Determining the effects of debt-to-GDP ratio on the economic growth of Greece, Italy and South Africa
- Mowoe, Merioboroghene Oreoluwa
- Authors: Mowoe, Merioboroghene Oreoluwa
- Date: 2019
- Subjects: Debts, Public -- Greece , Debts, Public -- Italy Debts, Public -- South Africa Economic development Greece -- Economic conditions Italy -- Economic conditions South Africa -- Economic conditions
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/41942 , vital:36611
- Description: A major challenge that most countries currently face, is to bring their economies out of indebtedness. In this study, the impact of public debt on the economic growth of Greece, Italy, and South Africa, and any similarities between them, was analysed. Two models were adopted for this purpose, the ARDL model and the VEC model. The ARDL was used to conduct a co-integration relationship between public debts, economic growth, with four controlled variables: inflation, government spending, net export, and investment. The results showed a negative co-integrating relationship for all three countries. In addition, the VEC model was adopted to determine whether there was causation between public debt and economic growth in each of the three countries. It was found that a unidirectional causality between public debt and economic growth exists for all three countries. For Greece, a long-run causality was found moving from economic growth to public debt. For Italy, short-run and long-run causalities were found, moving from economic growth to public debt. For South Africa, both a long-run and a short-run causality were found moving from public debt to economic growth. The economic growth and development policies for reducing the public debt of these countries, are recommended in accordance with the findings of the research results.
- Full Text:
- Date Issued: 2019
- Authors: Mowoe, Merioboroghene Oreoluwa
- Date: 2019
- Subjects: Debts, Public -- Greece , Debts, Public -- Italy Debts, Public -- South Africa Economic development Greece -- Economic conditions Italy -- Economic conditions South Africa -- Economic conditions
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/41942 , vital:36611
- Description: A major challenge that most countries currently face, is to bring their economies out of indebtedness. In this study, the impact of public debt on the economic growth of Greece, Italy, and South Africa, and any similarities between them, was analysed. Two models were adopted for this purpose, the ARDL model and the VEC model. The ARDL was used to conduct a co-integration relationship between public debts, economic growth, with four controlled variables: inflation, government spending, net export, and investment. The results showed a negative co-integrating relationship for all three countries. In addition, the VEC model was adopted to determine whether there was causation between public debt and economic growth in each of the three countries. It was found that a unidirectional causality between public debt and economic growth exists for all three countries. For Greece, a long-run causality was found moving from economic growth to public debt. For Italy, short-run and long-run causalities were found, moving from economic growth to public debt. For South Africa, both a long-run and a short-run causality were found moving from public debt to economic growth. The economic growth and development policies for reducing the public debt of these countries, are recommended in accordance with the findings of the research results.
- Full Text:
- Date Issued: 2019
Do FDI and public investment crowd in/out domestic private investment in the SADC region?
- Authors: Ngeendepi, Eslon J
- Date: 2019
- Subjects: Investments, Foreign -- Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/49997 , vital:41968
- Description: This paper attempts to contribute to empirical literature on investment theory by examining whether FDI inflows and government capital expenditure crowd-in/out domestic private investment in 15 SADC member states for the period 1991-2017. In order to realise the study objective, the panel Pool Mean Group (PMG)/ARDL technique was employed in estimating the shot-run and long-run relationship between FDI, government capital expenditure, domestic private investment and a further three more variables (interest rate, GDP growth rate and trade openness.) added to the model to form multivariate framework. Findings from the study show that FDI inflow crowd-in domestic private investment in both the short and long run, while government capital expenditure is found to crowd-out domestic private investment in the long-run and crowd-in domestic private investment in the short-run. The study concludes by providing policy recommendations and suggesting areas for further research.
- Full Text:
- Date Issued: 2019
- Authors: Ngeendepi, Eslon J
- Date: 2019
- Subjects: Investments, Foreign -- Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/49997 , vital:41968
- Description: This paper attempts to contribute to empirical literature on investment theory by examining whether FDI inflows and government capital expenditure crowd-in/out domestic private investment in 15 SADC member states for the period 1991-2017. In order to realise the study objective, the panel Pool Mean Group (PMG)/ARDL technique was employed in estimating the shot-run and long-run relationship between FDI, government capital expenditure, domestic private investment and a further three more variables (interest rate, GDP growth rate and trade openness.) added to the model to form multivariate framework. Findings from the study show that FDI inflow crowd-in domestic private investment in both the short and long run, while government capital expenditure is found to crowd-out domestic private investment in the long-run and crowd-in domestic private investment in the short-run. The study concludes by providing policy recommendations and suggesting areas for further research.
