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Fiscal policy in South Africa: closed input-output income and employment multipliers

This paper estimates income and employment multipliers for South Africa, based on a closed input-output model for the year 2018. Our results are in line with the literature on fiscal multipliers in South Africa and apply to the current conditions of high unemployment, economic stagnation and a negative output gap. Based on our estimates, we predict that the fiscal belt-tightening proposed in South Africa’s 2020 Budget, will reinforce the slow growth of the South African economy and augment the already high rate of unemployment.

This paper estimates income and employment multipliers for South Africa, based on a closed input-output model for the year 2018. Our results are in line with the literature on fiscal multipliers in South Africa and apply to the current conditions of high unemployment, economic stagnation and a negative output gap. Based on our estimates, we predict that the fiscal belt-tightening proposed in South Africa’s 2020 Budget, will reinforce the slow growth of the South African economy and augment the already high rate of unemployment.

Read more about the steps the IEJ along with civil society partners, @AmandlaMobi, @black_sash, @CALS_ZA, @PayTheGrants & @SPI_OfficialZA, are taking to hold government accountable for the #R350 SRD grants crisis - https://mailchi.mp/iej.org.za/statement-civil-society-takes-government-to-court-on-r350-srd-grant

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