Faculty of Commerce, Law and Management (ETDs)

Permanent URI for this communityhttps://hdl.handle.net/10539/37778

Browse

Has files: YesSubject: search.filters.subject.Economic growth

Search Results

Now showing 1 - 10 of 22
  • Thumbnail Image
    Item
    Essays on Inflation Targeting and Macroeconomic Performance
    (University of the Witwatersrand, Johannesburg, 2024) Buthelezi, Norbert Sfiso; Malikane, Christopher
    This thesis focuses and investigates the impact of inflation targeting on macroeconomic performance, whether the level of the inflation target is consistent with optimal economic performance and finally, we investigate whether inflation targeting affects the behaviour of fiscal policy in such a way as to deliver fiscal sustainability. This is important because many central banks have adopted inflation targeting as their monetary policy framework. In chapter 2, we investigate the effect of inflation targeting on macroeconomic performance. We do so by formulating a measure of IT that is closely related to the degree of monetary policy activism that is used in the literature. Applying this to advanced and emerging market economies, we find that IT has an ambiguous effect on economic growth in advanced economies and it has negative effect in emerging markets. We also find mixed results on the effect of IT on inflation performance. Lastly, we find that IT tends to lower bond yields across economies. We argue that the financial market benefits of IT do not find expression in real economic activity because of the disconnect that may exist between financial markets and real economic activity. In chapter 3 we argue that there exists a non-linear relationship between inflation one hand and economic growth and unemployment rates on the other. IT requires an explicit announcement of a numerical target for inflation. However, it is not clear whether the announced targets are consistent with maximum economic growth and minimum unemployment rates. We derive a simple growth model in which economic growth and the unemployment rate are nonlinearly related to the inflation rate. Our findings are that there are some advanced economies that sacrifice growth to maintain low inflation rates. This sacrifice is more prevalent in emerging markets, and it ranges from 0.5 percentage points to 3 percentage points. The same results hold for the unemployment rate, excess unemployment rate to maintain the low inflation targets ranges from 0.5 to 4.5 percentage points. We argue that policymakers should consider ways to align inflation targets to optimal levels in order to include more people into employment. In chapter 4 we investigate whether the implementation of fiscal policy is consistent with the monetary policy stance. A number of economies have adopted inflation targeting as an overall framework to guide monetary policy. However, a key requirement of this framework is that fiscal policy should not be implemented in a manner that is not consistent with inflation targeting. We investigate the behaviour of fiscal authorities under inflation targeting by estimating simple fiscal rules that incorporate the targets of monetary policy as normally specified in simple Taylor rules. Our results suggest that for many of the economies in our sample, fiscal authorities respond in a counter-cyclical manner. In advanced economies they do not restrain fiscal policy when inflation rises. This is in contrast to fiscal authorities in emerging markets. Lastly, we do not find uniform adherence to Bohn’s principle of fiscal sustainability across economies
  • Thumbnail Image
    Item
    Evaluating the influence of wool, cotton and fish on economic growth in Lesotho
    (University of the Witwatersrand, Johannesburg, 2021) Mokhothu-Ramohlanka, Thato; Sibanda, Jakubose
    This study aims to evaluate the influence of wool, fish, and cotton on the economic growth in Lesotho, analysing a 30-year period from 1990 to 2020. The paper provides an analysis of the long-term and short-term relationships between wool, cotton, fish and economic growth, and their causal effects on economic growth. The study used the Augmented Dickey-Fuller and the Phillips Perron unit root tests to determine whether the data set is stationary. The Johansen co-integration model identified the existence of long-run relationships. The error correction model and the Granger causality test determined the short run and causal relationships, respectively. Findings indicate that wool and cotton have a positive and significant influence on economic growth. In contrast, fish has a negative influence both in the long and short run. In addition, the study found unidirectional causation between economic growth and wool exports, bidirectional causality between cotton exports and economic growth, and unidirectional causation between economic growth and fish exports. Finally, to improve the benefits of the agricultural sector in Lesotho, there is a need for policy reform around structural changes to diversify exports and exports markets
  • Thumbnail Image
    Item
    Measuring the Fiscal Space for South Africa to Support Economic Growth and Development
    (University of the Witwatersrand, Johannesburg, 2023) Motsepe, Dikgang; Pillay, Pundy
