Theses and Dissertations (Economics)

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A regulatory framework for tax whistleblowing in South Africa
(University of Pretoria, 2024) Van Zyl, Stephanus; Franzsen, R.C.D. (Riel); Megan.labuschagne@live.com; Labuschagne, Megan
This study explores the viability and practicality of incorporating an incentivised tax whistleblowing programme in the Tax Administration Act, 28 of 2011. The primary objective of the study is to develop a legislative framework that can be used as a baseline for the development of the Tax Administration Act. To achieve this primary objective, the study considers the theories of compliance such as economic deterrence theory, fiscal exchange theory, social and comparative treatment and trust and political legitimacy of revenue authorities. These theories provide a basis for concluding on the factors that influence taxpayers' behaviour. The potential effect of a whistleblowing programme on these theories is considered to determine the potential role of an incentivised whistleblowing programme. The study also considers protection laws, fines, reporting duties and rewards as different regulatory policies or strategies to compel tax compliance. Finally, by taking lessons from the policy designs of the US and Australia, the study concludes on the foundational requirements for an incentivised whistleblowing programme. The study adopts a mixed-method approach. It involves reviewing the findings of existing studies on behavioural economics to understand taxpayer behaviour and a doctrinal analysis of the existing legislative framework in South Africa. In addition, the study also examines the regulatory designs of incentivised tax whistleblowing frameworks in the US and Australia, not for comparative purposes, but to gather key insights into the foundational requirements for an incentivised tax whistleblowing programme. The key findings of the study can be summarised in three main points. Firstly, South Africa does not have an incentivised tax whistleblowing programme. In fact, there is no incentivised whistleblowing programme in South Africa. Secondly, the South African tax legislative framework requires amendment to accommodate such a programme. Tax whistleblowing is a fundamental and powerful tool for revenue authorities to collect information and combat tax non-compliance and evasion. Thirdly, the proposed incentivised legislative framework envisages the following seven foundational requirements: i. A separate office within SARS that deals with whistleblower reports; ii. The investigation powers currently available to SARS must be available for this separate office to investigate the whistleblower reports; iii. A preliminary reward must be calculated; iv. Appropriate dispute resolution mechanisms and processes; v. A system for payment of rewards; vi. Adequate protection for whistleblowers and taxpayers; and vii. Appropriate anti-retaliation mechanisms. Finally, the proposed whistleblowing programme passes preliminary constitutional scrutiny making it a viable option for consideration by SARS and the South African legislature. The introduction of an incentivised tax whistleblowing programme has several benefits. It could potentially assist SARS in achieving its strategic objectives to promote voluntary compliance by encouraging individuals to report tax non-compliance and evasion. The proposed programme could increase revenue collection, since whistleblowers provide information that can be used to recover unpaid taxes. The proposed programme also plays a role in the deterrence of non-compliant and evasion behaviour, since individuals and companies may be more cautious and less aggressive in their tax planning. In conclusion, the study highlights the potential benefits of such an incentivised tax whistleblowing programme and provides insight into the development of such a policy in South Africa. The study acknowledges the need for future research to develop the preliminary framework established in this thesis, so as to address the unique challenges within a South African context.
Essays on the role of banking and finance in the South African economy
(University of Pretoria, 2024-07-08) Viegi, Nicola; u12190145@tuks.co.za; Mncube, Keaoleboga Lucas
The objective of the thesis is to analyse and understand the interaction between the banking sector and the economy in South Africa. To do so, we evaluate the historical evolution of productivity in the South African banking industry in chapter 2, by calculating a measure of productivity through a descriptive exercise. In chapter 3, we introduce labour dynamics of the banking industry by developing a model that links the productivity of the banking sector and macroeconomic outcomes. In chapter 4, we analyse how banking sector regulation affects the relationship between the banking sector and the macroeconomy and the contribution of banking sector regulation in determining efficiency of the sector.
Portfolio optimisation using alternative risk measures
(University of Pretoria, 2023-06) Van Schalkwyk, Cornelis Hendrik; Szczygielski, J.; doug@verdigris.co.za; Lorimer, Douglas
Markowitz’ Modern Portfolio Theory (MPT) optimises the ratio of mean portfolio returns and portfolio risk in the form of the variance of returns, giving rise to criticism relating to, inter alia, minimising upside risk, the assumption of normally-distributed returns, and a failure to recognise heteroskedasticity. In addressing these criticisms, this research investigates the use of alternative risk measures to optimise risk and return in MPT investment strategies using non-parametric numerical methods to optimise portfolios comprising assets from the S&P 1200 and MSCI GICS world indices. It investigates, in particular, downside semivariance, downside semideviation, mean absolute deviation, semi-absolute deviation, value at risk and conditional value at risk. In addition, the study investigates optimisation using backward-looking and forward-looking risk measures through exponentially-weighted moving average forecasts of risk measures and return. In general, all the alternative risk measures investigated result in investment strategies with higher returns than traditional MPT variance-optimised strategies, with semi-absolute deviation-optimised strategies performing best of all. The introduction of risk and return forecasting does not materially impact on strategy performance.