- Full Text:
- Date Issued: 2019
Efficient market hypothesis in South Africa: an analysis using the flexible form unit root test
- Authors: Nomatye, Anelisa
- Date: 2019
- Subjects: Stocks -- Prices -- South Africa , Stock exchanges -- South Africa Stocks -- South Africa Johannesburg Stock Exchange Economic indicators -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/42825 , vital:36697
- Description: An efficient stock market is characterised by prices that are reflective of all the information such that there are no opportunities for arbitrageurs. In an efficient market, it is impossible to beat the market, therefore it follows that stock prices in an efficient market should follow a random walk. This study investigates whether the Johannesburg Stock Exchange (JSE) is an efficient market using the JSE Top 40 listed stocks, thus the relevance of the EMH in the current South African market is analysed. A corerlation analysis is undertaken to find whether the individual stocks in the different sectors are correlated in their returns, or if there are any intersector correlations. This analysis showed that individual sector stocks are mostly correlated, however, the individual sector stocks do not show a relationship with common sectors. The data used is monthly data of the individual stocks from 31 January 1999 to 30 June 2018. The study takes into consideration that the period is post the Asian Contagion and during the dot.com bubble. Also considered is the Global Financial crisis that occurred in 2007/2008. The study period thus allows enough time for market corerction. The study utilises the conventional unit root tests; the augmented Dickey-Fuller (ADF), Phillips- Perron (PP) and the Kwiatkowski–Phillips–Schmidt–Shin (KPSS) tests. Also utilised are modified unit root tests of Elliot, Rothenburg and Stock (ERS) (1996) as well as Ng and Perron (2001). Due to criticisms of the initially utilised unit roots, the nonlinear test of Kapetanois et al. (2003) and the Flexible Fourier form (FFF) is employed. Based on the empirical analysis, the study demonstrates that although the studies received conflicting evidence the FFF demonstrates the most “power” of the tests, thus is deemed to provide more accurate results. This test provided evidence of stationarity in the JSE market, thus implying inefficiency. The results were different for only two of the forty stocks, namely, Shoprite and Bidvest which implied efficiency. The study thus found that the EMH is not relevant to the current South African market and other theories should be considered in analysing the market. This also provides a case for behavioural finance to be analysed, as the assumption that all investors are rational is questioned.
- Full Text:
- Date Issued: 2019
- Authors: Nomatye, Anelisa
- Date: 2019
- Subjects: Stocks -- Prices -- South Africa , Stock exchanges -- South Africa Stocks -- South Africa Johannesburg Stock Exchange Economic indicators -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/42825 , vital:36697
- Description: An efficient stock market is characterised by prices that are reflective of all the information such that there are no opportunities for arbitrageurs. In an efficient market, it is impossible to beat the market, therefore it follows that stock prices in an efficient market should follow a random walk. This study investigates whether the Johannesburg Stock Exchange (JSE) is an efficient market using the JSE Top 40 listed stocks, thus the relevance of the EMH in the current South African market is analysed. A corerlation analysis is undertaken to find whether the individual stocks in the different sectors are correlated in their returns, or if there are any intersector correlations. This analysis showed that individual sector stocks are mostly correlated, however, the individual sector stocks do not show a relationship with common sectors. The data used is monthly data of the individual stocks from 31 January 1999 to 30 June 2018. The study takes into consideration that the period is post the Asian Contagion and during the dot.com bubble. Also considered is the Global Financial crisis that occurred in 2007/2008. The study period thus allows enough time for market corerction. The study utilises the conventional unit root tests; the augmented Dickey-Fuller (ADF), Phillips- Perron (PP) and the Kwiatkowski–Phillips–Schmidt–Shin (KPSS) tests. Also utilised are modified unit root tests of Elliot, Rothenburg and Stock (ERS) (1996) as well as Ng and Perron (2001). Due to criticisms of the initially utilised unit roots, the nonlinear test of Kapetanois et al. (2003) and the Flexible Fourier form (FFF) is employed. Based on the empirical analysis, the study demonstrates that although the studies received conflicting evidence the FFF demonstrates the most “power” of the tests, thus is deemed to provide more accurate results. This test provided evidence of stationarity in the JSE market, thus implying inefficiency. The results were different for only two of the forty stocks, namely, Shoprite and Bidvest which implied efficiency. The study thus found that the EMH is not relevant to the current South African market and other theories should be considered in analysing the market. This also provides a case for behavioural finance to be analysed, as the assumption that all investors are rational is questioned.
- Full Text:
- Date Issued: 2019
Efficient market hypothesis with structural breaks: evidence from BRICS stock markets
- Authors: Guduza, Sinazo
- Date: 2019
- Subjects: Stock exchanges , Investment analysis Developing countries -- Economic conditions
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/42342 , vital:36647
- Description: The study is an examination of weak form market efficiency (EMH) in BRICS equity markets using weekly data spanning from 2005 to 2018. The study makes use linear as well as nonlinear unit rot tests, that is, the ADF and KSS tests respectively. For more robust results, the study uses the Integer Flexible Fourier Function (IFFF) and the Fractional Frequency Flexible Fourier Function (FFFFF) to account for smooth structural breaks. The study investigates the full sample period and splits the empirical data into three sub-samples corresponding to the period succeeding the global financial crisis, the BRICS summits and the BRICS Development Bank (BDB). This study, to the best of our knowledge, is the first to investigate the efficiency in the BRICS stock markets using a combination of the specified series of unit root tests. Moreover, there are no prior studies that have examined these markets for the sub-samples mentioned above. Our empirical results point us to convincing evidence of weak form inefficiency as the majority of the results reject the null hypothesis of a unit root.
