Download Free Economy Wide And Distributional Impacts Of An Oil Price Shock On The South African Economy Book in PDF and EPUB Free Download. You can read online Economy Wide And Distributional Impacts Of An Oil Price Shock On The South African Economy and write the review.

Abstract: As crude oil prices reach new highs, there is renewed concern about how external shocks will affect growth and poverty in developing countries. This paper describes a macro-micro framework for examining the structural and distributional consequences of a significant external shock-an increase in the world price of oil-on the South African economy. The authors merge results from a highly disaggregative computable general equilibrium model and a micro-simulation analysis of earnings and occupational choice based on socio-demographic characteristics of the household. The model provides changes in employment, wages, and prices that are used in the micro-simulation. The analysis finds that a 125 percent increase in the price of crude oil and refined petroleum reduces employment and GDP by approximately 2 percent, and reduces household consumption by approximately 7 percent. The oil price shock tends to increase the disparity between rich and poor. The adverse impact of the oil price shock is felt by the poorer segment of the formal labor market in the form of declining wages and increased unemployment. Unemployment hits mostly low and medium-skilled workers in the services sector. High-skilled households, on average, gain from the oil price shock. Their income rises and their spending basket is less skewed toward food and other goods that are most affected by changes in oil prices.
As crude oil prices reach new highs, there is renewed concern about how external shocks will affect growth and poverty in developing countries. This paper describes a macro-micro framework for examining the structural and distributional consequences of a significant external shock-an increase in the world price of oil-on the South African economy. The authors merge results from a highly disaggregative computable general equilibrium model and a micro-simulation analysis of earnings and occupational choice based on socio-demographic characteristics of the household. The model provides changes in employment, wages, and prices that are used in the micro-simulation. The analysis finds that a 125 percent increase in the price of crude oil and refined petroleum reduces employment and GDP by approximately 2 percent, and reduces household consumption by approximately 7 percent. The oil price shock tends to increase the disparity between rich and poor. The adverse impact of the oil price shock is felt by the poorer segment of the formal labor market in the form of declining wages and increased unemployment. Unemployment hits mostly low and medium-skilled workers in the services sector. High-skilled households, on average, gain from the oil price shock. Their income rises and their spending basket is less skewed toward food and other goods that are most affected by changes in oil prices.
The South African Reserve Bank has continued to fulfill its constitutional mandate to protect the value of the local currency by keeping inflation low and steady. This paper provides evidence that monetary policy tightening aimed at maintaining low and stable inflation could at the same time reduce consumption inequality over a 12–18 month horizon, commonly understood as the transmission lag of monetary policy action to the real economy, and similar to the distance between survey waves used in the analysis. In response to “exogenous” monetary policy tightening, the real consumption of individuals at lower ends of the consumption distribution declines relatively modestly, or even increases. With greater reliance on government transfers, thus smaller reliance on labor income, and relatively larger food consumption, these individuals appear to benefit mainly from lower inflation. By contrast, the real consumption of individuals at higher ends of the consumption distribution is more likely to decline due to lower labor income, weaker asset price performance, and higher debt service cost.
This paper investigates the response of consumer price inflation to changes in domestic fuel prices, looking at the different categories of the overall consumer price index (CPI). We then combine household survey data with the CPI components to construct a CPI index for the poorest and richest income quintiles with the view to assess the distributional impact of the pass-through. To undertake this analysis, the paper provides an update to the Global Monthly Retail Fuel Price Database, expanding the product coverage to premium and regular fuels, the time dimension to December 2020, and the sample to 190 countries. Three key findings stand out. First, the response of inflation to gasoline price shocks is smaller, but more persistent and broad-based in developing economies than in advanced economies. Second, we show that past studies using crude oil prices instead of retail fuel prices to estimate the pass-through to inflation significantly underestimate it. Third, while the purchasing power of all households declines as fuel prices increase, the distributional impact is progressive. But the progressivity phases out within 6 months after the shock in advanced economies, whereas it persists beyond a year in developing countries.