Running events in a crisis context : a sport consumer marketing perspective
(University of Pretoria, 2023-06-30) Du Preez, Elizabeth; Jordaan, Yolanda; bianca.frost@up.ac.za; Frost, Bianca Lizelle
In this thesis, Running events in a crisis context: a sport consumer marketing perspective, the candidate investigated emotional and behavioural aspects of sport event participation, specifically running events, prior to and during phases related to the unique COVID-19 crisis. The study was conducted in three parts, with the first two applying a novel netnography among an online community of marathon runners, utilising both inductive and deductive qualitative research methods. In the third part, a quantitative CHAID segmentation approach was employed. The first part focused on self-expressiveness and showed that event participants derive a deeper sense of happiness (or eudaimonia) from marathon event participation. This results in positive marketing outcomes, particularly positive authentic electronic word-of-mouth communication. The second part showed that brand love is enduring during a crisis, and the third part showed the potential for virtual running events across different segments. The study provides theoretical, practical and methodological contributions within the field of sport marketing and consumer behaviour.
Geocoded analysis of the determinants of socio-political unrest in South Africa
(University of Pretoria, 2024-01-10) Nicholls, Nicky; Clance, Matthew; danieleroux1997@gmail.com; Le Roux, Danie
Protests have severe negative short and long-run impacts on the developing South African economy. They have caused significant increases in costs and losses in productivity for crucial South African industries, leading to declining growth rates and further increases in unemployment and poverty. The focus of this study was to examine how service delivery, income level, and political satisfaction affect the intensity of unrest in South Africa. Secondary geocoded data from the GDELT project and Afrobarometer was utilised to construct composite indices to analyse the relationships between unrest intensity and its predictors. In line with the predictions of Frustration-Aggression Theory and studies conducted by Kali (2023), Nleya (2011), and Botes (2018), the study revealed a positive linear relationship between poor service delivery and unrest intensity. The findings contribute to a better understanding of the complex dynamics between unrest and its determinants. Policymakers and stakeholders can leverage this understanding to address underlying issues effectively and work towards mitigating and reducing socio-political unrest. The study’s framework, utilizing GDELT data, can also be applied to investigate unrest in other countries, benefiting from the broad global coverage provided by GDELT.
Essays on gender : impostor feelings, team composition, and pay gaps
(University of Pretoria, 2023-08) Nicholls, Nicky; u15269320@tuks.co.za; Pleace, Michelle Anne
Since the second wave of feminism started in the 1960s, women have made progress in the labour force. However, persistent challenges such as low representation in specific fields, limited access to high-ranking positions, and the gender pay gap continue to hinder gender equality. Overcoming these inequalities is crucial for empowering women and challenging societal norms. In this dissertation, we use different methods to investigate how the illusion of feeling incompetent, gender biases around working in teams with women, and the gender wage gap contribute to the challenges faced by women. Firstly, we use anchoring vignettes in a survey to examine whether impostor feelings, characterised by individuals mistakenly perceiving themselves as incompetent despite external evidence of success, discourage women from pursuing fields where they are traditionally underrepresented, such as academia. We observe a negative relationship between impostor feelings and the likelihood of students pursuing further studies. This limits human capital accumulation which can perpetuate gender disparities in the labour market. Secondly, we use a university-based field experiment to explore whether gender perceptions influence team relations and performance. We note a lower willingness to work in randomly assigned teams that have more women, despite majority-female teams outperforming other team types. Since individuals that are less included in their team have fewer opportunities to build upon their human capital, bias against having more women in a team can limit women’s career progression. Lastly, we look at the broader effects of gender inequality, specifically the gender pay gap. Using administrative data pertaining to South Africa’s formal economy, we find that the income differential by gender widened from 2008 to 2021. This lower pay negatively impacts women’s economic autonomy. Also, we note that the gender pay gap is largest at the 90th percentile of the income distribution in high-skill sectors suggesting women earn less than men at top-level management positions. These findings together highlight that women still struggle with gender equality in the labour market.
