The Design of Fiscal Adjustment Strategies in Botswana, Lesotho, Namibia, and Swaziland

Anecdotal evidence suggests that the economies of South Africa and its neighbours (Botswana, Lesotho, Mozambique, Namibia, Swaziland and Zimbabwe) are tightly integrated with each other. The multiple interconnections suggest that South Africa's GDP growth rate should affect positively its neighbours'. However, our review of the available econometric evidence and our panel growth regressions suggest that there is no strong evidence of real spillovers in the region after 1994, once global shocks are controlled for. More generally, we find no evidence of real spillovers from South Africa to the rest of the continent post‐1994. We investigate the possible reasons for this lack of spillovers. Most importantly, the economies of South Africa and the rest of Sub‐Saharan Africa might have decoupled in the mid‐1990s. That is when international sanctions on South Africa ended and the country re‐integrated with the global economy, while growth in the rest of the continent accelerated due to a combination of domestic and external factors.

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The Mystery of Missing Real Spillovers in Southern Africa: Some Facts and Possible Explanations

Basdevant

Jonelis

Mircheva

et al. 2015

South African J Economics

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Tariff‐tax Reforms in Large Economies

Ganelli¹,

Tervala

2015

World Economy

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This paper studies tariff‐tax reforms in a two‐region global New Keynesian model composed of a developing and an advanced region. In our baseline calibration, a revenue‐neutral reform that lowers tariffs in developing countries can reduce domestic welfare. The reason is that the increase in developing countries welfare due to higher output is dominated by the welfare losses stemming from the deterioration of the terms of trade. On the other hand, the reform increases output and welfare in the advanced countries and in the world as a whole. The effects that we highlight have not been studied in previous contributions to the literature, which looks at tariff‐tax reforms using a small open economy framework. Nominal rigidities have important implications for adjustment dynamics in our model. In the case of a ‘point‐for‐point’ reform, for example, price stickiness implies that the international dynamics of output is reversed compared to a revenue‐neutral reform.

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The Design of Fiscal Adjustment Strategies in Botswana, Lesotho, Namibia, and Swaziland

Cited by 2 publications

References 5 publications

The Mystery of Missing Real Spillovers in Southern Africa: Some Facts and Possible Explanations

The Mystery of Missing Real Spillovers in Southern Africa: Some Facts and Possible Explanations

Tariff‐tax Reforms in Large Economies

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