Fiscal policy shocks in South Africa lead to job growth and trade imbalance.
The study looked at how government spending and taxes affect employment, trade balance, and exchange rates in South Africa from 1994 to 2008. They found that when government spending goes up, employment increases, the exchange rate goes up, and the trade balance gets worse. But when taxes go up, output increases, private employment goes up, and the exchange rate goes down, improving the trade balance. This shows that government policies can impact the economy in different ways.