Uncertainty related to infectious diseases and forecastability of the volatility of financial assets
(University of Pretoria, 2022) Gupta, Rangan; shibasisa@gmail.com; Shiba, Sisa
In the context of the great turmoil in the financial markets caused by the COVID-19 outbreak, we examine the predictability of the US Treasury securities (Chapter 2), international stocks (Chapter 3), foreign exchange rates and Bitcoin (Chapter 4) and agricultural commodity futures (Chapter 5) given daily infectious diseases-related uncertainties (EMVID) using the heterogonous autoregressive volatility (HAV-RV) model. On stationary intraday data computed from a 5-minute interval, we conduct a recursive out-of-sample forecast. Through the RMSFE metric, our results provide evidence that these financial assets remain attractive to investors within the pandemic episode, with Bitcoin obtaining significantly high forecast gains among all the other assets in the medium and long forecast horizons. The US Treasury securities remain risk-free and the worldwide recognition of gold as a “safe haven” asset is emphasised. Among the agricultural traded commodities, cocoa and oats futures had significant forecast gains. The international stocks in Pakistan and Singapore appeared to be the most volatile. It is also evident that an econometrician can acquire the highest forecast gain in the Swiss Franc futures in the foreign exchange market. In Chapter 6, we use annual data on real gold returns and the probability of fatality due to contagious diseases over the period 1258 to 2020, we detect nonlinearity and regime changes in the relationship between the two variables of concern. We rely on a quantile regression model to show that real gold returns can hedge against the risks associated with such rare disasters (COVID-19), primarily when the market is in its bullish state, with it being negatively impacted in its bearish state. By assessing the role of contagious diseases on these financial assets’ returns we find strong evidence that contagious diseases play an important role in forecasting their RV. Understandably, our results have important portfolio implications for investors, speculators and portfolio managers during periods of high levels of uncertainty associated with infectious diseases.
A proposed framework for supply chain analytics using customer data
(University of Pretoria, 2022) Das, Sonali; u29023051@tuks.co.za; Phadi, Nteboheng Pamella
The COVID-19 pandemic and recent geopolitical events have called for a need to re-evaluate methodologies for Supply Chain Risk management. Significant investment in supply chain technology has resulted in data being generated throughout the value chain. Customer data, specifically, is of interest in order to establish customer-centricity and an enhanced customer journey. However, the transformation of this data to insight is not obvious for some organisations. Forecasting models are typically used to inform decision-making, mitigate risks and enlighten policymakers. This thesis aims to address this challenge by proposing a set of capabilities that will enhance the integration of the supply chain network to its customer data. Given this context, two methodologies were used to address the research problem; (i) multinational petrochemicals company was considered for our case study and a web-based survey was distributed among key stakeholders at their head offices in South Africa. A structured equation model (SEM) was constructed to empirically test the proposed relationships among the constructs, specifically: People, Process and Technology capabilities; (ii) The macro-economic factors that drive customer demand also considered. Increasing crude oil prices have increased logistics costs and have incited the deglobalization of supply chain operations. A novel petroleum forecasting model is also proposed, particularly focusing on the forecasting on South Africa’s petrol and diesel consumptions. The model uses indices for Brent crude oil price (ZAR), Gross Domestic Product (GDP), Rand to Dollar exchange rate, Consumer Confidence Index (CCI) and Business Confidence Index (BCI) data as input data. Overall, this study suggests that in order to effectively serve their customers, organisations need to establish a culture of customer centricity that is underpinned by appropriate supply chain analytics techniques. The predictive model further highlights the need to establish the relationship between the organisation’s supply chain and micro and macro-economic drivers.
The self-fulfilling prophecy of uncertainty : a study on the impact of uncertainty and contagion on economic outcomes and policy
(University of Pretoria, 2022-04) Van Eyden, Renee; Aye, Goodness; chevaughnvdw@gmail.com; Van der Westhuizen, Chevaughn
Economic globalisation has ushered in the integration of world financial markets, and the degree of interconnectedness has never been greater. In the face of a resurgence in global risks from trade, geopolitical tensions and global health risks, such as the outbreak of COVID-19, there has been an increasing focus on the impact of uncertainty on economic outcomes. Overall, uncertainty has been found to have significant negative impact on economies with the potential to compound recession and hinder economic recovery. The principal objective of this study is to address the impact of uncertainty and contagion on economic outcomes and policy in the South African context through a broad focus on the key markets – including the stock market, the currency market and the goods market – with particular focus on non-linear modelling and asymmetric effects, where the sign and size of a shock or uncertainty within markets have different impacts. In order to meet this objective, this study first investigates the interdependence and volatility transmissions and contagion between the stock and currency markets through a bivariate Exponential Generalised Autoregressive Conditional Heteroscedasticity (EGARCH) framework. This approach is used to allow for asymmetric effects of the shocks, allowing both the size and the sign of the shock to have different impacts. The impact of COVID-19 on the transmission mechanism is also explored. The outcomes from this analysis provide strong evidence in support of the “stock-orientated” approach, where significant price and volatility spillovers propagate from the stock market into the foreign exchange market, whilst evidence of the “flow-orientated” approach is seen in the second moment, and significant shock and asymmetric spillovers from the exchange to the stock market are found. The results support the asymmetric and long-range persistence volatility spillover effect and show strong evidence of contagion between stock and foreign exchange markets. These spillovers became more pronounced during the COVID-19 pandemic, confirming heightened contagion in these markets during periods of crisis. Secondly, attention turns