Strengthening economic research through capacity development

From 2 to 6 December 2024, SA-TIED hosted a capacity development initiative on Dynamic Stochastic General Equilibrium (DSGE) modelling in Pretoria. The initiative brought together researchers, postgraduate students, and policymakers, reflecting ongoing efforts to strengthen macroeconomic research capacity and support evidence-based policymaking in South Africa.

Advancing economic analysis in South Africa

South Africa’s economic landscape, shaped by structural inequality, public debt, and recent global shocks, demonstrates the need for tools to inform policy decisions. DSGE models provide a structured framework for analyzing fiscal and monetary policies, enabling researchers and policymakers to evaluate their potential impacts on growth, inequality, and economic stability.

The initiative introduced participants to foundational and advanced modelling techniques, including Real Business Cycle theory, New Keynesian frameworks, and Bayesian estimation. Discussions also focused on adapting DSGE models to specific policy challenges, such as the implications of fiscal adjustments for economic stability and the effects of inflation-targeting measures.
Palesa Makhetha-Kosi, a senior lecturer at the University of Fort Hare, highlighted the significance of the initiative: ‘Resources are a challenge in our institution, so we cannot access all the necessary software. This training was a great experience and has inspired me to start a new project using DSGE models’.

A notable aspect of the programme was its collaborative environment, which brought together participants from diverse academic and professional contexts. Group projects explored topics such as fiscal policy coordination and monetary interventions, fostering shared insights into the complexities of economic modelling.For Abdul, a master’s student at Stellenbosch University, the initiative enhanced technical skills: ‘The course significantly improved my modelling skills, particularly in resolving technical issues and running simulations successfully’.

Sibongile Zulu, a PhD candidate at the University of Pretoria, noted: ‘The practical sessions helped reinforce theoretical concepts, allowing us to collaborate and troubleshoot effectively’. Extending impact beyond the initiativeParticipants were provided with access to a comprehensive repository of training materials, including video tutorials, coding guides, and sample model files, ensuring ongoing opportunities for learning and application. By equipping participants with these resources, the initiative supports both immediate skill development and long-term integration of DSGE techniques into academic and policy work.

This capacity development initiative is part of a broader emphasis on macroeconomic modelling and analysis in South Africa. These efforts aim to enable researchers and policymakers to address pressing questions about fiscal policy, monetary stability, and economic inclusion.Participants expressed enthusiasm for further capacity development initiatives to explore specialized topics such as financial market modelling, optimal policy design, and macroprudential policy. Building on these efforts provides an opportunity to deepen the technical expertise necessary to tackle South Africa’s evolving economic challenges. Through these capacity development initiatives, SA-TIED contributes to fostering a stronger foundation for economic research and informed decision-making in South Africa’s policy landscape.