Developing countries' responses to the often very unequal effects of the Covid-19 pandemic will require governments to leverage a range of mechanisms to raise finances to support economic recovery. We consider citizens' willingness to contribute to development projects as one such mechanism. In particular, we are interested in how willingness to contribute varies on 3 dimensions: inequality in initial endowments; the outreach of the project (local with clear direct benefits to the
contributor versus national with less direct benefit to the contributor); and the expected impact of giving. We conduct a preregistered online experiment with a sample of 900 South Africans, where the sample demographics align with country demographics. Respondents participate in 4 incentivised tasks to consider each of the 3 dimensions of interest: 2 small (4-player) public goods game tasks with equal and unequal endowments are compared to estimate inequality impacts. A dictator game decision with donations to a national public resource, the Solidarity Fund (with the same endowment and multiplier as in the public goods game) is compared to the local public goods game to study project outreach. Finally, a second dictator game decision where the multiplier is increased is compared to the first dictator game decision to assess the role of increasing the impact of donations.

International empirical studies show that the welfare impacts of uninsured mortality risks are deleterious, especially to poor households (Jalan and Ravallion, 1998). While poor households have pent up demand for insurance due to high degrees of risk aversion, the onerous requirements imposed by formal credit institutions and the lack of affordable policies often preclude these households from obtaining formal credit and insurance products. The result is a reduction in the likelihood of poor households’ participation in growth, which in turn widens income inequality.
This paper assesses the vulnerability to poverty of uninsured and insured South African households, which experience the death of a core household member. The analysis uses the five waves of the National Income Dynamics Study (NIDS). The descriptive analysis shows that in South Africa, risk mitigation mechanisms deployed by the poorest households are supplied primarily through informal community-based arrangements such as burial societies, with 20 per cent of chronically poor households belonging to a burial society and the remaining 80 per cent completely excluded from the formal and informal insurance markets. Using a Maximum Likelihood panel ordered logit model, we show that burial society memberships moderate downward social strata mobility amongst households that experienced the death of a core household member. While informal mortality-risk insurance arrangements utilized by impoverished households have been shown to provide a financial buffer, the uptake of these community-based arrangements has not reached critical mass.

Our findings highlight that the provision of mortality-risk insurance tailored to the needs of poor households is likely to play an important role in sustainable poverty reduction and overall economic growth. Proactive anti-poverty policies, however, require a three-way symbiosis between the formal financial sector, informal sector, and social welfare provision.

The Cultural and Creative Industries (CCI) worldwide have been particularly hard hit by the shutdowns to contain the COVID-19 pandemic. The sector is particularly vulnerable because of face-to-face nature of service delivery, high levels of freelance and short-term contract work, and (in South Africa) the high levels of informality in some parts of the sector. In 2020 and again in 2021, a quantitative online survey was run by the South African Cultural Observatory to collect information from South African CCI firms on the impact of the lockdown measures. Responses were obtained from all parts of the sector, which includes performing arts, heritage, publishing, music, film and video, design, and support activities. Research methods included the construction of a vulnerability score, based on the attributes of sub-domains, including the proportion of freelance workers, the proportion of informality, and the importance of in-person work. It also included the development realistic scenarios that were used to shock an econometric model (based on a Social Accounting Matrix) to determine the economic impact of the COVID-19 lockdown on the CCIs, and on the South African economy as a whole. Results showed that almost all creative industries had experienced cancellation or indefinite postponement of work scheduled to take place before the end of 2020. The impact of the COVID-19 shutdown is not symmetric and each of the CCI domains experienced different consequences and expected recovery times. The total impact (without the induced impact) on total output of the COVID-19 shutdown on the CCIs in 2020 was estimated to be -R53,3 billion and the direct and indirect impact on the whole economy is expected to be -R99,7 billion. For many, pivoting to doing business online was a very important adaptation strategy.

The global stainless steel market is probably unique in terms of its very high levels of geographic concentration. At one end of the value chain South Africa produces more than 50% of global Chrome ore and 71% of Chrome ore exports. At the other end, China produces 53% of global stainless steel and accounts for 84% of global Chrome ore imports. Price transmission theory suggest that lags, causality, market structure and asymmetry are key determinants of how price changes at a given market level impact prices at other levels in the supply chain. Barriers to entry, firm size and buyer/seller concentration are primary elements of market structure. If market agents influence price determination through collusive behaviour, an inefficient marketing system will have been created. Given the high dependence of China on South Africa and South Africa on China in the global stainless steel market, the presence of non-competitive markets is likely. Price asymmetry could be the consequence of the high levels of concentration because the presence of non-competitive markets is a main explanation for asymmetric price transmission (APT). When APT exists, either buyers (price decrease) or sellers (price increase) do not benefit equally from a given movement in prices. This paper examines whether APT in fact exists between the prices of South African Chrome ore, Charge Chrome, Nickel and Chinese Domestic Stainless steel prices over the period January 2009 to July 2019 using a Non-Linear Autoregressive Distributive Lag (NARDL) model. The four variables are cointegrated in the long-run, but no evidence of price asymmetry is found. The reason for this may in fact lie in the highly concentrated nature of the industry at each level within the supply chain. The limited number of players ensures that the distribution of pricing information is very efficient for participants within the industry.