to the goods market. The inflation-inflation uncertainty nexus is investigated through GARCH and GARCH-in-mean (GARCH-M) models to establish whether inflation uncertainty is a self-fulfilling prophecy, i.e., does higher inflation uncertainty leads to higher inflation and vice versa? The empirical outcomes from this study suggest the existence of a bidirectional relationship between inflation and inflation uncertainty, with stronger evidence in support of the Friedman-Ball hypothesis which states that heightened levels of inflation induce higher uncertainty about future inflation and weaker evidence in favour of the Cukierman-Meltzer hypothesis that proposes a reverse causation. The study also finds that inflation targeting has contributed significantly to reducing the level of inflation and inflation uncertainty. The Rossi-Wang (2019) time-varying Granger causality testing, which is robust in the presence of instabilities, further provides interesting insight into the relationship  notably that both the Friedman-Ball and Cukierman-Meltzer hypotheses break down during the inflation targeting period, which further hints towards the efficacy of inflation targeting as monetary policy framework. Finally, the thesis determines how high and low states of uncertainty in the three key domestic markets – the stock market, currency market and goods market – and uncertainty in the global market impact the effectiveness of monetary policy in South Africa. High and low uncertainty states in the markets are examined by employing sign-restriction and the Self-Exciting Interacted VAR (SEIVAR) analysis. This framework is particularly appealing in that it allows for estimating the economy’s response conditional on uncertainty states in the different markets. Impulse response analysis reveals that monetary policy is less effective in high uncertainty states in the different markets. Overall, the study attempts to inform policy in the face of uncertainty.
The impact of technological progress on emissions levels : evidence and lessons from different income-group countries
(University of Pretoria, 2022) Inglesi-Lotz, Roula; u17269581@tuks.co.za; Milindi, Chris Belmert
Global warming poses a serious threat to our ecosystem and our future. In this regard, reducing the use of fossil fuels by limiting energy consumption or improving energy efficiency is considered a critical path to combat climate change and environmental degradation. Among the main factors for reducing carbon emissions, technological progress's environmental impact has recently received considerable attention. Many scientists and political and economic leaders believe that technological progress will play a vital role in the low carbon path for both developed and developing economies. However, it would be interesting to determine whether technological progress has reduced carbon emissions over the past decades. Hence the purpose of this thesis. This thesis aimed to investigate the impact of technological progress on CO2 emissions. To do so, the specific research questions of the thesis were: What is the impact of aggregate technological progress on CO2 emissions? What is the effect of green technology on CO2 emissions? How are sectoral CO2 emissions (emissions from five energy sectors: Power, manufacture, transportation, petrol, and building sectors) affected by aggregate and green technological progress? In addition to these three specific questions, the thesis investigates how the relationship changes depending on countries’ development stages. These three research questions were addressed through three chapters (chapters 3, 4, and 5) around which the thesis is structured. This thesis was carried out on a panel of 60 countries divided into four income groups. Thus, we had 15 high-income countries, 15 upper-middle-income countries, 15 lower-middle-income countries, and 15 lower-income countries. The 15 countries chosen per income group are the largest CO2 emitters in their respective income groups. The study period ran from 1989 to 2018. The empirical analysis starts from chapter 3. In this chapter, various indicators of technological progress are used to evaluate their effect on CO2 emissions using the fixed effect and the Bruno LSDVC methodology. The full sample dataset analysis reveals mixed results. ICT expansion and science and technology publications reduce CO2 emissions. Patent applications and R&D expenditure did not significantly impact carbon emissions. TFP increases CO2 emissions in the full sample, suggesting that, in general, taking all its different aspects together, technological progress would increase carbon emissions. Subsample analysis revealed that ICT development decreases CO2 emissions in all income group countries. However, science and technology publication is negatively related to CO2 emissions only in high and upper-middle-income countries. The fourth chapter examined the interaction between green technology and CO2 emissions using the same estimation methodology employed in chapter 3. The thesis investigated if countries could reduce CO2 emissions through renewable energy consumption and climate-related innovations. Results reveal that renewable energy consumption significantly reduces CO2 emissions in the full sample and all subsamples. However, climate-related innovations represented by environmental-related patents significantly lower CO2 emissions only in very high-income countries. The fifth chapter investigated how aggregate and green technological progress affect CO2 emissions in five important energy sectors. The thesis developed an aggregate technological index using various technological progress measurements. Then, the thesis evaluates the effects of the composite indicator created on carbon emissions from the power, manufacture, transport, petrol, and building sector, using the Generalized Method of Moments (GMM) and Feasible Generalized Least Square (FGLS) methodology. The full sample analysis results show that, on the one hand, the composite indicator increases carbon emissions in all sectors except the building sector. On the other hand, renewable energy significantly lowers emissions from all sectors, except the petrol sector. Results from subsamples indicate that, generally, the composite indicator of aggregate technology is positively associated with carbon emissions across sectors; however, it is negatively related to carbon emissions from the manufacturing and building sector in high-income countries. The thesis further demonstrated that technological progress induced by the private sector plays a significant role in reducing CO2 emissions in these two sectors. This thesis allowed us to draw important lessons and recommendations for policymakers and various stakeholders to understand better the relationship between different aspects of technological progress and CO2 emissions and use technological progress as an essential tool to fight climate change.