- Full Text:
- Date Issued: 2019
- Authors: Guduza, Sinazo
- Date: 2019
- Subjects: Stock exchanges , Investment analysis Developing countries -- Economic conditions
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/42342 , vital:36647
- Description: The study is an examination of weak form market efficiency (EMH) in BRICS equity markets using weekly data spanning from 2005 to 2018. The study makes use linear as well as nonlinear unit rot tests, that is, the ADF and KSS tests respectively. For more robust results, the study uses the Integer Flexible Fourier Function (IFFF) and the Fractional Frequency Flexible Fourier Function (FFFFF) to account for smooth structural breaks. The study investigates the full sample period and splits the empirical data into three sub-samples corresponding to the period succeeding the global financial crisis, the BRICS summits and the BRICS Development Bank (BDB). This study, to the best of our knowledge, is the first to investigate the efficiency in the BRICS stock markets using a combination of the specified series of unit root tests. Moreover, there are no prior studies that have examined these markets for the sub-samples mentioned above. Our empirical results point us to convincing evidence of weak form inefficiency as the majority of the results reject the null hypothesis of a unit root.
- Full Text:
- Date Issued: 2019
Factors contributing to a positive work experience for domestic workers
- Authors: Taylor, Michelle Tracey
- Date: 2019
- Subjects: Household employees -- South Africa , Employment relations Psychology, Industrial
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/43877 , vital:37069
- Description: Despite entrenched legislation directed at protecting the rights of domestic workers, many still endure menial working conditions, receive low wages and are even subject to exploitation and abuse. At the same time, domestic workers are charged with the major responsibility of caring for their employers’ homes and families. All of this may lead to a work experience that is regarded as less than positive. The aim of this study was to identify the factors that contribute to a more humanising and positive working experience for domestic workers. A qualitative approach was adopted, and data was obtained by conducting semi-structured interviews with seven domestic workers, and a separate group of seven employers of domestic workers, all of whom were located in the Eastern Cape province of South Africa. Data was collected through interviews held with individuals in the two groups of participants and was processed by transcribing notes from audio tape recordings captured during the interviews. Data analysis took the form of a thematic analysis to identify recurring themes. The findings of the study revealed that domestic workers concerns regarding their work environment relate to job security, wages, working conditions and the relationship with their employer. The employers felt that legislation, being part of the family, retirement planning and respect were important themes that impact on a domestic worker’s work experience. This study endeavors to contribute to a better understanding of what is needed to provide a more humanising work experience for female domestic workers in South Africa who may have experienced a sense of marginalisation within, and exclusion from, the dynamics of the open labour market.
- Full Text:
- Date Issued: 2019
- Authors: Taylor, Michelle Tracey
- Date: 2019
- Subjects: Household employees -- South Africa , Employment relations Psychology, Industrial
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/43877 , vital:37069
- Description: Despite entrenched legislation directed at protecting the rights of domestic workers, many still endure menial working conditions, receive low wages and are even subject to exploitation and abuse. At the same time, domestic workers are charged with the major responsibility of caring for their employers’ homes and families. All of this may lead to a work experience that is regarded as less than positive. The aim of this study was to identify the factors that contribute to a more humanising and positive working experience for domestic workers. A qualitative approach was adopted, and data was obtained by conducting semi-structured interviews with seven domestic workers, and a separate group of seven employers of domestic workers, all of whom were located in the Eastern Cape province of South Africa. Data was collected through interviews held with individuals in the two groups of participants and was processed by transcribing notes from audio tape recordings captured during the interviews. Data analysis took the form of a thematic analysis to identify recurring themes. The findings of the study revealed that domestic workers concerns regarding their work environment relate to job security, wages, working conditions and the relationship with their employer. The employers felt that legislation, being part of the family, retirement planning and respect were important themes that impact on a domestic worker’s work experience. This study endeavors to contribute to a better understanding of what is needed to provide a more humanising work experience for female domestic workers in South Africa who may have experienced a sense of marginalisation within, and exclusion from, the dynamics of the open labour market.
