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Are fiscal budgets sustainable in South Africa? Evidence from provincial level data?

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  • Kavese, Kambale
  • Phiri, Andrew

Abstract

This study uses the nonlinear autoregressive distributive lag (N-ARDL) model to investigate the expenditure-revenue relationship for all nine South African provinces using annual data spanning from 2000 to 2016. Whereas other cointegration models can only depict whether budgets are sustainable or not, the N-ARDL model presents features which further enable us to predict a course of action which individual provincial governments can take towards attaining higher levels of budgetary sustainability in both the short and the long-run. Ultimately, our empirical study demonstrates that the ‘one rule fit all’ strategy as suggested by previous studies may not be an appropriate approach seeing that provincial governments have differing requirements for attaining improved levels of budget sustainability.

Suggested Citation

  • Kavese, Kambale & Phiri, Andrew, 2018. "Are fiscal budgets sustainable in South Africa? Evidence from provincial level data?," MPRA Paper 84034, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:84034
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    1. Samuel S Jibao & Niek Schoeman & Ruthira Naraidoo, 2010. "Fiscal Regime Changes and the Sustainability of Fiscal Imbalance in South Africa: A Smooth Transition Error-Correction Approach," Working Papers 201023, University of Pretoria, Department of Economics.
    2. Lusine Lusinyan & John Thornton, 2007. "The Revenue‐Expenditure Nexus: Historical Evidence For South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 75(3), pages 496-507, September.
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    4. Ahmad Zubaidi Baharumshah & Aliyu Alhaji Jibrilla & Abdalla Sirag & Hamisu Sadi Ali & Ibrahim Muye Muhammad, 2016. "Public Revenue-Expenditure Nexus in South Africa: Are there Asymmetries?," South African Journal of Economics, Economic Society of South Africa, vol. 84(4), pages 520-537, December.
    5. Paleologou, Suzanna-Maria, 2013. "Asymmetries in the revenue–expenditure nexus: A tale of three countries," Economic Modelling, Elsevier, vol. 30(C), pages 52-60.
    6. A. Phiri, 2019. "Asymmetries in the revenue–expenditure nexus: new evidence from South Africa," Empirical Economics, Springer, vol. 56(5), pages 1515-1547, May.
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    11. Edward Ghartey, 2010. "Cointegration and Causal Relationship between Taxes and Spending for Kenya, Nigeria and South Africa," International Economic Journal, Taylor & Francis Journals, vol. 24(2), pages 267-282.
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    Cited by:

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    More about this item

    Keywords

    Expenditure; Revenues; Budget sustainability; South Africa.;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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