Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229387
Authors: 
Woldu, Gabriel Temesgen
Year of Publication: 
2020
Series/Report no.: 
WIDER Working Paper No. 2020/163
Abstract: 
This paper empirically examines South Africa's fiscal sustainability through a Markovswitching model which utilizes quarterly datasets for the period from 1960 to 2019. The results show that public debt responds positively, demonstrating a sustainable fiscal policy. Furthermore, considering the regime-specific feedback coefficients of the fiscal policy rule and the durations of fiscal regimes, the study finds that South Africa's fiscal policy satisfies the No-Ponzi game condition. Therefore, from a policy perspective, the South African government should take measures such as pension reforms, reducing operational expenses, reducing subsidies, and funding micro and small enterprises to gain the double dividend on the expenditure side along with revenue-enhancing measures on consumption taxes to achieve stable public finances and lower debt levels.
Subjects: 
fiscal sustainability
Markov-switching model
South Africa
JEL: 
E62
F34
H62
Persistent Identifier of the first edition: 
ISBN: 
978-92-9256-920-4
Document Type: 
Working Paper

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