Micro-simulations of a dynamic supply and use tables economy-wide Leontief-based model for the South African economy

Abstract

Background: South Africa has not fully recovered from the 2008 global recession. The World Bank has predicted that South Africa will be one of the worst performers in sub-Saharan Africa in 2020 with tepid growth of 1.3% which is far below the National Development Plan targets growth of 5.4% required a year to reduce unemployment, create decent jobs and generate enough revenue for social development. Aim:We aim to examine whether changes in the components of final demand (changes in government spending, household consumption expenditure, exports, investment spending) have a considerable effect on the sector's gross value added, job creation and tax revenue generation and whether there were changes in the exogenous final demand in die postrecession period.Setting: We focus on building supply and use tables based on 62 different sectors of the South African economy.Methods: An economy-wide Leontief multiplier-based model calibrated on a supply and use framework and a micro-simulation model is used to assess post-recession trends in macroeconomic, labour and fiscal multipliers for South Africa. Results:The simulations show that during the post-recession era, the effect of exogenous shock in the economy, like an increase in investment spending, although positive, yields a smaller return in terms of tax revenue, job creation and economic growth. At sector level, the results show that the inter-industry links and industry-consumer links have therefore weakened. Conclusion:Our findings imply that the persisting low growth trajectory associated with weaker inter-industry linkages could be exacerbated, while the fiscal austerity measures associated with weaker forward and backword tax linkages could be prolonged. We recommend government should follow a priorities-based spending policy that yields optimal socioeconomic returns.

A dynamic, stochastic, Bayesian, provincial input–output model for the South African economy

“…In its simplest expression, a green economy can be thought of as one which is low carbon, resource efficient and socially inclusive. (p. 9) http://www.sajems.org Open Access (Majory & Stephen 2011; Van Seventer 1999), on using inputoutput methods (Boshoff & Seymore 2016;Kavese & Phiri 2020;Park & Chan 1989), on utilising Bayesian methods (Kim & Hewings 2019), or on combining input-output analysis and system dynamics modelling (Uehara, Cordier & Hamaide 2018). In this paper, all these elements are combined in order to forecast not only national gross value added (GVA), but also provincial GVA, and estimate the relevant provincial multipliers.…”