- Full Text:
- Date Issued: 2019
Familiness resource pools: a comparative study in a developing country context
- Authors: Izaks, Robert
- Date: 2019
- Subjects: Family-owned business enterprises -- Management , Family corporations -- Management Developing countries -- Economic conditions
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/40105 , vital:35755
- Description: Over the years, there has been an increased research interest in the field of family business because of the entrepreneurial potential of these businesses, as well as their potential to outperform non-family businesses. However, a lack of longevity and a lack of transgenerational success has hindered the potential of family businesses. The widely recognised Successful Transgenerational Entreprenuership Practices (STEP) framework highlights that eight familiness resource pools influence performance outcomes and ultimately the transgenerational potential of family businesses. These eight family resource pools are: leadership, networks, capital, decision-making, culture, relationships, governance, and knowledge. Given the lack of knowledge that exists concerning the nature of familiness resource pools among family businesses in a developing country context, the purpose of this study was to investigate the familiness resource pools of two South African family businesses, so that the nature of these pools in a developing country can be described and potential sources of heterogeneity highlighted. Specifically, the study analyses these familiness resource pools as a source for creating value across generations and enhancing the longevity of family businesses. The study followed the research methodology guidelines and protocols of the global STEP project by adopting an interpretivistic paradigm and a qualitative methodological approach. The case study methodology was used, and two successful multigenerational family businesses operating in the South African automotive industry were selected by means of criterion sampling. The data was collected by undertaking personal interviews with key members of these family businesses, and the data analysis involved undertaking deductive content analysis using Atlas.ti and a comparative analysis. The findings of this study suggest that the familiness resource pools among family businesses in a developing country are similar in some respects to those of family businesses in a Western context. However, they differ in other respects, and differ from each other. As such, the existence of heterogeneity in family businesses and particularly among the familiness resource pools, is confirmed. The findings also identify several similarities and differences between the extant literature and real world evidence concerning the nature of the familiness resource pools in family businesses. In general, they suggest that real world evidence is often similar to that reported in extant literature with only some discrepancies being identified. The current study provides a better understanding of the nature of the familiness resource pools in a developing country, and has enhanced the knowledge of family businesses in this regard. In describing the eight familiness resource pools of two successful South African family businesses in the automotive industry, this study provides valuable insights into the nature of the resource pools of successful family businesses in a developing country context and highlights their heterogeneity. The findings also prove of value to the participating family businesses, because by highlighting shortcomings and differences between them, changes and improvement can be made where necessary.
- Full Text:
- Date Issued: 2019
- Authors: Izaks, Robert
- Date: 2019
- Subjects: Family-owned business enterprises -- Management , Family corporations -- Management Developing countries -- Economic conditions
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/40105 , vital:35755
- Description: Over the years, there has been an increased research interest in the field of family business because of the entrepreneurial potential of these businesses, as well as their potential to outperform non-family businesses. However, a lack of longevity and a lack of transgenerational success has hindered the potential of family businesses. The widely recognised Successful Transgenerational Entreprenuership Practices (STEP) framework highlights that eight familiness resource pools influence performance outcomes and ultimately the transgenerational potential of family businesses. These eight family resource pools are: leadership, networks, capital, decision-making, culture, relationships, governance, and knowledge. Given the lack of knowledge that exists concerning the nature of familiness resource pools among family businesses in a developing country context, the purpose of this study was to investigate the familiness resource pools of two South African family businesses, so that the nature of these pools in a developing country can be described and potential sources of heterogeneity highlighted. Specifically, the study analyses these familiness resource pools as a source for creating value across generations and enhancing the longevity of family businesses. The study followed the research methodology guidelines and protocols of the global STEP project by adopting an interpretivistic paradigm and a qualitative methodological approach. The case study methodology was used, and two successful multigenerational family businesses operating in the South African automotive industry were selected by means of criterion sampling. The data was collected by undertaking personal interviews with key members of these family businesses, and the data analysis involved undertaking deductive content analysis using Atlas.ti and a comparative analysis. The findings of this study suggest that the familiness resource pools among family businesses in a developing country are similar in some respects to those of family businesses in a Western context. However, they differ in other respects, and differ from each other. As such, the existence of heterogeneity in family businesses and particularly among the familiness resource pools, is confirmed. The findings also identify several similarities and differences between the extant literature and real world evidence concerning the nature of the familiness resource pools in family businesses. In general, they suggest that real world evidence is often similar to that reported in extant literature with only some discrepancies being identified. The current study provides a better understanding of the nature of the familiness resource pools in a developing country, and has enhanced the knowledge of family businesses in this regard. In describing the eight familiness resource pools of two successful South African family businesses in the automotive industry, this study provides valuable insights into the nature of the resource pools of successful family businesses in a developing country context and highlights their heterogeneity. The findings also prove of value to the participating family businesses, because by highlighting shortcomings and differences between them, changes and improvement can be made where necessary.