In the last decade we have witnessed rising protests in the United States associated with issues that form part of society’s social fabric that can either facilitate or break down collective behaviour. Rising social inequalities can cause people to no longer share the same values and force individuals to work against each other. This breakdown in social capital can be a key driver for protests as the marginalised attempt to voice their unhappiness. While there is extensive literature on the effect of economic inequality on protests, there is limited evidence on the links between social capital and protests, or how economic inequalities such as wealth, labour, or social immobility can attenuate the effects of social capital. In this study, we pose the question: does social capital lead to protests in the United States? We propose that social capital (related to how individuals work together in a group to effectively achieve a common purpose) is negatively associated with protests. Using social capital data from the Social Capital Project and protest data from the GDELT Project for U.S counties, we find that higher social capital decreases different types of protests, moreso demonstrations and violent protests. At a disaggregated level, we find that community engagement and collective efficacy (i.e. level of social organisation) are better predictors of protests in relation to quality of household health and level of confidence in institutions. These results remain consistent when controlling for economic and social inequalities, such as income, unemployment and race. The findings highlight the importance of social capital in the development process, particularly in mitigating the incentives to engage in violence. Therefore, addressing the mechanisms that can delay social capital may assist in less grievances that lead to protests.

This article examines the relationship between art market sentiment and the financial markets. A specialised art market sentiment index is developed in this article and is analysed against a selection of international financial market indices. A relationship is observed between art market sentiment and financial market performance. This article uses data collected from the Twitter application programming interface (API) and applies Valence Aware Dictionary for sEntiment Reasoning (VADER) to determine the sentiment scores. The data show that increasing levels of digitalisation has resulted in the art market becoming a more popular alternative investment within the financial market to hedge against market risk. This would imply that the art market may be an effective hedging instrument within financial investment portfolios. The sentiment analysis proved to be statistically robust and, due to its consistency, provides evidence that the art market sentiment analysis developed in this article is an effective market analytics tool.

Debt-financed fiscal stimulus (DFFS) programs directly stimulate aggregate demand through government expenditure or tax cuts, but their effectiveness is highly dependent on direct crowding-out of private sector expenditure, spillover effects to the private sector through a higher risk premium on interest rates, and the interaction between fiscal policy and monetary policy. Using an open-economy fiscal DSGE model, we identify the effect of six different fiscal policy instruments (consumption spending, investment spending, transfers, consumption taxes, capital taxes, and labour taxes) on short-term and long-term (nominal and real) interest rates. These disaggregated expenditure and revenue shocks raise long-term real yields between 18 and 29 basis points, but there are non-negligible differences in the dynamic responses to each fiscal instrument. Our main findings suggest that an investment-driven DFFS would reduce the government debt-to-GDP ratio, especially in periods of economic slack when monetary policy would typically be more accommodative. In fact, since the global financial crisis, monetary policy has reduced the burden of fiscal adjustment in response to rising debt and a rising risk premium. But, further shocks to the risk premium could offset any gains from the current stance of monetary policy (for example, a credit rating shock raises the long-term government bond rate 155 basis points). We conclude that if fiscal policy remains unsustainable a negative feedback loop between increasing debt servicing costs (through a higher risk premium) and rapid debt accumulation may push the country into a sovereign debt crisis and economic distress.

The movement of settlers into the interior of southern Africa had a profound effect on the development trajectory of the region. The reasons for this migration, starting around 1836, continue to be debated. Was it the emancipation of slaves two years earlier, the arrival of British migrants in 1820 or the antagonism of a British government that had captured the Cape from the Dutch East India Company in 1795? Or was it the pressure on land, a consequence of the closing of the frontier between the expanding settlers, the remaining pastoral Khoesan and the strong and sedentary amaXhosa? This paper uses new archival microdata to investigate the reasons why, in 1836, bands of settlers left their homes and migrated deeper into the South African interior. We show that the emancipation of slave labour was unlikely to play a role. The reason, instead, was economic: the loss of a capital asset, combined with the potential for high returns on land in the interior, resulted in the Trek. Masked as a nationalist movement, the Trek was ultimately about financial gain.