    A number of developing and emerging market economies are faced with economic challenges that will require governments to access additional resources in order to invest in their economies. This thesis seeks to answer two research questions: 1) Should governments increase fiscal spending or government debt to finance the investment in the productive capacity of the economy in order to support and drive economic growth? and 2) Will an increase in government debt reduce investment and economic growth? Time series data of emerging market economies were used from the period 1994 – 2017 to answer the research questions. The key findings from the emerging market economies analysis confirm the positive relationship between government debt and economic growth across all the identified countries. The research findings indicate that in the identified emerging market economies, economic growth was high, showing an average growth of 5.0% when debt levels were below the 90% ratio. For debt levels above 90% of GDP, economic growth was significantly low, averaging 0.5%. The study’s findings indicate that the emerging market economies showed an average public sector investment to GDP ratio of 23.6% at debt levels below 90% of GDP. For debt above 90% of GDP, public sector investment to GDP was slightly lower, averaging 15.3%. The key findings with regard to measuring debt sustainability using the debt limit of 68% to 97% to GDP as calculated by Ganiko, Melgarejo and Montoro (2016), is that all the emerging market economies have significant room to increase their debt levels, with South Africa obtaining an average debt ratio of 41% for the study period. The findings from the emerging market economies support the themes in the literature review that government debt can influence economic growth through the total factor productivity channel. This will entail increased government investment in infrastructure development, industrial development, education, health and nutrition. The thesis acknowledges that increases in debt levels will increase interest rates, thus reducing the fiscal space available to government. The increase in interest rates calls for a more effective utilisation of monetary policy instead of fiscal policy via the reduction of interest rates and purchasing of zero interest rate government bonds. To achieve this, this study calls for the increased role of monetary policy to use interest rates to achieve debt sustainability and to support economic growth. The thesis provides the policy direction for both fiscal and monetary policy on how to increase the ‘fiscal space’ available to government to raise additional resources to support economic growth and development. The study’s contribution to knowledge is the call for a change to the orthodox paradigm and narrative that debt is bad for economic growth and to promote the policy direction of using debt and increased spending to get economies to full employment. The policy directive seeks to support the use of government debt to fund structural reforms, to recapitalise State-Owned Entities, to support industrial development as well as to promote infrastructure and human capital development, with the objective to support economic growth. The thesis argues that debt is not harmful if directed towards the productive side of the economy. The paradigm is embedded within the Keynesian approach which is supported by the new growth theory, functional finance and modern monetary theory on fiscal stimulus and how to finance it. The paradigm shift also talks to moving away from conventional monetary policy and recommends that central banks decrease interest rates, monetise government debt, and create sovereign money in order to support government debt sustainability. The paradigm shift also seeks to change the conventional policy direction of central banks of increasing money supply indirectly using the banking sector, to directly increase money supply through fiscal policy in order to support economic growth. This will give central banks the tool to direct and influence spending in the economy to meet the objectives of economic growth and job creation. As argued by various economists, this can be achieved through better policy coordination between monetary and fiscal policy, and improved institutional arrangements which will ensure that the creation of money is directed towards economic growth and job creation
  • Thumbnail Image
    Item
    An evaluation of the impact of transport infrastructure investment on the economic performance of South Africa
    (University of the Witwatersrand, Johannesburg, 2023) Magoiwa, Mathapelo Refilwe
    The decision to invest in economic infrastructure has far-reaching benefits for the South African economy, including innovation, economic growth, job creation, increased productivity, poverty alleviation, and an improvement in the standard of living. Therefore, the current study was conducted to determine the causal impact of selected critical economic variables for positive economic performance. The focus of the study was to evaluate how rail infrastructure investment impacts economic performance by assessing indicators such as economic growth, competitiveness, and unemployment rate using time series data from 1989 to 2018. As a quantitative study, the research employed correlational and causal- effect designs. Quantitative data was collected from credible secondary sources, including the websites and reports of Statistics South Africa, the South African Reserve Bank, the South African Revenue Services, and the World Economic Forum. Data analysis was conducted using descriptive analysis to identify the series of trends. In contrast, multivariate time series analysis generated inferential statistics to assess the direction and significance of the relationship between the variables. The study discovered that rail infrastructure investment, competitiveness, and economic growth are significant causal relationships to unemployment and were found to have substantial causal relationships to economic growth. The study findings also confirmed the single-direction hypothesis that rail infrastructure investment Granger causes economic growth, competitiveness, and employment. Bidirectional Granger causal effects were proven between competitiveness and economic growth, competitiveness and unemployment, and economic growth and unemployment.
