Economics, Econometrics and Finance
8 years ago

Government spending boosts short-term GDP, taxes hinder growth in South Africa.

Economic Modelling
Analysing the effects of fiscal policy shocks in the South African economy
Charl Jooste, Guangling Liu, Ruthira Naraidoo

Paper Summary

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The study looked at how government spending and taxes affect South Africa's economy. They used different models to see the short and long-term impacts. The results showed that increasing government spending can boost GDP in the short term, but not always by a lot. In the long run, the effect is not significant. On the other hand, raising taxes can lower GDP in the short term, but has little impact over time.