3. Electronic Theses and Dissertations (ETDs) - All submissions
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Item The effect of economic policy uncertainty and herding on leverage: An examination of the BRICS countries(2019-09) Makololo, PrudenceThis study examines the role of economic policy uncertainty (EPU) in influencing firm performance and leverage as a form of financing decisions, in the presence of herding in the emerging markets of Brazil, Russia, India, China and South Africa (BRICS). The increase or decrease EPU is determined by the way policymakers or investors act and the consequences of their decisions. This study tries to answer the questions of: During times of economic policy uncertainty, how do firms rationalise making leverage financing decisions; and do they herd their leverage financing decisions towards what the market or other firms have decided? The sample firms are selected based on the Top 80 listed firms by market capitalisation in their respective country stock exchanges; however, the Top 50 in Russia was used. These firms will be split into two sub-groups of the first 40 (25) listed firms and the next 40 (25) listed firms. This will provide some insight into how the first group performs as to the second group at the beginning and end of the sample period. A total of 369 firms will be sampled over a period of 15 years from the beginning of June 2002 to the end of June 2017. Russian, Indian and South African results reject the primary and secondary null hypotheses and conclude that there is a significant relation with EPU being a factor in determining firm leverage financing decisions and that there is a significant relation with more EPU leading to herding towards firm leverage financing decisions, respectively. Brazilian and Chinese results fail to reject the primary and secondary null hypotheses and conclude that there is no significant relation with EPU being a factor in determining firm leverage financing decisions and that there is no significant relation with less EPU leading to little or no herding towards firm leverage financing decisions, respectively. EPU has an impact on business and affects the profit for many firms and this is the reason of investment delays or less consumption, which together may lead to economic activity slowdown.Item Monetary policy and stock market liquidity: empirical evidence from the Johannesburg Stock Exchange (JSE)(2018) Nyika, Patrick. H.e recent financial crisis has given liquidity an important role in the financial market functioning. Especially in small size equity markets like the African, lack of liquidity has been reported as major issue. In order to source the causes of the lack of liquidity, this study investigated the relationship between monetary policy and stock market liquidity in South Africa using fixed and random effect estimations for stock specific effect and VAR impulse response function for portfolio analysis. We first estimate a Taylor rule for South Africa, which we augment with a financial indicator adapted from the literature and use the difference between actual and fitted values to measure monetary stance. The literature on the monetary policy rules in South Africa revealed M3 as the instrument used by the SARB before the period of inflation targeting that started in February 2000. We then used the monetary stance computed from the Taylor rule and the growth rate of M3 as measures of monetary policy. The panel regression analysis, with monetary policy measured by the growth rate of money supply, is only significant in the case of illiquidity models while monetary policy shows no effect on liquidity models in that case. In the case of monetary policy as measured by Taylor rule, the turnover model revealed a negative relationship, but weakly significant. Further, a positive and significant effect at 5% and 10% was revealed for Amihud’s illiquidity measure and Roll’s price impact measure. The impulse response analysis shows different results as compared to the stock specific analysis. The study found that monetary policy, as measured by money supply, has a positive effect on the liquidity variables which are turnover and trading volume; and also found that the monetary policy, as measured by the Taylor monetary stance, has a positive effect on illiquidity variables.Item Short-run exchange rate dynamics in South Africa: a microstructure approach(2017) Phiri, EgnatiousThis dissertation investigates the short-run variation of the South African Rand versus the US Dollar exchange rate. A market microstructure approach to exchange rate determination is adopted and the central hypothesis is that customer order flow is an important determinant of short-run variation in the exchange rate. Two key objectives are examined. Firstly, the paper looks at the in-sample explanatory power of the order flow as a key determinant of exchange rate variation. Secondly, the practical significance of order flow is evaluated by looking at its out-of-sample forecasting accuracy. The findings from this study suggest that order flow can explain some of the variation in exchange rate; however, a large portion of the exchange rate variation remains unexplained. Further, the out-of-sample performance