Economic Growth, Redistribution Policy and Fiscal Policy in South Africa: An SVAR Analysis

  • G van Zyl
  • L Bonga-Bonga


The aim of this article is to uncover which method of fi nancing an increase in social services expenditure would guarantee economic growth while assuring that government operates within a balanced budget constraint. The article will also assess whether fi scal policy (which aims at fiscal discipline) could improve the rate of economic growth when a particular tax is used to fi nance social services expenditure. The SVAR models applied in this study used two types of restrictions: the contemporaneous and the long-run (Blanchard and Quah) restriction. In the Blanchard and Quah restriction, structural shocks are identifi ed under two different categories: the Keynesian and neoclassical types.

Africa Insight Vol. 38 (1) 2008: pp. 67-80

Journal Identifiers

eISSN: 1995-641X
print ISSN: 0256-2804