Public spending on infrastructure plays an important role in promoting economic growth and poverty alleviation. Empirical studies unequivocally show that under-investment in infrastructure limit economic growth. At the same time, numerous other studies have shown that investment in infrastructure can be a highly effective tool in fighting poverty reduction1. In that context, the financing of infrastructure has been a critical element of most economic growth and poverty reduction strategies in developing countries, since the start of this millennium. This book provides a comparative analysis of the aggregate and sectoral implications of higher spending on infrastructure in three very different Asian countries: China, Pakistan, and the Philippines. Particular attention is paid to the role of alternative financing mechanisms for increasing public infrastructure investment, namely distortionary and non-distortionary means of financing. The book will be of interest to scholars and policy-makers concerned with economic growth in developing countries.
Since the mid-1990s, sub-Saharan Africa has experienced an acceleration of economic growth that has produced rising incomes and faster human development. However, this growth contrasts with the continent's experience between 1975 and 1995, when it largely missed out on two decades of economic progress. This disparity between Africa's current experience and its history raises questions about the continent's development. Is there a turnaround in Africa s economy? Will growth persist? 'Africa at a Turning Point?' is a collection of essays that analyzes three interrelated aspects of Africa's recent revival. The first set of essays examines Africa's recent growth in the context of its history of growth accelerations and collapses. It seeks to answer such questions as, is Africa at a turning point? Are the economic fundamentals finally pointing toward more sustainable growth? The second set of essays looks at donor flows, which play a large role in Africa's growth. These essays focus on such issues as the management and delivery of increased aid, and the history and volatility of donor flows to Africa. The third set of essays considers the recent impact of one persistent threat to sustained growth in Africa: commodity price shocks, particularly those resulting from fluctuations in oil prices.
Oil is the lifeblood of modern industrial economies. Petroleum powers virtually all motorized transport, which in turn enables most economic activities and provides mobility for citizens. But oil is a finite resource that is steadily depleting. In the past decade, the phenomenon of global peak oil – the fact that annual world oil production must at some point reach a maximum and then decline – has emerged as one of the twenty-first century’s greatest challenges. South Africa imports over two-thirds of its petroleum fuels, and history has shown that oil price shocks generally translate into a weakening currency, rising consumer prices, increasing joblessness and a slow-down in economic activity. This book examines the implications of peak oil for socioeconomic welfare in South Africa and proposes a wide range of strategies and policies for mitigating and adapting to the likely impacts. It contains a wealth of data in tables and figures that illustrate South Africa’s oil dependencies and vulnerabilities to oil shocks. The material is presented from a systems perspective and is organized in key thematic areas including energy, transport, agriculture, macro-economy and society. The study highlights the risks, uncertainties and difficult choices South Africa faces if it is to tackle its oil addiction, and thereby serves as an example for researchers, planners and policy-makers in the developing world who will sooner or later confront similar challenges. This case study brings a fresh southern perspective to an issue of global importance, and shows how the era of flattening and then declining global oil supplies may be a pivotal period in which either the project of industrialization progressively runs out of steam, or societies are able to undertake a proactive transition to a more sustainable future.
Addressing the poverty and distributional impacts of carbon pricing reforms is critical for the success of ambitious actions in the fight against climate change. This paper uses a simple framework to systematically review the channels through which carbon pricing can potentially affect poverty and inequality. It finds that the channels differ in important ways along several dimensions. The paper also identifies several key gaps in the current literature and discusses some considerations on how policy designs could take into account the attributes of the channels in mitigating the impacts of carbon pricing reforms on households.
This book provides a broad overview of the current research on various aspects of development, with a focus on India. The content and treatment of the subject of development in this volume is distinctive in many ways. It is a balanced mix of theory and practical elements, dealing with a number of issues at micro as well as macro levels. The analyses of the current socio-economic problems are attempted in an elegant yet simple manner which makes it equally useful for an aspiring researcher in economics or any inter disciplinary field. The methodologies of the articles include analytical verbal argumentative logic, theoretical constructs or different versions of statistical, econometric or programming techniques. It also contains well written survey articles, which are useful in grasping the fundamental research issues and in tracing the progress of research in an area. The general scope of the book is very wide as the readership can include researchers, scholars, graduate and undergraduate students, policy makers and practitioners. Though the contributors are primarily scholars in the field of Economics or Statistics, the book contains useful takeaways for those working in the area of Development. It will also be of interest to policy makers and practitioners interested in development issues, and to post graduate students in Economics or any field, in social science, management or development.