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This paper explores the institutional factors behind the crisis of capital accumulation in South Africa in the 1970s and 1980s. Because of its focus on institutional stability, the paper contributes to the literature on the existence of an apartheid social structure of accumulation in which economic and political institutions are important determinants of investment. Investment function estimates show that political instability accounted for most of the fall in the rate of accumulation, independent of distributive outcomes, such as the level of profitability. Based on these findings, the paper argues that tensions between political stability, democratic reforms, and distributive outcomes prompted the adoption of market-oriented macroeconomic policies in the post-apartheid era that have so far failed to move the economy away from the low rates of accumulation characteristic of recent decades.
This book examines the dynamics in capital flows, credit markets and growth in South Africa. The authors explore the role of global economic growth, policy shifts and various economic policy uncertainties. Central banks in advanced economies are engaged in unconventional monetary policy tools such as balance sheet policies, negative interest rates and extended forward guidance to assist them to meet their price, financial and macro-economic stability objectives. This book determines whether BRICS GDP growth is a source of shocks or an amplifier of global growth shocks. The authors find that global economic growth and policy uncertainty reinforce each other via capital flows, credit conditions and business confidence on the domestic economy. Furthermore, they demonstrate that there is momentum in the changes in the spread between the repo rate and federal funds rate. In addition, global real policy rates impact domestic GDP growth and labor market conditions. The authors examine the economic costs of capital flow surges, sudden stops and elevated portfolio volatility shocks and their interaction with GDP growth and credit. They show that equity and debt inflows matter in the attainment of the price stability mandate. Moreover, business confidence transmits sovereign credit ratings upgrades and downgrades shocks to the real economy via GDP growth, the cost of government debt and borrowing to impact credit growth. High GDP growth increases the likelihood of sovereign credit ratings upgrades, hence policymakers should implement pro-growth policies. Inflation regimes impact the transmission of positive nominal demand shocks to the price level. Low and stable inflation (inflation below 4.5 per cent) reduces the pass-through of positive nominal demand shocks to inflation.
This paper examines whether a mix of tighter fiscal policy, looser monetary policy, and greater reserve build-up would increase growth and depreciate the rand in real terms. The experience of South Africa over the last twenty years is looked at using a number of econometric techniques that control for the external environment.
This book explores the disconnect between fiscal policy and macroeconomic development in South Africa. It analyses the factors that have contributed to the lack of economic growth in the country over recent decades and outlines an improved fiscal policy framework that increases investment and employment. Particular attention is given to the impact of government debt and its relationship with GDP, the connection between budget deficits and interest rates, and how economic policy uncertainty affects employment dynamics and inflation. This book provides practical fiscal policy suggestions to increase economic growth in South Africa and Africa more generally. It will be relevant to researchers and policymakers interested in African economics and economic policy.
This Volume 17 of the African Development Perspectives Yearbook considers the following major issues: the macroeconomic policies in post-conflict countries (especially reviews of growth, social progress, and public finance strategies in medium-term frameworks) with Sudan and South Sudan as the country cases; and macroeconomic policy formation in West Africa -- with case studies presented on Senegal and Nigeria in the West African Monetary Zone and the CFA Zone. In addition, the book presents book reviews and book notes. (Series: African Development Perspectives Yearbook - Vol. 17) [Subject: African Studies, Economics]
This book focuses on income inequality, output-inflation trade-off and economic policy uncertainty in South Africa. Tight monetary and macroprudential policies raise income inequality. Income inequality transmits monetary policy and macroprudential policy shocks to real economic activity. Economic policy uncertainty influences the dynamics in the lending rate margins, inflation expectations, credit, pass-through of the repo rate to bank lending rates and companies’ cash holdings. The trade-off between output and inflation and output growth persistence vary with inflation regimes. Stimulatory demand policy shocks are less effective in high inflation regime. High income inequality raises consumption inequality, which raises demand for credit, but price stability matters in this link. Increased bank concentration raises income inequality, lowers economic growth and employment rate. Elevated economic policy uncertainty lowers output growth, lowers capital formation, reduces credit and raises companies’ cash holdings. Increased companies’ cash holdings reduce capital formation and impact the transmission of expansionary monetary policy shocks to real economic activity. This book shows there is an inflation level within the target band below it which lowers income inequality, while raising GDP growth and employment. Thus price stability, economic policy uncertainty and income inequality matter for the efficient transmission of policy shocks.
This book examines new macroeconomic policy frameworks for Africa, and it discusses the role of policies for generating sustainable and inclusive growth. The responses of the macroeconomic policymakers in Africa to the Euro crisis and to the recent globalization trends are reviewed and analyzed. The book also analyzes the economics of the "Arab Spring" countries by focusing on the socioeconomic conditions and the economic policy factors that have led to the "Arab Spring" events. Highlighted are the cases of Egypt and Tunisia, and the new strategic and policy frameworks in these countries after the democratic changes. An agenda for comprehensive reforms is presented. (Series: African Development Perspectives Yearbook - Vol. 16)
This paper attempts to analyze the magnitude of the setback in capital accumulation in Eastern and Southern Africa and the proximate causes of this phenomenon. The sample consists of 16 countries and available data for the late 1960s and 1970s are explored. Given the weakness of the statistics, the authors rely more on expert observations than on rigorous quantitative assessments; available data are analyzed, however. Capital formation increased fairly rapidly during 1967-1974 but then slowed down considerably. Investment was financed to a considerable extent by external concession assistance; rapid growth in such funds during the late 1970s helped offset declining national savings rates to some extent. The setback in investment rates was greatly accentuated by a large and widespread deterioration in the productivity of capital brought about by the impact of government policy, strained absorptive capacity and a variety of exogenous factors.