- Full Text:
- Date Issued: 2019
Financial development and economic growth in South Africa
- Authors: Mhango, Joseph
- Date: 2019
- Subjects: Finance -- South Africa , Economic development -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/41117 , vital:36358
- Description: Since the identification of financial development for economic growth by Schumpeter (1911), the importance of financial development has been emphasised. However, the nature of the relationship is unclear, whether financial development is demand-following, supply-leading, feedback relationship or no causal relationship with economic growth. The revolution of the relationship between finance and economic growth has left a void of the exact nature of the relationship and importance of financial development in literature and empirical evidence. In addition, the variation of the nexus between financial development and economic growth in developed and developing countries has left policy makers uncertain on the exact policy to employ. In awe of this, after the discovery of diamonds and gold in South Africa, policy makers have attempted to improve the access, depth and efficiency of the finance sector to spur economic growth. However, South Africa has been subject to apartheid, low economic growth, global financial crises, international sanctions, unemployment and other challenges to the finance sector. In light of this, this study aims to empirically investigate the relationship between financial development and economic growth in South Africa. The study used the recently developed financial institutions index and financial markets index by the International Monetary Fund to represent bank-based and market-based financial development. This study utilises annual data over the period 1980 to 2014. The study applied the Autoregressive Disturbed Lag (ARDL) bounds testing, Vector Error Correction Model (VECM) Granger – Causality, Impulse Response Function (IRF) and Variance Decomposition to uncover the relationship between financial development and economic growth in South Africa. The ARDL was selected over the Johansen Cointegration because the variables can be I (1) or I(0) before carrying out the bounds testing. It is more suitable to a small sample size. It uses a reduced form equation, and it provides unbiased estimates of the long-run model. Lastly, it can be transformed into an error correction model. The VECM Granger-Causality was chosen because it represents the short-run and long-run causalities. After selection of the optimal lag, the ARDL bounds testing shows that economic growth, bank-based financial development, market-based financial development, savings and investment have a long-run relationship in South Africa. However, after estimation of the coefficients, financial development has a positive relationship with economic growth, but insignificant and only savings and investment were significant in determining long-run economic growth. The VECM granger-causality results show that financial development (bank and market), savings and investment granger cause economic growth in the long-run. While, economic growth, market-based financial development, savings and investment granger cause bank-based financial development in the long-run. Therefore, a feedback relationship exists between bank-based financial development and economic growth in the long-run. In the short-run, it was clear that bank-based financial development positively causes economic growth. The causality results show that a feedback relationship exists between bank-based financial development and economic growth in South Africa in the short-run as well. The IRF shows that a shock in economic growth negatively and positively affects bank based and market-based financial development respectively. A shock in bank-based financial development causes a positive effect on economic growth. Lastly, a shock in market-based financial development causes a positive effect on economic growth. Whilst, the variance decomposition shows that fluctuations in economic growth are increasingly explained by financial development (bank and market). While, fluctuations in bank-based financial development are increasingly explained by market-based financial development, savings and investment. The fluctuations in market-based financial development are increasingly caused by economic growth, savings and investment. It is recommended that policy makers utilise bank-based financial development for economic growth and reduced unemployment, to increase savings for long-run economic growth. Furthermore, challenges against market-based financial development should be reduced in order to create a positive relationship between investment and economic growth in the long run.
- Full Text:
- Date Issued: 2019
- Authors: Mhango, Joseph
- Date: 2019
- Subjects: Finance -- South Africa , Economic development -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/41117 , vital:36358
- Description: Since the identification of financial development for economic growth by Schumpeter (1911), the importance of financial development has been emphasised. However, the nature of the relationship is unclear, whether financial development is demand-following, supply-leading, feedback relationship or no causal relationship with economic growth. The revolution of the relationship between finance and economic growth has left a void of the exact nature of the relationship and importance of financial development in literature and empirical evidence. In addition, the variation of the nexus between financial development and economic growth in developed and developing countries has left policy makers uncertain on the exact policy to employ. In awe of this, after the discovery of diamonds and gold in South Africa, policy makers have attempted to improve the access, depth and efficiency of the finance sector to spur economic growth. However, South Africa has been subject to apartheid, low economic growth, global financial crises, international sanctions, unemployment and other challenges to the finance sector. In light of this, this study aims to empirically investigate the relationship between financial development and economic growth in South Africa. The study used the recently developed financial institutions index and financial markets index by the International Monetary Fund to represent bank-based and market-based financial development. This study utilises annual data over the period 1980 to 2014. The study applied the Autoregressive Disturbed Lag (ARDL) bounds testing, Vector Error Correction Model (VECM) Granger – Causality, Impulse Response Function (IRF) and Variance Decomposition to uncover the relationship between financial development and economic growth in South Africa. The ARDL was selected over the Johansen Cointegration because the variables can be I (1) or I(0) before carrying out the bounds testing. It is more suitable to a small sample size. It uses a reduced form equation, and it provides unbiased estimates of the long-run model. Lastly, it can be transformed into an error correction model. The VECM Granger-Causality was chosen because it represents the short-run and long-run causalities. After selection of the optimal lag, the ARDL bounds testing shows that economic growth, bank-based financial development, market-based financial development, savings and investment have a long-run relationship in South Africa. However, after estimation of the coefficients, financial development has a positive relationship with economic growth, but insignificant and only savings and investment were significant in determining long-run economic growth. The VECM granger-causality results show that financial development (bank and market), savings and investment granger cause economic growth in the long-run. While, economic growth, market-based financial development, savings and investment granger cause bank-based financial development in the long-run. Therefore, a feedback relationship exists between bank-based financial development and economic growth in the long-run. In the short-run, it was clear that bank-based financial development positively causes economic growth. The causality results show that a feedback relationship exists between bank-based financial development and economic growth in South Africa in the short-run as well. The IRF shows that a shock in economic growth negatively and positively affects bank based and market-based financial development respectively. A shock in bank-based financial development causes a positive effect on economic growth. Lastly, a shock in market-based financial development causes a positive effect on economic growth. Whilst, the variance decomposition shows that fluctuations in economic growth are increasingly explained by financial development (bank and market). While, fluctuations in bank-based financial development are increasingly explained by market-based financial development, savings and investment. The fluctuations in market-based financial development are increasingly caused by economic growth, savings and investment. It is recommended that policy makers utilise bank-based financial development for economic growth and reduced unemployment, to increase savings for long-run economic growth. Furthermore, challenges against market-based financial development should be reduced in order to create a positive relationship between investment and economic growth in the long run.