Essays on technological trade composition and capital goods imports
(University of Pretoria, 2022) Clance, Matthew; Koch, Steven F.; Chisadza, Carolyn; beechipanda@gmail.com; Chipanda, Blessing
Recent international trade literature emphasised the importance of countries’ technological trade composition structures (both exports and imports) in enhancing economic growth and development. Yet Africa’s trade has been analysed at a macroeconomic aggregate level and export-led growth dominates the literature. The role played by imports is almost completely neglected, despite the continent being far removed from the world technology frontier. In the literature, those countries that are far removed from the technological frontier can benefit from importing capital technologies to the extent that can enable their ability to export such goods. The objectives of this thesis are 1) to examine the structures of Africa’s technological trade composition (both exports and imports) and determine how they have changed over the period 1980-2015 in relation to developed and other developing regions; 2) to investigate the effects of importing capital goods on the technological export composition; and (3) to establish the determinants of capital goods imports in developing countries, particularly in Africa. The first paper provides a comprehensive analysis of Africa’s trade composition spanning 1980-2015. I decompose Africa’s trade into five categories: primary goods, resource-based, low, medium, and high technology manufactured goods. I find that Africa’s imports are concentrated in capital goods and its export composition is highly concentrated in primary goods, which has contributed to the decline in Africa’s share of global exports. I also find that regions within Africa have similar technological trade composition structures. The second paper investigates the effect of capital goods imports on technological export composition in developing countries. The findings reveal that capital goods imports have a positive effect on technological export composition in developing countries. The findings also show that the positive effect of capital goods imports on technological export composition is larger in developing countries relative to developed economies. In Africa, capital goods imports also have a positive effect on technological export composition. However, the positive effect of capital goods imports on high technology exports is smaller in Africa relative to the average for other developing countries. The third paper investigates the determinants of capital goods imports in developing countries. The findings reveal that financial development, infrastructure investment, and institutions are important determinants of capital goods imports in developing countries. The findings also indicate that financial development has greater benefits in developing countries relative to developed countries. In Africa, financial development and infrastructure investment are key determinants of capital goods imports, with infrastructure investment being critical in landlocked nations. The overall findings in this thesis highlight the importance of capital goods imports in achieving export composition diversification, and hence economic growth. Furthermore, the findings reveal the importance of development factors that can complement capital goods imports, which can result in increased export composition diversification and economic growth. The findings may assist policymakers to (1) examine national trade structures, specifically to see how faster they have transformed over time; (2) understand the source of Africa’s underperforming trade, which is highly documented in the literature; (3) have a good understanding of the linkages between capital goods imports, technological export composition, and the rest of the economy; and (4) attain the best trade and industrial policies for their economies.
