Furthermore, we believe the Central Bank has earned the credibility to operate macro policy with a more decisive output stabilization objective, and we discuss several reinterpretations of the inflation targeting regime that provide the flexibility to do so without risking the strong anti-inflationary credibility of the SARB. On exchange rate policy we recommend that the authorities take a pragmatic approach to floating, mostly allowing the currency to move freely, but intervening to avoid overvaluation. We explain why and discuss how this objective could be achieved.JEL classifications: F41 , F36, F32 .

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Reconsidering the business cycle and stabilisation policies in South Africa

Cited by 34 publications

References 14 publications

Can macroeconomic policy stimulate private investment in South Africa? New insights from aggregate and manufacturing sector‐level evidence

Can macroeconomic policy stimulate private investment in South Africa? New insights from aggregate and manufacturing sector‐level evidence

An Alternative Business Cycle Dating Procedure for South Africa

Fiscal and monetary policy in a commodity‐based economy¹

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Reconsidering the business cycle and stabilisation policies in South Africa

Cited by 34 publications

References 14 publications

Can macroeconomic policy stimulate private investment in South Africa? New insights from aggregate and manufacturing sector‐level evidence

Can macroeconomic policy stimulate private investment in South Africa? New insights from aggregate and manufacturing sector‐level evidence

An Alternative Business Cycle Dating Procedure for South Africa

Fiscal and monetary policy in a commodity‐based economy1

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Fiscal and monetary policy in a commodity‐based economy¹