36 research outputs found
The possible effects of the extended lockdown period on the South African economy : a CGE analysis
The economic effects of the lockdown period in South Africa will be devastating. We simulated the industry level capacity constraints imposed by the lockdown regulations since 27 March 2020 on all industries in South Africa by reducing the amount of capital and labour available for production. We found a decrease in real GDP to 10% below the baseline level in 2020, and recovery of all industries and macroeconomic variables towards the baseline by 2027. Industries that are suffering and would continue to suffer are the hospitality and tourism industry and all industries related to it, such as transport services, as well as beverages and tobacco. Manufacturing in general is also hard hit because they were prohibited to let large groups of labourers enter their premises. The model shows that most manufacturing will suffer throughout the forecast period, which was modelled up to 2027.http://wileyonlinelibrary.com/journal/saje2022-11-08hj2022Economic
Constructing a CGE database using GEMPACK for an African country
This paper describes how we transformed the 2002 Ugandan Supply Use
Table (SUT) into the required structure of a database for the static UgandanCGEmodel
Dixon et al. (ORANI: A multisectoral model of the Australian economy, 1982). We
describe the unique features captured in the Ugandan SUT as well as that of the CGE
database. We highlight the structural differences of the published data and that of the
CGE database. In describing the SUT we identify data issues, such as negative capital
rentals and omitted data entries that had to be addressed before the database could be
constructed. The ideas put forward in this paper describe, in a pragmatic manner, not
only how to transform published data into a CGE database, but also how to create an
additional sector in the CGE database. For the Ugandan CGE database, we created an
additional Oil sector.http://link.springer.com/journal/106142016-12-31hb2016Economic
The dividends from a revenue neutral tax on coal in South Africa
South Africa is endowed with a significant proportion of the world's coal reserves, which is used relatively cheaply to supply in more than 75 per cent of the country's energy needs. In terms of its per capita South Africa is one of the largest air polluters in the world. Even higher on the list of social preferences in South Africa, however, is the problem of unemployment, which also ranks amongst the highest in the world. In this paper we use a Computable General Equilibrium (CGE) model to simulate fiscal policy scenarios that address both these problems, and try to establish a "double dividend", namely a reduction in CO2 levels of pollution as well as a reduction in unemployment levels
Water resource accounting for Uganda : use and policy relevancy
This paper uses the system of economic and environmental accounting for water to demonstrate how the water
sector interacts with the social-economic sectors of the economy. Furthermore, it reviews the existing institutional
and policy framework in Uganda, and proposes an analytical framework which can be used to provide sound intersectoral
planning in order to achieve sustainable water resource use. The proposed framework also articulates how
outcomes of water policies and social-economic policies can be analyzed. In Uganda, the uneven distribution of
water resources both in space and time, poses constraints to economic activity particularly in the water-scarce
regions of the country. The problem is being exacerbated by the increasingly erratic rainfall and rising temperatures.
The accounting results show that the current level of water use within the economy is less than the available
quantity. In this regard, there is room for the development of mechanisms to increase its utilization. This would
serve to mitigate the scarcity especially of water for production which primarily emanates from climate variability.
This in turn affects the performance of the economy, as key sectors such as agriculture are rainfall-dependent.The Carnegie Corporation of New York under the Next Generation of African Academics (NGAA II) project, and Economic Research Southern
Africa (ERSA).http://www.iwaponline.com2016-08-31hb2016Economic
The welfare effects of reversed border tax adjustments as a remedy under unilateral environmental taxation : a South African case study
Border Tax Adjustments (BTAs) resurfaced recently in national policy debates as a
possible measure to counter the anti-competitiveness effect of unilateral
environmental taxes. There seems to be no consensus in the literature on the
effectiveness of BTAs under environmental taxes. This paper aims firstly to provide a
theoretical Heckscher-Ohlin analysis that not only challenges the effectiveness of
BTAs, but also proposes an alternative approach to mitigate the welfare effects of
environmental taxes. Secondly, the paper evaluate the effectiveness of the
alternative approach, to negate the economic impact on competitiveness of an
electricity generation tax, without sacrificing the environmental benefits of the tax, in
the case of South Africa.
Using conventional Heckscher-Ohlin methodology, in a small country, we show that
policy makers should, instead of implementing BTAs, consider the opposite of BTAs
to mitigate the welfare effects of environmental taxes. We show that gains from trade,
due to a reduction in import tariffs, could, under certain assumptions, offset the initial
tax induced welfare loss.
The paper then applies the Global Trade Analysis Project (GTAP) model to evaluate
the impact of an electricity generation tax on the South African, SACU and SADC
economies and explores the possibility to reduce the economic impact of the
electricity generation tax through traditional border tax adjustments. The results show
that an electricity generation tax will lead to a contraction of the South African gross
domestic product. However, traditional BTAs are unable to address these negative
impacts. The paper then test the proposed reversed BTA approach where gains from
trade are utilised to negate the negative impacts of an electricity generation tax, while
retaining the environmental benefits associated with the electricity generation tax.
