This study uses a simple univariate regression model to assess the cyclicality of fiscal policy, based on government expenditure, in South Africa since 1994. The model suggests that that total government expenditure is highly procyclical, indicating that government spending responds positively to economic growth. The results from similar regression focusing on components of government spending suggests that only capital spending (economic classification) and general services (functional classification) are countercyclical, while other classifications are more procyclical in line with total government spending. The procyclicality of expenditure components such as compensation of employees, goods and services and all functional classification is in line with government’s decisions to reduce taxes in order to boost economic activities during periods of recessions, coupled with South Africa’s high public wage bill. The countercyclicality of capital spending is attributed to government's view on prioritising capital projects during periods of recession, in line with the Keynesian theory. Results of procyclicality confirm most of other empirical findings on South Africa’s fiscal policy. However, this suggests that the procyclicality of South Africa’s government expenditure plays only a small role in demand management and therefore stabilising aggregate demand or economic fluctuations. / Dissertation (MBA)--University of Pretoria, 2012. / Gordon Institute of Business Science (GIBS) / unrestricted
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:up/oai:repository.up.ac.za:2263/23721 |
| Date | 02 April 2013 |
| Creators | Maidi, Mohloriseng Athelia Mmatshepo |
| Contributors | Rossouw, Jannie, ichelp@gibs.co.za |
| Publisher | University of Pretoria |
| Source Sets | South African National ETD Portal |
| Detected Language | English |
| Type | Dissertation |
| Rights | © 2012 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria. |
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