The paper examines the joint effect of market power and different types of bank efficiency on financial stability across 5 countries (Kenya, Tanzania, Uganda, Rwanda and Burundi) within the East African Community. Unlike existing studies which have employed efficiency in a broad way, it is decomposed into five different types i.e. technical, pure technical, scale, cost and revenue efficiency. Using a two-step system GMM on 149 banks with 1,805 observations over the period 2001-2018, empirical findings reveal that the joint effect of market power and bank efficiency is critical on financial stability and the effect is depended on the specific type of efficiency being explored. Increased market power is observed to have a direct positive effect on bank stability thus lending to support concentration-stability hypothesis. With respect to bank efficiency, cost and revenue efficiency have a positive significant effect with bank stability while the effect of technical, pure technical and scale efficiency is insignificant. In overall, concentrated banks with higher cost and revenue efficiency are more stable compared to the inefficient banks thus supporting the efficiency-stability hypothesis. The findings highlight that an eclectic policy to ensure a trade-off between bank concentration and competition should be ensured by the bank regulators.

Human capital (HC) has increasingly been identified as a driver of economic development, with the potential to reduce income inequality, which, in South Africa, originates in the labour market. HC is however a complex concept to measure. This study uses Fields’ regression-based decomposition method to analyse the relationships between income inequality and HC. Fields’ method allows the impact of several factors contributing to HC on the inequality of a measure of income. Data from the NIDS wave 1 (2008) and 5 (2017) is used. The findings suggest the dominance of education attainment in discussions of HC, is justified. The study confirms that increasing educational attainment, through improved school quality, is the remedy South Africa needs to reduce income inequality.

Since the inception of the Competition Act in 1998 public interest considerations (PICs) have been an integral part of merger reviews in South Africa. The Walmart/Massmart merger, finalised in 2012, brought PICs to the fore in South Africa (Mandiriza et al., 2017). It also increased the profile of South African competition law and debate on how competition policy can be aligned with broader government policy. The Walmart case drew so much attention because this was one of the first mergers which saw multiple government departments and worker unions presenting submissions and recommendations to the Competition Appeal Court (CAC). It also was the first instance where a Supplier Development Fund (SDF) was set as condition for the merger to proceed.

In 2020, PepsiCo Inc. acquired a 100% share in the business of Pioneer Foods Group Ltd – a merger also approved with PICs including a SDF. This merger was the first major transaction under the new provisions of the Competition Amendment act, which promotes a greater spread of ownership in firms, in particular by workers and historically disadvantaged persons.

This paper follows a mixed method approach to compare the conditions of the Walmart/Massmart and PepsiCo/Pioneer Foods mergers. Specific emphasis will also be on the (potential) impact of the established SDFs on SMMEs in South Africa. After the comparison of the two mergers, the empirical part of the paper investigates the determinants that potentially influence the decision on specific PICs in final merger decisions. The explanatory variables include: the economic sector involved, the size of the merger, whether it is a local or international transaction, the profitability of the firms involved, the general economic condition at the time of the merger, etc. The regression analysis is done on a unique data base compiled by the first author.

The detrimental effect of climate change on health is becoming an essential topic of economic research and policymaking. The negative impact of rising temperatures and extreme weather events on children’s health outcomes and their human capital is especially concerning. Disease patterns, the increased probability of extreme weather events, agriculture production (productivity), and food security are all affected by climate change. Erratic temperatures and precipitation are some events that affect these key factors that influence nutrition, human capital investment, and living standards, particularly for children (Davenport et al., 2017; Lobell & Field, 2007). Children are more vulnerable to the consequences of climate change due to their dependence on caregivers and immature physiology. Furthermore, the children in households that are dependent on agriculture are most susceptible to chronic malnutrition due to climate change (Brown & Funk, 2008). This study investigates the impact of changing temperature and precipitation on child health indicators - stunting and underweight. We find evidence that supports the notion that temperature has a direct effect on child malnutrition and precipitation an indirect effect (Ahdoot et al., 2015; Cooper et al., 2019). We are not the first to consider the effects that temperature and/or precipitation have on children’s health outcomes, but these studies use predictive changes in temperature and/or rainfall to forecast health outcomes. We instead contribute by using the Living Standards Measurement Study-Integrated Surveys on Agriculture (LSMS-ISA) to form a panel dataset that allows us to investigate how actual changes in temperature and precipitation impact contemporary children’s health outcomes.

South Africa has one of the most unequal societies in the world. The country has a unique history in terms of racial segregation, which has been a major cause of the inequality between the population’s white minority versus the country’s black majority. Between 1960 and 2011, the country experienced economic growth of 3,42% on average. Unemployment has risen over the same period, from around 9,2% in the early 1980s to a staggering 30,1% recorded in the first quarter of 2020 (Statistics SA). Inequality, measured by the Gini coefficient, rose from 0,593 to 0,63 between the early 1990s and 2014. The number of individuals living in poverty increased from 19,9 million in 1993 to 20,8 million in 2014 and the income share in the country, held by the country’s top 10% highest earners, also increased from 46,7% in 1993 to 50,5% in 2014 (World Bank). Evidently, the growth experienced by the country over the years has not been inclusive.

