2024/10/08 by Francois Jacobus Stofberg, Stofberg, Francois Jacobus, Jan van Heerden +3
Economics, Econometrics and Finance · #C68 #Computable general equilibrium models #E16 #Economic Growth and Productivity #Economic Theory and Policy #Fiscal Policy and Economic Growth #H31 #L91 #R10 #Social accounting matrix #households #policy modelling #regional economics
paper · doi:10.71587/hrjfaf21
openalex publication_date 2024/10/08 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/15
After showing that the bulk of government expenditure is unproductive, we consider the impact of an alternative fiscal policy mix in South Africa. The alternative suggests freezing the real government wage bill for five years and using the savings generated by this decision to increase spending on a specific, productive and wealth-creative expenditure item, aggregate investments. By indirectly contributing to greater levels of investments we show how government can generate better levels of economic performance and social development. To analyse the economic consequences of the suggested fiscal policy mix we use TERM-SA a dynamic, regional computable general equilibrium model of South Africa. We also add additional features to provide more accurate and detailed results. Our results show that a wage freeze can increase both real GDP (5.9%) and employment (456,00 jobs) in the long-term.