- Full Text:
- Date Issued: 2019
Influence of product variables on consumers’ buying behaviour in the South African skin care industry
- Authors: Mabuyana, Brian
- Date: 2019
- Subjects: Consumer behavior -- South Africa , Product management Packaging Branding (Marketing)
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/40713 , vital:36229
- Description: The aim of this study was to develop, validate and test a hypothesised model on the product variables that can possibly influence consumers’ buying behaviour in the skin care industry in South Africa. The product variables that can possibly influence consumers’ buying behaviour are product attributes, product packaging, product labelling, product pricing and product branding. A positivistic quantitative research methodology was followed by collecting data with a structured, self-administered questionnaire using convenience and snowball sampling. The validity and reliability of the measuring instrument were confirmed by means of an Exploratory Factor Analysis (EFA) and the calculation of Cronbach’s alpha coefficients. A sample of 220 respondents was obtained. Descriptive statistics were provided to summarise the sample data. Pearson’s product moment correlations were calculated to establish the correlations between the variables used in this study. Multiple regression was performed to test the significance of the relationships hypothesised between the independent and dependent variables. A T-test and Analysis of Variance (ANOVA) tests were performed to assess the influence of demographic variables on respondents’ perceptions regarding the independent and dependent variables used. To establish significant differences between individual mean scores, post-hoc Sheffé tests were calculated, and practical significance was assessed by calculating Cohen’s d values. The multiple regression analysis indicated a positive significant relationship among the independent variables (Product attributes, Product packaging and Product branding) and the dependent variable (Consumer buying behaviour). The ANOVA tests indicated significant relationships between three demographic variables namely ethnicity, occupation and average spending and the dependent variable (Consumer buying behaviour). Black and White respondents and Asian and Coloured respondents had different perspectives regarding Product labelling and Product branding respectively when purchasing skin care products. Respondents with different occupations had different perspectives on Product packaging, Product branding and Consumer buying behaviour respectively. Consumers in two different spending groups had different perspectives on Consumer buying behaviour. This study has made a contribution to the shortage of literature on the impact of product variables on consumers’ buying behaviour in the skin care industry. The hypothesised model for this study assisted in understanding the influence of product variables (tangible and intangible) on consumers’ buying behaviour. As a result, this study provides recommendations and suggestions for role players in the skin care industry to ensure a positive image in the minds of consumers and to ultimately use product variables to positively influence the buying behaviour of consumers in the skin care industry.
- Full Text:
- Date Issued: 2019
- Authors: Mabuyana, Brian
- Date: 2019
- Subjects: Consumer behavior -- South Africa , Product management Packaging Branding (Marketing)
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/40713 , vital:36229
- Description: The aim of this study was to develop, validate and test a hypothesised model on the product variables that can possibly influence consumers’ buying behaviour in the skin care industry in South Africa. The product variables that can possibly influence consumers’ buying behaviour are product attributes, product packaging, product labelling, product pricing and product branding. A positivistic quantitative research methodology was followed by collecting data with a structured, self-administered questionnaire using convenience and snowball sampling. The validity and reliability of the measuring instrument were confirmed by means of an Exploratory Factor Analysis (EFA) and the calculation of Cronbach’s alpha coefficients. A sample of 220 respondents was obtained. Descriptive statistics were provided to summarise the sample data. Pearson’s product moment correlations were calculated to establish the correlations between the variables used in this study. Multiple regression was performed to test the significance of the relationships hypothesised between the independent and dependent variables. A T-test and Analysis of Variance (ANOVA) tests were performed to assess the influence of demographic variables on respondents’ perceptions regarding the independent and dependent variables used. To establish significant differences between individual mean scores, post-hoc Sheffé tests were calculated, and practical significance was assessed by calculating Cohen’s d values. The multiple regression analysis indicated a positive significant relationship among the independent variables (Product attributes, Product packaging and Product branding) and the dependent variable (Consumer buying behaviour). The ANOVA tests indicated significant relationships between three demographic variables namely ethnicity, occupation and average spending and the dependent variable (Consumer buying behaviour). Black and White respondents and Asian and Coloured respondents had different perspectives regarding Product labelling and Product branding respectively when purchasing skin care products. Respondents with different occupations had different perspectives on Product packaging, Product branding and Consumer buying behaviour respectively. Consumers in two different spending groups had different perspectives on Consumer buying behaviour. This study has made a contribution to the shortage of literature on the impact of product variables on consumers’ buying behaviour in the skin care industry. The hypothesised model for this study assisted in understanding the influence of product variables (tangible and intangible) on consumers’ buying behaviour. As a result, this study provides recommendations and suggestions for role players in the skin care industry to ensure a positive image in the minds of consumers and to ultimately use product variables to positively influence the buying behaviour of consumers in the skin care industry.