Against this backdrop, this study set out to investigate possible reasons for the lack of inclusive growth. The study explored the nature and pattern of structural transformation and productivity growth using aggregate national sectoral data for South Africa using the canonical decomposition method. The results show that the pattern of structural transformation has been growth reducing for South Africa. Both manufacturing and agriculture have increasingly experienced negative ‘within sector’ and ‘structure change’ effects on growth and employment share with consequential effects on inequality and poverty. The study proposes policies to address weak economic fundamentals and the negative growth inducing structural change to unlock the country’s growth potential.

The growth in tourism has not always been smooth, but subject to cyclical patterns caused by instabilities, such as the current COVID-19 pandemic. Forecasting models that take cyclical patterns in tourism demand into account include the basic structural model (BSM), spectral analysis and regime-switching models. While the BSM and spectral analysis have been applied in tourism demand forecasting, the use of regime-switching models is not common; especially models that also allow elasticities to vary between regimes. This article aims to fill this void by forecasting tourism demand to five destinations, namely Australia, Canada, South Africa, Sweden and the USA, using a Markov-Switching Approach. Rolling forecasts at four different time horizons using two variants of the Markov-Switching model are compared to traditional models, such as the ARDL, ARIMA and naïve forecasts. The findings show that accounting for asymmetric behaviour in the tourism cycle itself or asymmetry in price and income elasticities improve forecasts, especially for long-haul destinations.

Using a South African linked employer-employee data we estimate the wage premium for: (1) simultaneously being a foreign connected firm (FCF), exporter and importer (i.e. hybrid); (2) pure exporters; (3) pure importers; (4) firms that are both importers and exporters (EXIM); (5) domestically owned FCFs; and (6) foreign owned FCFs relative to local firms. We find evidence of hybrid firms paying the highest wage premium. Further, workers moving to hybrid firms receive the highest wage gains. Thus, it is the combination of exposure to foreign markets through imported inputs, export sales and foreign direct investment that results in the highest wage premia.
We run an OLS regression on individual wages to determine the existence and magnitude of the FCF and exporter wage premium. The baseline regression does not account for time invariant unobservable worker and firm characteristics. As such, we estimate the unobserved worker and firm fixed effects following the same methodology as Abowd et al. (1999) with the inclusion of observable firm characteristics. We then run an OLS regression controlling for unobservable firm and worker fixed effects. We also examine the existence and magnitude of the wage premia experienced by workers moving between local, exporters, importers and FCF firms in the panel. Thus, we estimate a wage equation which compares all the switchers from the different firm types relative to all workers that stay in same local firms controlling for unobservable worker and firm characteristics.

South Africa faces significant challenges in a low economic growth rate, high levels of unemployment and poverty, and persistent inequality, all of which have been exacerbated by the Covid-19 pandemic. At first glance, the link between income inequality and health outcomes would be the increased incidence of hunger during the lockdown of the South African economy in 2020. Yet, this is one part of a much bigger health challenge: many households face a double burden of malnutrition, where there is over and undernutrition co-existing in the same household, children sometimes go hungry and adults suffer the problems of obesity. The nutrition transition is the process by which economic growth, development, social mobility involves changes in the nature of work, changes in where people live, and also changes in what they eat. Popkin et al. (2012:2) wrote that the increasing rate of obesity amongst the poor “has important implications for the distribution of health inequalities”. This paper examines the relationship between economic development and health. Healthy people can achieve higher levels of income and people with higher levels of income have more resources available to seek medical care, follow a more nutritious diet and, as a result, live healthier lives. Yet this is not always a linear, two-way relationship
The focus is specifically on changes in obesity over changes in household mobility across different social classes in South Africa. The results show that there is an observed positive relationship between respondents who moved from a lower social class to a higher social class and an increase in BMI.

Regional integration and other forms of bilateral and multilateral neighbourhood agreements have increasingly enhanced global linkages across many countries. The global linkages have therefore made more economies vulnerable to external shocks such as the Covid-19. The global financial linkages gives reason to believe that, besides the direct effect of the pandemic on these markets, the Covid-19 pandemic could actually be driving these markets. This study contributes to literature by investigating the connectedness between major African equity markets and crude oil prices as well as developed global equity markets; investigates the spillover network between commodity markets and African financial markets during COVID-19 pandemics and ascertains the extent of commodity and global equity markets spillovers to African stock markets. The study employs the stock price indices for 12 main equity markets across Africa and rely on the Bloomberg Commodity Index for the five main commodity classes such as Energy, Agriculture, Industrial metals, Precious metals and Livestock. Furthermore, the study uses the CAC 40, DAX 30, FTSE 100, S\&P 500 and the Shanghai Stock Exchange equity indexes to capture five globally developed equity markets corresponding to France, Germany, the United Kingdom, the United States and China. The study adopts the newly introduced DCC-GARCH based volatility connectedness approach of Gabauer (2020). The key findings show that, during the COVID-19 period, the total connectedness among the markets is (30.3%) which is significantly larger than the total connectedness documented for the full period (8.79%). The equity markets of South Africa, Egypt, Nigeria, Tanzania and Ghana are net-receivers of shocks from the system, while the remaining countries in our sample are net-transmitters of shocks to the system. We observe that the energy market continue to significantly transmit spillovers to other markets than any other market during to covid-19 period and during the full period.