Essays on Intergenerational Mobility in Africa
(University of Pretoria, 2022) Getachew, Yoseph; patricia.funjika@gmail.com; Funjika, Patricia
This thesis seeks to provide an in-depth examination of intergenerational mobility in Africa. Examining intergenerational mobility and its underpinnings is of particular importance for Africa which, by 2020, was home to 8 of the 10 most unequal countries globally. We focus on the role of different historical institutional aspects in understanding and explaining trends and patterns in intergenerational mobility within selected African countries. The different institutions and relationships that we examine are (i) colonial administrative institutions and their implication for parental versus ethnic group based persistence (ii) precolonial ethnic group class systems and historical persistence (iii) political systems and human capital accumulation across different stages of development. The thesis is comprised of six chapters. The first chapter provides a general introduction to the thesis. In the second chapter paper, we provide insight on how colonial administrative institutions and policies may have affected the evolution of intergenerational mobility in different parts of Africa through their effect on ethnicity. We focus on former British and French colonies and compare differences in intergenerational education persistence from parents to children to ethnic group based persistence. We use cross sectional secondary data for eight countries and apply both linear regression and interaction modelling regression techniques. Our results show high levels of parental and ethnic based persistence. We also find that persistence from parents to children is stronger in former French colonies while parental ethnic group-based persistence is stronger in former British colonies. Nevertheless, our birth cohort results show that the importance of ethnicity in the intergenerational mobility process has declined in former British colonies, while remaining comparatively static in former French colonies. Precolonial characteristics such as ethnic group centralization and agricultural practices have been found to be relevant in explaining different aspects of economic development for Africa. In the third chapter, we explore whether intergenerational transmission of education within African countries also depends on precolonial and early colonial period ethnic group characteristics. In particular, we set out to examine whether differences in class stratification systems that existed within ethnic groups from that era are relevant for explaining social mobility. Estimates from an interaction linear regression model, using cross-sectional household survey data for six African countries, reveals differences in intergenerational persistence based on the historical class stratification system in which the various ethnic groups fall into. We find statistically significant differences in intergenerational persistence in three of the six countries. The findings from this paper challenges the notion of uniformity in institutional lock in and support arguments that national level estimates mask significant differences in mobility between groups within the country. The fourth chapter of this thesis examines taxes and intergenerational transmission of human capital when households are faced with a savings threshold that determines the ability to invest in children’s education. We study human capital accumulation across different stages of economic development and show that rich households are more likely to invest in children’s education than poor households at all stages. We find that the tax rate preferred by the poor is higher than that of the rich households and an application of the median voter theorem suggests that democratic settings may be a mode of accelerating social mobility and movements to higher stages of development through increased redistribution and public investment in education in the early stages. This then increases aggregate human capital and productivity in the economy, leading to a transition to a higher stage of development. Chapter 5 provides policy implications that arise from the thesis while Chapter 6 concludes by providing a summary of the dissertation and suggesting future areas of research.
Forecasting South Africa’s inflation rate using deep neural networks
(University of Pretoria, 2022-01-14) Van Eyden, Renee; kabothorisophage@gmail.com; Phage, Kabo Thoriso
Inflation forecasting is crucial for efficient monetary policy and decision-making in an economy. This paper examines the feasibility of including deep neural networks in the macroeconomic forecasting toolbox for the South African economy. This study focuses on South Africa’s annual headline inflation rate and applies two different deep neural network architectures for forecasting. The deep neural network’s performance is compared to the autoregressive integrated moving average (ARIMA) benchmark, where root mean squared error (RMSE) is used as a performance measure. The results show that the multiple layer perceptron (MLP) outperformed the benchmark and its peer, the convolutional recurrent neural network model. Admittedly, the convolutional long-short term memory network (CNN-LSTM) is sensitive to architectural design, especially when the amount of training data is in short supply. In conclusion, the study finds that the ARIMA model predicts inflation inconsistently in the presence of endogenous and exogenous structural breaks in the time series and consequently gives non-unique forecasts. The MLP becomes a viable addition to the macroeconomic forecasting toolbox in such a case.
Die likwiditeitsvraagstuk in die stelsel van internasionale ekonomiese betrekkinge
(University of Pretoria, 1968) Du Plessis, F.J.; Stals, Christian Lodewyk
No abstract available
Essays on welfare implications of knowledge acquisition corruption and signalling costs from the perspective of a developing country
(University of Pretoria, 2020) Zimper, Alexander; u28384327@tuks.co.za; Molefinyane, Mpoifeng Richard
The Economic Effects of Diabetes and Sugar-Sweetened Beverage Taxes
(University of Pretoria, 2020) Bohlmann, Heinrich R.; Koch, Steven F.; thsehla.eve@gmail.com; Thsehla, Masedikwe Mokwape Evelyn
The aim of this study is to analyse the effects of diabetes and sugar-sweetened beverages on the South African economy. The study was motivated by the prevalence of diabetes in South Africa and the cost of managing diabetes. In 2016, diabetes was the second leading cause of mortality in the country. Current studies show that more than 7% of healthcare expenditure is spent on diabetes care. Sugar-sweetened beverages have been linked to the increase in the prevalence of diabetes. Three independent studies are conducted to investigate the link between diabetes, sugar-sweetened beverages (SSB) and the economy. Firstly, we study the impact of diabetes on labour market outcomes in South Africa using regression analysis. We achieve this through using probit models, propensity score matching and linear instrumental variable methods to account for endogeneity of diabetes. We find through the analysis that individuals with diabetes are less likely to be employed when compared to individuals without diabetes. Secondly, we investigate the economy-wide impact of diabetes using a computable general equilibrium model. We assessed the impact of diabetes on GDP, household welfare and sectoral outputs. We find that diabetes reduces sectoral outputs, household consumption as well as GDP. Thirdly, we investigate the effects of sugar-sweetened beverages tax on the economy. We analyse this by simulating the effects of the tax together and the envisaged health benefits from the tax. The results of the analysis show that in the short-run poor households are negatively affected. The negative effect is however reversed in the long-run when the net health benefits of the SSB tax are considered. Overall, the main finding of this research is that diabetes has a negative effect on the South African economy. This negative effect can however be offset by targeted tax policy interventions.