- Full Text:
- Date Issued: 2019
Labour immigration, per capita income growth and unemployment in post-apartheid South Africa
- Authors: Nyagweta, David Tinashe
- Date: 2019
- Subjects: Unemployment rate
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/44531 , vital:38136
- Description: Since the end of apartheid in 1994, South Africa has experienced considerable increase in immigration. The country’s immigrant population share relative to the total population stood at 2.4% in 1995 which soared to 7.6% in 2017. This increase has mostly been enticed by the highly competitive economic and political outlook of the rainbow nation in relation to other global developing nations. Unfortunately, reality of increased immigration particularly, labour-based immigration has spurred fierce debates which in many instances manifested into xenophobic violence. Pessimism amongst public, academic and political spheres continues to grow with detrimental economic strains of slow per capita income growth and high unemployment cited as immigration outcomes. The purpose of this study was to evaluate whether labour-based immigration contributed to changes in per capita income growth and unemployment levels in South Africa. Using unemployment rate, labour immigration entrances and per capita income growth rate data from 1994-2017, the autoregressive distributed lag (ARDL) bounds test was used to test for long run relationship together with the short run dynamic model. Evidence from the underlying results show that labour immigration has an insignificant causal effect on both per capita income growth and unemployment. Thus, contrary to pessimistic public and political sentiment, constrained income growth and increased unemployment are not attributed to high rates of labour immigration. Based on these findings policy makers should improve alignment of policies with regional and multinational blocs, constitutional obligations and economic goals to ensure sound immigration policies. Furthermore, communities should enable programs which aim to reduce tensions between immigrants and citizens whilst building towards inclusive development.
- Full Text:
- Date Issued: 2019
- Authors: Nyagweta, David Tinashe
- Date: 2019
- Subjects: Unemployment rate
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/44531 , vital:38136
- Description: Since the end of apartheid in 1994, South Africa has experienced considerable increase in immigration. The country’s immigrant population share relative to the total population stood at 2.4% in 1995 which soared to 7.6% in 2017. This increase has mostly been enticed by the highly competitive economic and political outlook of the rainbow nation in relation to other global developing nations. Unfortunately, reality of increased immigration particularly, labour-based immigration has spurred fierce debates which in many instances manifested into xenophobic violence. Pessimism amongst public, academic and political spheres continues to grow with detrimental economic strains of slow per capita income growth and high unemployment cited as immigration outcomes. The purpose of this study was to evaluate whether labour-based immigration contributed to changes in per capita income growth and unemployment levels in South Africa. Using unemployment rate, labour immigration entrances and per capita income growth rate data from 1994-2017, the autoregressive distributed lag (ARDL) bounds test was used to test for long run relationship together with the short run dynamic model. Evidence from the underlying results show that labour immigration has an insignificant causal effect on both per capita income growth and unemployment. Thus, contrary to pessimistic public and political sentiment, constrained income growth and increased unemployment are not attributed to high rates of labour immigration. Based on these findings policy makers should improve alignment of policies with regional and multinational blocs, constitutional obligations and economic goals to ensure sound immigration policies. Furthermore, communities should enable programs which aim to reduce tensions between immigrants and citizens whilst building towards inclusive development.
- Full Text:
- Date Issued: 2019
Measuring the industry maturity of the South African export table grape industry
- Authors: De Bruyn, Corean
- Date: 2019
- Subjects: Exports -- South Africa , Fruit trade -- South Africa Agriculture -- Economic aspects -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/39403 , vital:35243
- Description: Despite the fact that the South African export table grape industry is more than a century old, studies which focus on the development of the industry have not previously been conducted. The main aim of this study was to measure the phase of maturity of the South African export table grape industry. The industry life cycle model was a main focus point to measure the maturity of the South African export table grape industry and as such has been used to analyse the dynamics of the South African export table grape industry. An expansive literature study was conducted to identify as many variables as possible that serve as indicators of the phase of maturity. A measuring instrument, in the form of a questionnaire, was developed, based on these identified variables. A randomly selected sample of 214 export table grape producers completed the questionnaire. Five main export table grape regions are present in South Africa, namely, the Hex River Valley region, the Berg River region, the Olifants River region, the Orange River region and the Northern Province region. An exploratory factor analysis was used to disentangle and reduce the large number of variables. From the factor analysis, four distinct factors emerged, namely: Manufacturing and Distribution, Demand, Research and Development, and Buyer Segments. Cronbach’s coefficient alpha was employed to confirm the reliability and internal consistency of the measuring instrument. The mean scores and standard deviations were used to determine the strength of direction of each of the four variables, followed by a t-test to determine the differences in development between the five regions. Finally, the Pearson’s Product Moment Correlations were calculated for investigating the correlations between the variables used. The findings indicated that, among the five-export table grape regions in South Africa, Manufacturing and Distribution have evolved beyond the introductory phase, but that there is still considerable scope for growth in all the regions. Additionally, there are significant differences between the five regions, thereby indicating that the industry exhibits uneven development with some of the regions being further along the path of development. Demand delivered the second highest mean score and the smallest variation among the five regions. This indicates that export table grapes from South African producers have a loyal customer base. The mean score, however, still indicated that the industry as a whole is in the growth phase of development. Research and Development delivered the highest mean score, thereby signifying the industry’s commitment to research and development. This once again points to an industry being in the growth phase of development. The average mean score delivered by Buyer Segments indicates that the market has begun to fragment. This provides opportunities to create and exploit niche marks. This too conforms to the characteristics of the growth phase in the industry life cycle model. In essence, the current study provided useful information regarding the evolution of the South African export table grape industry. Moreover, a foundation has been laid for further research to be conducted in the industry life cycle of the South African export table grape industry.