This paper sets out to investigate the possible role of inequality in macroeconomic outcomes as well as how macroeconomic policy may be influenced by redistribution aspects. Policy effectiveness is expected to be dependent on the response of the agents in the economy, therefore we model heterogeneity. This study aims to model growth in an unequal society while capturing the role of money and its policy. The intuition is that inflation, through money growth, crowds out savings, reduces capital stock accumulation and therefore reduces growth. In an unequal society, inflation extends the inequality gap as those with fewer resources have less room to adjust their savings-consumption decision around inflation fluctuations. In this paper we adopt an overlapping generation model and money is introduced through a Cash in Advance constraint and we specifically model a heterogeneous economy to build a framework that portrays and explains growth, inflation and inequality dynamics. Analytical examination shows that inequality is explained by inflation and money growth while capital accumulation relates to distribution disparities. A numerical analysis of the model simulating for South Africa shows that inflation and inequality are positively related and changes in monetary policy through inflation targeting reduce the level of inequality. The impact of policy is also noted to be better under equality for macroeconomic aggregates such as consumption, output and welfare. Particularly welfare reflects negative relationship with inequality and the level of inflation. The findings are expected to assist policy formulation to allow achievement of sustainable stability in economies.

This study attempt to account for the possible outcome of increased government expenditure as an outcome of economic recession due to the fall in crude oil prices and COVID-19 pandemic in Nigeria. The efforts of the government to boost aggregate demand and stimulate the economy becomes imperative in the light of prolonged locked down. Inflation rose from 11.4 per cent in 2019 to 12.88 per cent in 2020 and it is expected to be on average, 13.9 in 2021 year-over-year growth. In terms of the ratio of government expenditure to the GDP, this rose marginally from 12.62 percent to 12.68 percent in 2020. A forecast of 12.08 per cent is envisaged for 2021. Drawing from previous studies, historical data between 1980 and 2020 will be employed to understand how government fiscal response affects inflation. Hinged on the neo-classical theoretical mechanism that public spending stimulus to expand output would indirectly induce inflation, the Bound test econometrics approach would be employed. The empirical results, a priori, would suggest increasing government spending in a regime of low growth of liquidity is not necessarily inflationary. Also, a fall in interest rates appears to reduce an increase in price tendency. Monetary growth, however, induces a rise in prices. It is therefore suggested that a combination of policy mix will be necessary to expand the economy while ensuring price stability. The interest rate should be kept low via the discount rate channel to ensure the private sector’s investment drive is not crowded out.

The paper will examine the implications of the AfCFTA agreement on key macroeconomic indicators such as Gross Domestic Product (GDP), Government Revenue, and Private Investment on the three African largest economies: Nigeria, South Africa and Egypt. This paper will also examine how the African government can maximize the benefits of the agreement and minimize associated costs. Multilateral trade liberalization, including both tariff and non-tariff liberalization as well as protection of intellectual property, contributes to ensuring the link between trade and innovation will be discussed in this paper. To achieve the aim of this research paper, we shall adopt the Computable General Equilibrium (CGE) model which will be specifically developed to estimate the impact of the AfCFTA agreement on the macroeconomy, firm-level innovation and welfare of economic agents such as businesses, rich and poor households and sectorial outputs. Secondly, another focus of the model application will be on the contribution of expanded trade on increasing innovation and thus economic growth. The analysis shall set out different scenarios, detailing several assumptions relating to the gradual removal of tariffs, introduction of special products, increase in government investment in key sectors and inflow of Foreign Direct Investment (FDI) and labour into strategic sectors.

In late 2007, South Africans experienced the first of what would become a recurring series of nationwide load shedding episodes. Load shedding refers to the deliberate shutdown of parts of the electricity distribution network to avoid damaging the electricity grid and safeguard against a national blackout. Weekly data from Eskom’s system operator show that load shedding occurred in 33 months between 2007 and 2019.

Load shedding has not only disrupted the daily lives of South Africans but has also come at a significant cost to the economy. In this study, we employed a range of econometric techniques to estimate the historical cost of load shedding (CoLS) at a national and sectoral level.

Our results suggest that load shedding cost the South African economy a total of R35 billion between 2007 and 2019. We also found that the CoLS was unevenly distributed across sectors. The cost of regular planned outages is a function of the damages and costs incurred by a firm, its inherent resilience, and its ability to adapt. As such, it was the relatively electricity-intensive primary and secondary sectors that bore most of the cost, while service-oriented industries emerged relatively unscathed. Our results show that Agriculture suffered the most significant loss of output due to load shedding relative to its contribution to GDP, while the manufacturing industry lost the largest amount in absolute terms – R11 billion over the 12-year period.

