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

Kavese, Kambale and Phiri, Andrew (2018): Are fiscal budgets sustainable in South Africa? Evidence from provincial level data?

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Expenditure; Revenues; Budget sustainability; South Africa.
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C13 - Estimation: General; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; H - Public Economics > H6 - National Budget, Deficit, and Debt > H61 - Budget ; Budget Systems; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H72 - State and Local Budget and Expenditures

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