  • Thumbnail Image
    Item
    An evaluation of the impact of transport infrastructure investment on the economic performance of South Africa
    (University of the Witwatersrand, Johannesburg, 2023) Mogoiwa, Mathapelo Refilwe
    The decision to invest in economic infrastructure has far-reaching benefits for the South African economy, including innovation, economic growth, job creation, increased productivity, poverty alleviation, and an improvement in the standard of living. Therefore, the current study was conducted to determine the causal impact of selected critical economic variables for positive economic performance. The focus of the study was to evaluate how rail infrastructure investment impacts economic performance by assessing indicators such as economic growth, competitiveness, and unemployment rate using time series data from 1989 to 2018. As a quantitative study, the research employed correlational and causal-effect designs. Quantitative data was collected from credible secondary sources, including the websites and reports of Statistics South Africa, the South African Reserve Bank, the South African Revenue Services, and the World Economic Forum. Data analysis was conducted using descriptive analysis to identify the series of trends In contrast, multivariate time series analysis generated inferential statistics to assess the direction and significance of the relationship between the variables. The study discovered that rail infrastructure investment, competitiveness, and economic growth are significant causal relationships to unemployment and were found to have substantial causal relationships to economic growth. The study findings also confirmed the single-direction hypothesis that rail infrastructure investment Granger causes economic growth, competitiveness, and employment. Bidirectional Granger causal effects were proven between competitiveness and economic growth, competitiveness and unemployment, and economic growth and unemployment
  • Thumbnail Image
    Item
    Foreign direct investment and economic growth in South Africa during the Covid-19 era
    (University of the Witwatersrand, Johannesburg, 2023-03) Chigeza, Tinotenda Lina; Pillay, Pundy
    Foreign Direct Investment (FDI) has been an essential source of sustainable and inclusive economic growth in South Africa. The need to attract FDI to boost economic growth, create employment opportunities, and supplement domestic expenditure is embedded in South Africa's past and present economic policies and frameworks. FDI can bring numerous benefits to various stakeholders including the host country government, which gains increased tax revenues; local businesses through partnerships and supply opportunities and local communities through improved infrastructure development and access to resources and services. FDI inflows to South Africa have been volatile over the past decade, with periods of significant inflows followed by downturns. The COVID-19 pandemic had a significant negative impact on the South African economy, leading to a decrease in FDI inflows and a contraction in GDP. This report provides an overview of FDI inflows in South Africa, its contribution to economic growth, and the impact of the COVID-19 pandemic on FDI in South Africa. The report reviews existing literature on the relationship between FDI and economic growth and discusses the factors influencing FDI inflows to South Africa. Furthermore, the report examines the measures implemented by the South African government to attract FDI. To truly promote inclusive and sustainable economic growth the South African government must address the challenges investors face, such as policy uncertainties, regulatory hurdles, and infrastructure limitations. Furthermore, the government must channel efforts into empowering local businesses, improving education and healthcare, and investing in infrastructure that benefits all citizens. While FDI can bring some advantages, it should not come at the cost of neglecting domestic initiatives that foster self-reliance and equitable development. The report recommends that the government should promote sectors with high potential for FDI, such as renewable energy, and ensure that FDI contributes to technology transfer and knowledge sharing with domestic industries. The COVID-19 pandemic has significantly impacted FDI, but the country has the potential to recover and attract long-term FDI in the future
  • Thumbnail Image
    Item
    Examining the relationship between household debt and economic performance in South Africa
    (University of the Witwatersrand, Johannesburg, 2023-02) Karombe, Stephen; Fasanya, Ismail