Our estimate of the CoLS, expressed in rand per kilowatt-hour, is R9.53/kWh for 2018/19. The CoLS can be used to assess the relative cost of interventions to mitigate against the risk of future load shedding and so to make socially optimal investment decisions.

The COVID-19 pandemic and the restrictive lockdown measures globally have undoubtedly brought the international economy to a standstill initially, followed by short- and long-run consequences in all economic sectors. The energy sector’s dynamics have not been the exception to that. The severity of the impact on energy and specifically electricity demand depend highly on the strictness and duration of the lockdown measures. South Africa implemented one of the most severe and longer lockdowns internationally and that was on top of the slowdown of economic growth in the country in the recent years and the high unemployment and inequality levels.
This study uses the theoretical framework of McKibbin and Fernando (2020) to examine different scenarios of how COVID-19 and the lockdown measures of 2020 have impacted the South African energy demand. To do so, we use a dynamic computable general equilibrium (CGE) model (Bohlmann et al., 2016) to estimate the energy and economy-wide effects of the pandemic and the lockdowns. The simulation results will provide insight into how much the local economy and energy sector has been affected but also, what are the long-term consequences that need to be considered in the formulation and implementation of energy policies. This will be particularly important in the case of a country such as South Africa that struggles with frequent power cuts, unstable electricity supply and other socioeconomic problems such as unemployment, income inequality and high corruption levels.

References
Bohlmann, J., Bohlmann, H., Inglesi-Lotz, R., & van Heerden, J. (2016). An economy-wide evaluation of new power generation in South Africa: The case of Medupi and Kusile. Energy Policy, 97, 450–460. https://doi.org/10.1016/j.enpol.2016.07.020
McKibbin, W. J., & Fernando, R. (2020). The Global Macroeconomic Impacts of COVID-19: Seven Scenarios (SSRN Scholarly Paper ID 3547729). Social Science Research Network. https://doi.org/10.2139/ssrn.3547729

The Reserve Bank of Malawi is mandated to pursue a low inflation strategy in the interest of sustainable output growth and low unemployment. In the literature, it is suggested that in order to achieve price stability, an understanding of the inflation-output relationship is essential because the effects of monetary policy are dependent on whether the relationship between the two variables is symmetric or asymmetric, and in the case of the latter, whether the asymmetry is convex or concave. This paper sets out to conduct an empirical investigation on this relationship. A variant of the inflation-expectations augmented Phillips curve derived from the Lucas “surprise” aggregate supply function is estimated using the generalised method of moments and data for the period 1981:Q1 to 2019:Q4. The study finds that the Phillips curve in Malawi is concave asymmetric. This implies that the cost of lowering inflation in Malawi, following a positive demand shock, is not the same as the cost of stimulating output growth following a negative demand shock of equal magnitude. The concave asymmetric relationship indicates that a positive demand shock increases inflation by a smaller margin than a negative demand shock of similar magnitude decreases it. In this case, policymakers are expected to react swiftly when the economy shows signs of weakening rather than when it shows signs of strengthening.

This study analyses the linkage between remittances and household consumption patterns in Lesotho. It employs the LHBS data of 2017, with the sample size of 4295 national representative households. The number of observations for the analysis in the urban area is 1470, while it is 2525 for rural. The method of analysis is OLS Working-Leser Model. The expenditure categories analysed are food, non-food, utilities, human capital, and durables. The study analyses how remittances are related to household consumption and then compares the patterns in rural and urban areas. The study found that, on average, ceteris paribus, the recipients of external remittance spend more on food, utilities, and human capital than the non-recipients. The recipients of both remittances, ceteris paribus, spend more on non-food and durables whereas less is consumed on food and human capital. Internal remittance decreases the receiving households’ expenditure on food, and durables due to their significant consideration for education and health issues. The rural households spend less on all categories under analysis than the urban households. The spending patterns in the two locations for external remittance recipients are different for all categories except for durables. The recipients of both remittances in the two locations, on average, ceteris paribus, spend less on food and more on non-food and durables but differ for utilities and human capital. The recipients of internal remittance in both locations, on average, ceteris paribus, spend less on food and more on other categories but differ for durables.

SMEs in Africa faces challenges in raising capital and accessing financial services. Myriad studies on determinants of SMEs growth conclude that lack of finance is one of the biggest obstacles for SMEs’ productivity, performance, competitiveness, and growth in developing countries. Factors that impede SMEs financing in Africa include information opacity and asymmetry, collateral requirements, high transaction costs, and difficulty for banks to enforce the loan contract in case of default. These obstacles are largely due to poor institutions. COVID-19 pandemic has further strained SMEs financing. The question is how can SMEs financing be enhanced to help build Africa better after the Covid-19 pandemic? This paper attempt to address this question by investigating the role of institutional factors on domestic credit to private sector by banks as a proxy for financial deepening in 50 countries in Africa for the past two decades. The institutional factors explored in the study include regulatory quality, control of corruption, political stability, rule of law and democracy. The empirical analysis employs different panel econometric models to account for time series and cross-sectional dimensions of the data. The results of this study will provide useful information on how to strengthen institutional factors to stimulate debt financing which is by and large the main source of SMEs financing in Africa.