of the order flow model is found to be inferior to that of the GARCH model for periods up to 6 months and inferior to the naïve Random Walk model at 12 months horizons. The evaluation of a Vector Autoregression model suggests that there are feedback effects from exchange rate returns to order flows. This means that Ordinary Least Squared estimates could be biased and the results thus inaccurate and misleadingItem Essays on the political economy of state formation and of laboratory federalism(2016) Keeton, LyndalThis thesis investigates the problem of the economic organisation of the public sector. It begins by establishing context by considering the two related issues central to it: the boundary of the state and the internal organisation of government (Chapter 1). There is a growing literature that explores the boundary of the state in political economy terms. Moreover, the boundary of the state can be viewed in a similar light to the boundary of the firm. The Second Generation Theory of Fiscal Federalism explores the internal organisation of government through the lens of the theory of the firm. Second Generation Theory assumes that governments are subject to the same problems that firms face: for example, just like firms require institutions to align the incentives of managers and shareholders (e.g., better defined contracts), governments require institutions to align the incentives of politicians and citizens (e.g., better defined constitutions). In order to improve our understanding of economic performance over time, the state should be considered as a complex organisation held together by a series of public choice compromises. Chapter 2 considers one aspect of the state as an organisation: when a boundary change of an existing state generates a new state. It tries to economically capture the birth of a new state through boundary change by taking a cue from the theory of internal exit: the secession of a group of people from an existing state who will then go on to form a new state. Internal exit predicts an internal exit-proof tax rate, i.e., a state will set the tax rate so that internal exit will not occur (e.g., Quebec in Canada). However, in precolonial southern Africa (ca. 1600-1910), internal exit occurred. A well-known example of this is that of Mzilikazi who in the 19th century left the Zulu with his followers and formed his own, new state: the Ndebele. Why is it that in Africa internal exit as a threat failed and internal exit still took place? With the aid of a simple, historically informed model, this chapter offers a political economy explanation of why internal exit took place in precolonial southern Africa. The model shows how internal exit results from the payoff calculation of an elite member’s (e.g., Mzilikazi) desire to maximise his share of public revenue surplus. Chapter 3 considers the internal organisation of government through the role of intergovernmental grants in the context of laboratory federalism. The Public Economics literature on intergovernmental grants is extensive. In this extensive literature, grants are usually analysed according to consumer behaviour theory where income and substitution effects determine community spending (and ultimately community welfare). However, these effects shed little light on how local governments can use grants to experiment with policy (laboratory federalism) in order to develop new, successful policies. In fact, even casual empiricism shows that local governments routinely experiment with policy and achieve varying degrees of success. One recent example is Mayor Bloomberg’s range of anti-poverty experiments in New York City. Very little theory has been produced that ties policy experimentation with the role of grants, however. Chapter 3 takes an organisational view of grants, namely it likens them to incomplete contracts to show how certain grants can be policy instruments for the creation and discovery of new knowledge in the public sector. More precisely, the chapter develops an evolutionary learning model that captures the knowledge gains that different types of grants (e.g., lump-sum grants compared to matching grants) can engender. It shows that a lump-sum grant can bring about greater learning at the local government level than a closed matching grant. Chapter 4 concludes by summarizing and suggesting areas for future research.Item How and why the ANC's nationalisation policy changed(1995) Ceruti, ClaireThe study traces and explains reformulation of ANC natlonatlsatlon policy between 1990 and early 1994. In doing so It develops the sociology of natlonallsatlon. It argues that natlonallsatlon is a nexus of particular social relations. First, since these relations are dynamic, nationalisation can only be fully understood through a concrete rather than an abstract approach to its study. Second, the nature of the relations which natlonallsatlon expresses are both political and economic. Therefore changes in ANC nationallsatlon policy cannot be analyzed only from an economic or pragmatist perspective. Finally, nationalisation reflects and expresses class relations. It is necessary to understand the class character of the major actors Involved and the balance of class forces to analyze any particular