Uncertainty, Financial Stress and Monetary Policy in South Africa
(University of Pretoria, 2021) Viegi, Nicola; Gupta, Rangan; theshnekisten@gmail.com; Kisten, Theshne
In this thesis, we examine the role of economic uncertainty and financial market stress in the South African economy and its implications for monetary policy. Financial market disruptions and economic uncertainty are commonly listed as the main sources of economic turmoil and slow recovery experienced by many economies globally following the 2007-08 global financial crisis. Understanding how financial and uncertainty shocks impact the real economy and the ability of financial market information to predict economic conditions is imperative from a policy perspective, potentially informing prudent macroprudential and monetary policy. Against this backdrop, this thesis is organised into three main chapters. In Chapter 2, we develop an index to monitor the intensity of stress in the South African financial sector, and examine the potential non-linearity in the transmission of financial shocks to the real economy. The index (called SAFSI) is constructed using a novel approach that selects and aggregates financial indicators based on their information content i.e. their ability to capture key periods of financial stress in the economy, thereby striking a balance between parsimony and efficacy. Furthermore, the use of time-varying correlations in the aggregation allows the index to capture the interconnectedness of financial markets as well as enabling each indicator to be assessed in terms of its systemic importance. In addition to capturing the benchmark episodes of financial stress in South Africa, the SAFSI successfully captures other global and idiosyncratic risks that affect the financial markets in the country. A regime-switching model reveals non-linearity in the transmission of financial shocks to the real economy. Specifically, financial shocks are more detrimental to the real economy during stressful periods than normal times. An unexpected shock to financial stress conditions during financially vulnerable times is associated with a more prominent contraction in output and higher inflation. However, during normal times, the financial shock has a negligible impact on prices and interest rates, with a small output impact. Chapter 3 examines the predictive ability of financial market information, captured by the SAFSI, by evaluating economic forecasts from three vector autoregression specifications: a mixed-frequency specification which includes quarterly and monthly time series data, a standard linear quarterly frequency model, and a threshold (non-linear) quarterly frequency specification. Out-of-sample forecasts reveal that accounting for intra-quarterly information improves the forecasting performance of financial information in terms of output growth and inflation, which are considered key economic indicators in formulating monetary policy decisions. Finally, in Chapter 4 we examine the connection between economic uncertainty and financial market conditions in South Africa, documenting that the macroeconomic implications of an uncertainty shock differs across financial regimes. A non-linear VAR is estimated where uncertainty is captured by the average volatility of structural shocks in the economy, and the transmission mechanism is characterised by two distinct financial regimes (i.e. financially stressful versus normal periods). We find that while the deterioration of output following an uncertainty shock is much more prominent during normal periods than during stressful periods, it is much more persistent during stressful financial times. The share of output variance explained by the volatility shocks in good financial times is more than double the share in bad times. Uncertainty shocks are found to be inflationary in both regimes, with the impact being larger in the stress regime. While our estimates reveals that financial frictions do not amplify the impact of uncertainty on real output, it does increase the impact on prices.
The Role of Renewable Energy in the South African Energy Supply Mix and Economy
(University of Pretoria, 2020) Inglesi-Lotz, Roula; vanessacndlovu@gmail.com; Ndlovu, Vanessa Constance
Globally and in most emerging economies such as South Africa, there is an urgent need to attain sustainable development goals as well as honor climate change mitigation commitments. In order to achieve this and to participate in a global transition to clean, low-carbon energy systems, it is imperative for South Africa to focus on its energy transition strategy. In South Africa, the current energy system is mainly reliant on fossil fuel, nuclear and gas energy sources. The high reliance on fossil fuels combined with an old fleet of power plants have intensified the challenges of unsustainability, poor security of supply, as well as unreliability demonstrated in frequent disruptions in the electricity supply. The South African energy supply system is in great need for transformation through the strengthening of cleaner and sustainable energy technologies. This thesis used the international energy supply mix comparison, energy supply mix drivers causality analysis, as well as the energy supply mix system modelling to investigate and propose an optimal energy supply mix which is aligned to the current South African national policy frameworks as well as the strategic targets and plans which enable a sustainable and secure energy transition. The overarching aim of this study was to investigate the role of renewable energy in the South African energy supply mix and economy. To do so, the specific research questions of the study were: 1) How is South Africa’s planned energy supply mix relative to the rest of the world and how has it changed in recent years? ; 2) What is the relationship between renewable energy and economic growth in South Africa?; 3) What is the optimal energy supply mix that is used in South Africa in order to assist with the transition from fossil fuels to renewable energies? These questions were addressed through three research papers around which the thesis is structured. The study’s findings advance the EnergyPlan system modelling tool and methodology and its introduction in the South African context. In terms of its energy supply mix (specifically electricity supply mix), South Africa is still heavily dependent on fossil fuels and there is a need for diversification towards a cleaner and sustainable energy supply mix. As a result, it is evident that nonrenewable energy has the most impact on economic growth. There is also a need to increase R&D expenditure and energy technology development. The key contribution of this thesis is the introduction to the South African context an energy supply mix methodology and tool that can be used to accurately determine the maximum contribution of renewable energy into the South African energy supply mix at the least cost and minimum emissions enabling the transition from a fossil fuel dominated mix to one that has more renewable energy. Also providing an evaluation of the role of renewable energies in the future optimal energy supply mix of the country and empirically evaluating and discussing the current Intergrated Resource Plan (IRP) as part of the process. In this regard, identifying the gaps in the current energy mix against likely scenarios based on the current economic climate. As well as better informing the policy makers and key stakeholders in the electricity industry on the role and effect of preferring a renewable -based energy supply mix.
