n Africa Insight - Economic growth, redistribution policy and fiscal policy in South Africa : an SVAR analysis

Volume 38, Issue 1
  • ISSN : 0256-2804


The aim of this article is to uncover which method of financing an increase in social services expenditure would guarantee economic growth while assuring that government operates within a balanced budget constraint. The article will also assess whether fiscal policy (which aims at fiscal discipline) could improve the rate of economic growth when a particular tax is used to finance social services expenditure. The SVAR models applied in this study used two types of restrictions : the contemporaneous and the long-run (Blanchard and Quah) restriction. In the Blanchard and Quah restriction, structural shocks are identified under two different categories : the Keynesian and neoclassical types.

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