This is achieved through a reduction in import tariffs, as this reduction will reduce
production costs and thereby restore the competitiveness of South Africa. The
reduction in import tariffs not only negates the negative GDP impact of the electricity
generation tax, but most the CO2 abatement from the electricity generation tax is
retained.http://www.multi-science.co.uk/ee.htmhb2017Economic
A supply-side alternative for SRD grants in South Africa
This was an informal discussion during a session conducted by Nicola Viegi, called ‘Narratives in Economic Policy’ during the Faculty of Economic and Management Sciences' Inaugural Research Day on 8 September, 2023.During a lively debate between Haroon Bhorat and Michael Sachs at the University of Pretoria recently, Bhorat pleaded for supply-side measures to alleviate poverty in South Africa, rather than demand-side measures. (The debate took place during a session at the Faculty of Economic and Management Sciences' Inaugural Research Day on 8 September, 2023).Bhorat claimed that the SRD grants could not secure a solution to unemployment in a sustainable manner. In this paper, we use the UPGEM Computable General Equilibrium (CGE) model of the University of Pretoria to test the performance of wage subsidies in South Africa, in comparison to the Social Relief of Distress (SRD) grants of the same expenditure magnitude, and report on the differences between the two policy measures in terms of (i) unemployment alleviation, (ii) poverty alleviation and (iii) economic impact in general.http://wileyonlinelibrary.com/journal/sajehj2024EconomicsSDG-01:No povert
The impact of the 2014 platinum mining strike in South Africa : an economy-wide analysis
In this paper we measure the economy-wide impact of the 2014 labour strike in South Africa's platinum industry.
The strike lasted 5 months, ending in June 2014 when producers reached an agreement with the main labour
unions. The immediate impacts on local mining towns were particularly severe, but our research shows that
the strike could also have long lasting negative impacts on the South African economy as a whole. We find
that it is not the higher nominal wages itself that caused the most damage, but the possible reaction by investors
in the mining industry towards South Africa. Investor confidence is likely to be, at least, temporarily harmed, in
which case it would take many years for the effects of the strike to disappear.We conduct our analysis using a
dynamic CGE model of South Africa.http://www.elsevier.com/locate/ecmod2016-12-31hb201
An economy-wide evaluation of new power generation in South Africa : the case of Medupi and Kusile
This paper investigates the role that the building of two new power stations, Medupi
and Kusile, will play in facilitating future economic activity in South Africa. We use a
dynamic computable general equilibrium (CGE) model to estimate the economy-wide
effects of these new power stations. Our simulation results also provide insight into
how much the local economy has lost due to inadequate electricity supply in the
period leading up to the construction of Medupi and Kusile. We find that the decision
to build additional power generation capacity was necessary and justified, and that
the failure to sooner recognise the need for expansion of the country’s electricity
generation capacity and subsequent delays in commissioning Medupi and Kusile,
likely cost the economy over R110bn in lost production. Additional analysis, in which
a further two-year delay in the construction of Medupi and Kusile is simulated, shows
that such an event will cause the economy to perform below baseline projections up
to 2022.Economic Research Southern Africa (ERSA)http://www.elsevier.com/locate/enpol2017-10-31hb2016Economic
The economic and environmental effects of a carbon tax in South Africa : a dynamic CGE modelling approach
South Africa’s National Treasury released its Carbon Tax Policy Paper in May 2013. The paper proposed a
R120/tCO2-equiv. levy on coal, gas and petroleum fuels. Here, we model the possible impacts of such a tax
on the South African economy using the computable general equilibrium (CGE) 53-sector model of the
University of Pretoria’s Department of Economics. The model shows that the carbon tax has the capacity to
decrease South Africa’s greenhouse gas (GHG) emissions by between 1 900MtCO2-equiv. and
2 300MtCO2-equiv. between 2016 and 2035. The extent of emissions reductions is most sensitive to the rate
at which tax exemptions are removed. Recycling of carbon tax revenue reduces the extent of emissions
reductions due to the fact that economic growth is supported. The manner in which carbon tax revenue is
recycled back into the economy is therefore important in terms of the extent of emissions reductions
achieved, but not as significant as the influence of different exemption schedules. The model shows the
carbon tax to have a net negative impact on South Africa’s gross domestic product (GDP) relative to the
baseline under all exemption regimes and all revenue recycling options assessed. The negative impact of
the carbon tax on GDP is, however, greatly reduced by the manner in which the tax revenue is recycled.
Recycling in the form of a production subsidy for all industries results in the lowest negative impact on GDP.This paper was an update of a December 2010 paper on the same topic.The World Bank’s Partnership for
Market Readiness on Climate Change Mitigation programmehttp://www.sajems.orgam2016Economic
The practice of economics as a science : obsolete in a changing world?
p. 22-32: Publikasies van die Universiteit van Pretoria (Nuwe Reeks)http://explore.up.ac.za/record=b139263