Evaluating the impacts of energy and environmental policy on South African households
(University of Pretoria, 2020-06-01) Inglesi-Lotz, Roula; jessika.bohlmann@gmail.com; Bohlmann, Jessika Andreina
This thesis investigates how different policies and measures designed to reduce CO2 emissions – i.e. carbon tax and energy efficiency policies – in South Africa will affect South African households. The contribution of this study lies with evaluating South African households at a disaggregated income level from low to high-income appreciating the fact that households at different levels are impacted differently by the implementation of policies at national level. In order to evaluate such impacts, the study started with profiling the households’ electricity consumption patterns in South Africa through the years and comparing them with the rest of the world. The next objective was to comprehend – implementing an Auto Regressive Distributed Lag (ARDL) econometric model – the determinants of electricity consumption of the residential sector in the country. Finally, by using a Computable General Equilibrium (CGE), the study examined various policy scenarios designed to reduce emissions and its effects on different households, particularly the low-income ones that do not have the capital to absorb the impacts. The results showed that low-income households are affected differently than the rest of South African households by the national policies implemented to reduce CO2 emissions and combat climate change. However, given the way the carbon tax and energy efficiency policies are designed, low-income households should be affected minimally.
Fiscal Decentralization and Autonomy of Subnational Entities in Ghana
(University of Pretoria, 2020) Fosu, Augustin K.; Franzsen, R.C.D. (Riel); ponfek@yahoo.com; Oppong, Felix
This thesis examines the implementation of fiscal decentralization in Ghana, originally known as the Gold Coast in West Africa. It focuses on the Government of Ghana’s policies regarding subnational entities especially those related to own-source revenues, property taxes and government fragmentation. Ghana began the implementation of fiscal decentralization during the colonial era, but commenced more rigorous reforms only after 1988, with the enactment of laws to implement a Constitutional provision to allocate 5 percent of tax revenues to subnational governments and to fragment growing subnational units to smaller ones, in order to aid service delivery. The effectiveness of these polices has not yet been assessed by the Government of Ghana. This thesis examines these policies by posing three questions: First, “how effective is fiscal decentralization in supporting subnational autonomy in Ghana?” Second, “To what extent do revenue and expenditure assignments as well as intergovernmental transfers impact on regional gross domestic product in Ghana?” Third, “to what extent do subnational fragmentation and intergovernmental transfers impact on own-source revenue and more specifically property tax revenue in assemblies in Ghana?” The thesis concludes that Ghana has been more successful with political and administrative decentralization relative to fiscal decentralization. Of the pillars of fiscal decentralization, the intergovernmental transfers pillar is the most effective, although its implementation is bedeviled with delays in the transfer of funds. Revenue and expenditure autonomy are limited in Ghana, partly because of financial capacity constraints at the local level and over the financing of their capital budgets. It also concludes that subnational debt is not a challenge in Ghana. However, fragmentation at the regional and assembly levels has an overall negative impact on regional GDP, own-source revenue generally and property taxes more specifically, with some nuance at the level of metropolitan assemblies. Finally, this study confirms that intergovernmental transfers have an aggregate negative impact on own-sourced revenue, but no impact on the property taxes. I therefore recommend a detailed analysis of the institutional capacity of assemblies to generate own source revenue to be carried out before assemblies are fragmented. In addition, the central government needs to progressively increase the performance-based proportion of its intergovernmental transfers and provide technical assistance to assemblies that require support to enhance their revenue collection.

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