instance or absence of natlonallsatlon, The ANC's natlonallsatlon policy gradually rejected wlde-scalo natlonalleatlon. Nationallsatlon represents one form of the state-capital relation. The ANC's olass character as a nationalist organisation constrains It to act within the broad framework given by global trends in capitalism, since Its aim Is to get hold of a nation state (ttle characteristic political form of capitalism). As a government-in-waltlng' during the transition, It was Increasingly concerned to find the optimum relation between Itself (a future state) and capital In Its economic policy, the aim being to safeguard the national economy. The advancing lnternatlonallsatlon of capital has created a tendency for a multi-polar relation between individual capitals and various nation-states. Nationallsatlon (a close link between Individual capitals and a rjngle nation state) is out of line with these trends. However, these trends were not directly, unproblematlcally or even consciously assimilated Into ANC policy. The ANC's contradictory relation to its mass base Is key in understanding the ANC's increased sensitivity to such questions. The prolonged nature of the transition revealed the political limitations on nationalism In the present global context, in the ANC's vacillation between its mass base and other political actors. This constrained the ANC's ability to drive home an economic and political programme of Its own Initial choice and increased its sensitivity to capital and other major actors. Research Into the South African economy and the experience of other countries was Interpreted from the ideological framework given by the Eastern European revolutions and the collapse of command 1st economies, which themselves were interpreted from the framework of nationalist polit!cs. The study concludes that natlonallsatlon must be understood to express social relations. Its disappearance from ANC economic policy expresses the dynamic of the prevailing capitalist system, through the agency of a nationalist organisation.Item An analysis of accession process of the Russian Federation to the World Trade Organisation(2015-08-27) Louw, AlexandraThe purpose of this project is to analyse the accession process to the World Trade Organisation using Russia as the case study. It will be guided by the following hypothesis ‘Russia’s slow accession to the WTO can be explained in a two-level game context where administrative capacity, domestic lobbies, domestic political changes and relations with international actors are relevant’. The importance of such research lies at the heart of a debate in the literature which asks whether a country should liberalise its trade, integrate itself into the international system by limiting its freedom and increasing competition on domestic producers. In a thorough analysis of Russia’s accession this paper intends to investigate how this dilemma was affecting the country’s decision-making process. This paper attempts to deliver an original analysis of Russia’s accession process by embedding it in a consistent theoretical framework, as the relevant literature lacks the theory implication and mostly focuses on economic benefits of Russia liberalising its trade.Item Potential drivers of growth and employment in Mpumalanga province: An assessment of inter-industry linkages using input-output analysis(2014-03-07) Sithole, Jabulani EasmouthThis study investigates the potential drivers of growth and employment in Mpumalanga’s economy using input-output (I-O) analysis as a contribution to industrial policy research and development for the province. Since 1995 to 2011, the Mpumalanga economy has been dominated by the tertiary sector (Quantec, 2011). Mohamed (2010) argues that in South Africa, while there had been growth in services, this growth has generally not been in productive services but instead has been driven by acceleration in debt-driven consumption, outsourcing and growth in private security services. The unemployment rate in the province was at 30.9 percent and labour absorption 52.0 percent in 2011, which made Mpumulanga the 6th largest contributor to the unemployment rate in the country that year (Quantec, 2011). The fifth iteration of the Industrial Policy Action Plan, 2013/14 – 2015/16 aims to promote a labour absorbing industrialisation path, with the emphasis on the systematic building of economic linkages that create employment. While being aware of potential weaknesses associated with this method, I-O analysis is one of the tools used frequently in the literature for identifying sectors to be supported in the industrial policy. The results of this study shows that the manufacturing sector in the province has a stronger stimulatory power to directly stimulate output in most sectors and drive industrial development, provided that local imports and available skills can be used appropriately to fill the existing gaps. This study forms the basis for the Mpumalanga Province’s policymakers to further conduct sector analysis through other refined supplementary methods such as value chain analysis with the purpose to confirm linkages of the sectors and determine key sectors that have the potential to drive industrialisation in the province.