    High level of debt has been a major concern in the South Africa recent times. The prevalence of high debt levels hinders savings and investments, thus exerting a detrimental influence on economic growth. This surge in debt can be attributed to the consumer boom experienced in the past decade and the recent proliferation of credit cards, which have made it easier for consumers to access goods and services. This study evaluates the link between household debt and economic performance and characterises the implications of changes in household debt on economic growth in South Africa using the Toda Yamamoto VAR framework, using quarterly data covering the period 2008Q1 to 2022Q2. The connection between household debt and economic growth lies in the Life Cycle Hypothesis. The following findings are discernible from the analysis. First, the study finds that there is a bi-directional relationship between economic growth and mortgage loans and a unidirectional relationship between economic growth and household debt to disposable income ratio. Second, household debt to disposable income has a significant impact on economic growth, whilst the debt service ratio insignificantly affects economic growth with a smaller margin. Third, economic growth responds positively to mortgage loans, while a positive response to household debt exists which is transitory and positive. These results suggest that policymakers should encourage economic agents to take mortgage loans to boost economic growth in the short run. Household debt may be used to boost the economy in the short run but may deter economic growth in the long run. In the meantime, nothing maybe be done in items of debt service ratio as it has no significant impact, however, constant monitoring may be applied to avoid creeping in of debt overhang in the future. Access to household debt should be monitored and controlled since high debt significantly impacts economic growth in the long run
  • Thumbnail Image
    Item
    An investigation of the relationship between ICT infrastructure and economic growth of emerging market
    (University of the Witwatersrand, Johannesburg, 2023-02) Jiang, Jun Wen; Fasanya, Ismail
    The study examines the link between Information and Communication Technology, institutional quality, and economic growth in emerging markets over the period of 2000 to 2019, using the system Generalized Method of Moments. The connection between economic growth and technology lies on the framework of exogenous growth model. The following findings are discernible from the study. First, a substantial positive relationship exists between internet usage and economic growth, while a negative association between economic growth and fixed telephone users is evident. Second, a positive association between growth and innovation exist in emerging markets, whilst institutions reveal a negative association. These findings have a significant policy implication for policymakers to monitor innovation factors rather than institutional quality to bypass the digital divide. Consequently, policymakers should pay attention to the benefits of Information and Communication technology usage by means of reducing entries cost whilst improving network facilities transfers
  • Thumbnail Image
    Item
    Institutional racism and its oppression of the black employee’s economic freedom
    (2021-11) Lubile, Nyota C.S
    Institutional racism can be identified as a prominent factor, amongst numerous others, in the slow progression of the black population in the South African workplace. Consequently, due to the perpetual undermining of the black race and their professional capabilities, this leads to the rather slow (socio-) economic growth and progress of the black workforce and population in the long run. This report considers the extent to which institutional racism still has an impact on the (socio-) economic emancipation of the black worker which ultimately limits their standard of living. The origin of institutional racism from the colonial and apartheid era lay the foundation for the report, the effectiveness of corrective policies and legal frameworks are explored together with the elements of Critical Race Theory and how they are relevant to the issues pertaining to institutional racism in the workplace. Two areas that are specifically looked into are institutional racism against women and black women particularly as well as its presence in the legal profession. From a statistical perspective, theory is translated into numbers – the findings support and demonstrate how indeed there is a large gap between the saturation of the white race and the black race at different skills levels in the workplace as well as in business management and ownership in comparison to the economically active population of each race group. This corroborates the findings of the literary research in that systemic racism is still a major barrier to the elevation and progressions of the black population in the workplace and ultimately in their general standards of living
  • Thumbnail Image
    Item
    Economic growth and public debt: patterns and lessons between advanced, emerging, and declining growth economies
    (University of the Witswatersrand, Johannesburg, 2023-09-08) Shamu, Mbali N.D.; Bhoola, Fatima
    This research investigates the causal relationship between economic growth and public debt for economies in different growth categories: advanced, emerging and declining-growth economies, the latter being a new category introduced by this study. The study aims to answer the question: Does the level of economic growth affect public debt accumulation? The results reveal that in advanced economies growth is not a significant explanatory variable for public debt accumulation nor is there a significant long-run relationship between growth and public debt. For emerging and declining growth economies, the opposite holds- economic growth is a significant explanatory variable for public debt accumulation