After an income shock, households reduce spending and asset holding, diversify income sources, and change household composition or location. Migration is common in South Africa, often resulting in food insecurity. During the COVID-19 pandemic, the unemployment rate surpassed thirty percent, accompanied by extreme poverty levels. The social relief of distress grant, the old age pension, and employment income all significantly reduced food insecurity. SRD receipt reduced household hunger levels by ten percent, and severe hunger in children by more than twenty percent in vulnerable households. In contrast, mobility strategies did not effectively prevent food insecurity in households during the pandemic.

Economics has a great deal to say about regulation. This has produced a substantial body of knowledge. Expressed more fully the literature deals with question of government intervention into markets. Economics, thus, has a great deal to offer in understanding the question of regulation. Indeed it can be said a reasonably complete economic theory of regulation has evolved. Despite the volume of economic literature, no attempt has been made to place the literature within a useful coherent framework. The absence of this framework impedes the systematic exposition of the topic. This paper proposes a useful framework to overcome this deficiency.

As the financial markets for environmentally friendly investment grow in both scope and size, analyzing the relationship between green financial markets becomes an important issue. This allows investors to identify the conditions under which green financial instruments are useful diversification tools for one another. This paper aims at answering the following questions. Is there evidence of volatility spillovers between the African stock markets and clean energy stocks? Has there been any change since the COVID-19 Pandemic? How does pandemic uncertainty drive this connectedness? Our study answers these questions by investigating the time and frequency domain connectedness between African Stock Markets and Clean Energy Stocks covering both “pre-COVID” and “during-COVID” periods. Specifically, we analyse volatility transmissions between African stocks and Clean Energy Stocks, utilizing daily data for the period July 1, 2014 to May 31, 2021. Our study employs the Time-Varying Parameter Vector Auto regression (TVP-VAR) approach to compute the time domain and the Barunik and Krehlik (2017) approach for frequency domain. We also consider the causal effect of infectious diseases uncertainty on the connectedness between both markets by utilizing the non-parametric causality-in-quantiles approach of Balcilar et al. (2016) which is capable of testing non-linear causality of the kth order across all quantiles of the entire distribution of commodities returns and is robust to the presence of misspecification errors, structural breaks and frequent outliers, which are frequently found in financial time series. Our results would provide insight for portfolio diversification strategies and relevant policy implications can be drawn from these findings.

This paper examines the interaction of housing-related macroprudential policies and monetary policy. The study uses housing cycles in a Dynamic Stochastic General Equilibrium (DSGE) model with a small open-economy framework. We estimate the model with Bayesian techniques using South African data covering the period from 2000Q1 to 2018Q4. The results indicate that monetary policy has small effects on house prices. We consider a loan-to-value (LTV) tool for macroprudential policy. The results show that a one percent rise in the LTV ratio, a tight macroprudential policy, leads to increasing house prices, with significant effects on Consumer Price Index (CPI) inflation. The effects on CPI inflation suggest that monetary policy is not very effective. Efficient policy frontier analysis indicates that the introduction of macroprudential policy yields an improved effective outcome that lowers output and inflation volatility. The findings suggest monetary policy and macroprudential policy require coordination.

The importance of human capital, as key economic variable that promotes growth has long been a controversial topic, hampered in part by the lack of its empirical evidence in developing countries such as South Africa. Hence this study seeks to determine the contribution of human capital to the economic growth of South Africa. The South African government devotes substantial amount of money towards human capital as it postulated that human capital is a key tool in accelerating the economic growth of the country. In this regard, the aim of this study is examine the impact of human capital on the economic growth of South Africa. The autoregressive distributed ADRL model and the error correction model ECM model, are employed to examine the long run and short run relationship of the variables in the study, on secondary time series data over the period of 1980 to 2019. The results of the study revealed that education expenditure, has positive long run relationship with GDP per capita, however there is no short run relationship between education expenditure and the economic growth of South Africa. The findings of the study suggest that human capital has a significant impact on South Africa’s economic growth in the long run. The study recommends that the South African government should continue to investing in human capital development, however it should implement policy that is geared towards improving the quality of the educational sector, as it will improve the quality of human capital stock, and accelerate the level of economic growth in the country.

