Macro-fiscal analysis and policy modelling

South Africa’s economy experienced a particularly steep decline —relative to other emerging markets— during the 2009 Global Financial Crisis. These economic challenges were exacerbated by the COVID-19 pandemic and impact South Africa’s ability to expand health coverage, decrease unemployment, and increase start-up and entrepreneurship rates.

The work stream on Macro-fiscal analysis and policy modelling will improve policymakers’ and institutions’ abilities to carefully assess the risks and opportunities of the macroeconomic policies intended to solve South Africa’s economic problems. Through its efforts to improve the macroeconomic modeling capacity of the institutions responsible for economic policy, the work stream will strengthen decision-making and contribute to broader economic stability and growth in South Africa.

Additional work includes:

  • evaluation of coordination between macroeconomic policy components: their impact on each other and overall macroeconomic outcomes
  • evaluation of the conduct of fiscal policy against its stated objectives
  • evaluation of the Reserve Bank’s conduct of monetary policy against its stated objectives
  • improving our ability to model reality in macro simulations
  • estimation of the determinants of the yield curve and optimal debt management

Outputs

One of the primary goals of this work stream is to improve the flow of information from academics working on policy-relevant and evidence-based research to actual policymakers. As a continuation of SA-TIED Phase I, the macro-fiscal work stream will focus on four broad areas of policy:

  • fiscal policy (public investment and debt, tax policy, and expenditure)
  • monetary policy (including inflation targeting and exchange rate policy)
  • micro- and macroprudential policy
  • coordination of macroeconomic policy and its impact on savings, investment, and the balance of payments
Working paper
Rod Crompton, Midesh Sing, Vernon Filter, and Nonhlanhla Msimango
The South African liquid fuels industry is a significant part of the economy. Historically, government policy focused on import substitution industrialization to support industry margins. This approach is called into question by the 2006 shift...
October 2020
Macro-fiscal analysis
Working paper
Rob Davies and Dirk van Seventer
Technical change impacts both the employment intensity of production and the composition of occupations and skills of employment. Artificial intelligence, automation, and robots are already leading to machines undertaking routinizable tasks previously carried out by...
October 2020
Macro-fiscal analysis
Working paper
Johannes Hermanus Kemp and Hylton Hollander
Much of the research on fiscal multipliers has used reduced form modelling approaches. While these models have been extended to include richer controls and identification approaches, it remains unclear whether shocks identified capture the true...
July 2020
Macro-fiscal analysis
Working paper
Johannes Hermanus Kemp
Despite the frequent use of fiscal policy for stabilization purposes and the important role fiscal activism has played over the last decade, the size of budgetary multipliers (i.e. the output response following an exogenous shock...
July 2020
Macro-fiscal analysis
Working paper
Serena Merrino
This paper aims at providing new evidence over the effect of conventional monetary policy shocks on wage inequality through the earnings heterogeneity channel under the inflation-targeting regime implemented in South Africa since 2000. The empirical...
June 2020
Macro-fiscal analysis
Working paper
Channing Arndt, Rob Davies, Sherwin Gabriel, Laurence Harris, Konstantin Makrelov, Boipuso Modise, Sherman Robinson, Witness Simbanegavi, Dirk van Seventer, and Lillian Anderson
This paper reports ‘first pass’ estimates of the costs of the lock-down implemented by the South African government beginning on 27 March 2020. It also presents a series of recovery scenarios. Four channels by which...
April 2020
Macro-fiscal analysis
Climate and energy
Working paper
Serena Merrino
This paper investigates the validity of household survey data published by Statistics South Africa since 1993 and later integrated into the Post-Apartheid Labour Market Series (PALMS). A series of statistical adjustments are proposed, compared, and...
March 2020
Macro-fiscal analysis
Working paper
Rob Davies and Dirk van Seventer
There is evidence from developed countries that technical change affects not only the employment intensity of production, but also the occupational composition of employment. The use of artificial intelligence, automation, and robots has changed the...
March 2020
Macro-fiscal analysis
Journal article
By Konstantin Makrelov, Channing Arndt, Rob Davies, and Laurence Harris
We analyse implications of financial sector dynamics for fiscal expenditure multipliers in recessionary conditions. A new stock-flow consistent model is developed in which a financial sector with four financial instruments is integrated with the real...
September 2019
Macro-fiscal analysis