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GTAP Resource #6525

"A fiscus for better economic and social development in South Africa"
by Stofberg, Francois, Jan van Heerden, Mark Horridge and Louise Roos

After showing that the bulk of government expenditure is unproductive, we consider the impact of an alternative fiscal policy mix in South Africa. The alternative suggests freezing the real government wage bill for five years and using the savings generated by this decision to increase spending on a specific, productive and wealth-creative expenditure item, aggregate investments. By indirectly contributing to greater levels of investments we show how government can generate better levels of economic performance and social development. To analyse the economic consequences of the suggested fiscal policy mix we use TERM-SA a dynamic, regional computable general equilibrium model of South Africa. We also add additional features to provide more accurate and detailed results. Our results show that a wage freeze can increase both real GDP and employment in the long-term.

Resource Details (Export Citation) GTAP Keywords
Category: 2022 Conference Paper
Status: Published
By/In: Presented during the 25th Annual Conference on Global Economic Analysis (Virtual Conference); ERSA working paper series
Date: 2020
Version: 1
Created: van Heerden, J. (4/13/2022)
Updated: van Heerden, J. (5/31/2022)
Visits: 529
- Dynamic modeling
- Model extension/development
- Government austerity
- Economic growth
- Africa (Southern)

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