This study explores the quantity theory of disaggregated credit (QTDC) to investigate the effects of bank credits on GDP in Mauritius. First, following the QTDC approach, the study disaggregates bank credits to credits for GDP transactions (Cr) and credits for non-GDP transactions. Next, we select the two best performing proxies of Cr and test their statistical significance and predictive value on nominal GDP in Mauritius from 1970 to 2019 using the time varying coefficient (TVC) estimation approach of Swamy and Von Zur Muelhen (2020). Our conclusions are the following: The total effect of proxy 10 on NGDP outperforms the total effect of proxy 11 on NGDP. This finding confirms the prediction of QTDC that when banks shift their allocation of credit to non-GDP transactions, the effect on credit on the economy weakens. The same results hold and the effect was higher when we replaced NGDP by real GDP. These findings show that the uses of credit matters for long run economic growth. The results of the total effect of proxy 10 on GDP shows that during the duration of the credit control system from 1973 till 1993, bank credit has encouraged investment in manufacturing sector and supported high growth in the 1970s and from 1984 to early 1990s. The empirical results suggest that policies that guide bank lending towards GDP transactions can be very effective in stimulating GDP growth and much more so than conventional interest rate policies, to which credit guidance can act as a complement and not necessarily as a substitute. The results of this paper have profound implications for how to reignite economic growth in the country during and after the COVID-19 pandemic.

As emerging market economies struggle to advance towards financial stability and sustainable economic growth, increasing exchange rate volatility has been a major challenge hindering the progressing of these economies. Considering the underdeveloped nature of the financial system in these economies several factors have been looked into as the main cause of exchange rate fluctuations but despite a plethora of literature in this area, findings have yielded minimal results. This study therefore, intends to determine the causes of exchange rate volatility in 11 large emerging market economies. It will be a comparative analysis in that what triggers exchange rate movements differs with countries. Moreover, while most of the studies apply the traditional macroeconomic variables, this study will use an augmented hybrid model for its analysis. The methodology to be employed in the study will be the dynamic heterogeneous panel non-linear autoregressive distributed lag model (NARDL) which will help to capture the within group differences and allow for heterogeneity effects in the cross-sections. The model will also cater for the asymptotic differences with large T and N including the combination of exogeneous and endogenous variables. The findings from this study will help to improve financial structures and stabilise monetary policy frameworkwhich will in turn reduce the increasing exchange rate volatility that is mostly prevalent in large emerging market economies.

The COVID-19 crisis remains an unforeseen black swan event that impacted both the equity market and the alternative investment markets, globally. While the world is still grappling with containing the virus and dealing the wreckages of the pandemic, the South African economy, as seen from the eyes of the Johannesburg Stock Exchange market and the listed property market are not unperturbed from the pains of the pandemic. The motivation for this study was to evaluate the interactions between the JSE markets (JSE All Share Index and Listed Property Index) and the global alternative investment markets (Oil, Platinum, Gold and Cryptocurrency) before and during COVID-19 crisis. To do this, we considered daily datasets in a three-time period; the Entire period (01/05/2015 – 28/04/2021), the Before COVID-19 period (01/05/2015 – 31/12/2019), and the during COVID-19 period (01/01/2020 – 28/04/2021). Subsequently, we assessed the effects of the COVID-19 crisis on the relationships between the South African markets and the global alternative markets by performing cointegration tests- Granger causality test and the Gregory-Hansen cointegration test. The Granger causality test results showed that there is a significant one-way causality relationship among JSE ALSI, Oil and Platinum markets in both the during and Before COVID periods. Furthermore, Granger causality test showed that there is a significant one-way causality relationship between SA Property market and the Platinum market. Likewise, findings from the Gregory-Hansen cointegration structural change test found structural breaks in cointegration relationships among JSE ALSI, Oil and Platinum markets as well as between the JSE ALSI and Platinum markets. Hence, based on our findings, we found that compared to the Oil and Platinum markets, the South African markets are unlinked to both the Gold and Cryptocurrency markets. This indicates that both Gold and Cryptocurrency remain independent of the South African markets regardless of COVID-19 crisis.

Besides the impact of the COVID-19 on public health, the pandemic has caused major disruptions in economic activities and society. Many South African businesses have closed, and some are struggling because of the frequent lockdown impose by the government to limit the spread of the disease. The government has committed over R500 billion in COVID-19 stimulus packages to support households and businesses and businesses have in turn strategically adopted online business activities to mitigate the effect of the pandemic sales. However, how these government support programs, and online business activities have affected businesses has not been well studied. The purpose of this paper is to examine the effect of government support and online business activities on enterprises’ sales growth using the South African World Bank enterprise survey 2020 employing recentered influence functions regressions. The South African 2020 enterprise survey is the most recent and has questions on government support and online business activities of enterprises. The data has 1097 enterprises and when weights are applied gives the following distribution 54.5% small, 36.3% medium and 9.2% large enterprises. Recentered influence functions are robust statistical tools used to analyze small changes in the unconditional distribution of the outcome of interest and are exactly what this study aims to achieve. This type of analysis is relevant for policymakers as it gives information on how changes in the stimulus packages affect enterprises across the distribution. Another advantage of this approach is that it helps in targeted policy intervention.