- Full Text:
- Date Issued: 2019
- Authors: De Bruyn, Corean
- Date: 2019
- Subjects: Exports -- South Africa , Fruit trade -- South Africa Agriculture -- Economic aspects -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/39403 , vital:35243
- Description: Despite the fact that the South African export table grape industry is more than a century old, studies which focus on the development of the industry have not previously been conducted. The main aim of this study was to measure the phase of maturity of the South African export table grape industry. The industry life cycle model was a main focus point to measure the maturity of the South African export table grape industry and as such has been used to analyse the dynamics of the South African export table grape industry. An expansive literature study was conducted to identify as many variables as possible that serve as indicators of the phase of maturity. A measuring instrument, in the form of a questionnaire, was developed, based on these identified variables. A randomly selected sample of 214 export table grape producers completed the questionnaire. Five main export table grape regions are present in South Africa, namely, the Hex River Valley region, the Berg River region, the Olifants River region, the Orange River region and the Northern Province region. An exploratory factor analysis was used to disentangle and reduce the large number of variables. From the factor analysis, four distinct factors emerged, namely: Manufacturing and Distribution, Demand, Research and Development, and Buyer Segments. Cronbach’s coefficient alpha was employed to confirm the reliability and internal consistency of the measuring instrument. The mean scores and standard deviations were used to determine the strength of direction of each of the four variables, followed by a t-test to determine the differences in development between the five regions. Finally, the Pearson’s Product Moment Correlations were calculated for investigating the correlations between the variables used. The findings indicated that, among the five-export table grape regions in South Africa, Manufacturing and Distribution have evolved beyond the introductory phase, but that there is still considerable scope for growth in all the regions. Additionally, there are significant differences between the five regions, thereby indicating that the industry exhibits uneven development with some of the regions being further along the path of development. Demand delivered the second highest mean score and the smallest variation among the five regions. This indicates that export table grapes from South African producers have a loyal customer base. The mean score, however, still indicated that the industry as a whole is in the growth phase of development. Research and Development delivered the highest mean score, thereby signifying the industry’s commitment to research and development. This once again points to an industry being in the growth phase of development. The average mean score delivered by Buyer Segments indicates that the market has begun to fragment. This provides opportunities to create and exploit niche marks. This too conforms to the characteristics of the growth phase in the industry life cycle model. In essence, the current study provided useful information regarding the evolution of the South African export table grape industry. Moreover, a foundation has been laid for further research to be conducted in the industry life cycle of the South African export table grape industry.
- Full Text:
- Date Issued: 2019
Perceptions of corporate social responsibility initiatives in the banking industry
- Authors: Mjodo, Lunga
- Date: 2019
- Subjects: Corporate social responsibility
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/44571 , vital:38134
- Description: The South African banking industry is well developed and highly competitive. Banks offer homogenous products and services and are vulnerable to negative reputations. Banks can use corporate social responsibility (CSR) to respond to stakeholder needs and demands, achieve a competitive advantage, gain a positive reputation, achieve positive word of mouth referrals, and increase profitability. On the other hand, banks which neglect CSR, are faced with the threat of clients switching their buying behaviour to banks that profoundly invest in CSR. Therefore, CSR is a business obligation. Carroll (1991) conducted a landmark study and identified four elements of CSR; namely economic responsibilities, legal responsibilities, ethical responsibilities, and philanthropic responsibilities, ranging from the most important to the least important element. Currently, a plethora of studies have been conducted which utilise Carroll’s pyramid of CSR and have found that in different countries and different industries, the pyramid takes a different hierarchical order, while other studies identify the limitation of Carroll’s pyramid as being created from a developed country’s perspective. Therefore, it is not clear which CSR elements are likely to build positive customer responses more than others. The primary objective of this study is to ascertain whether the various elements of CSR influence bank clients’ perceptions of their respective banks. If affirmative, what is the hierarchical order of preference from the most important to the least important CSR element? To achieve this objective, a positivist research paradigm is adopted for the study, utilising a quantitative research design. The empirical results revealed that the various elements of CSR influence bank clients’ perceptions of their respective banks. Bank clients ranked the four elements of CSR from the most important to the least important in the following order: the economic responsibilities, the philanthropic responsibilities, the ethical responsibilities, and the legal responsibilities respectively. Likewise, this confirms the assertion by other researchers who argue that Carroll’s pyramid takes a different hierarchical order in different countries, and in different industries within the borders of a country. The results of the study can assist banks in South Africa to understand bank clients’ experiences, interests, motives, attitudes, and expectations of CSR. Consequently, this can effectively and efficiently help the banks in planning and developing their CSR interventions.
- Full Text:
- Date Issued: 2019
- Authors: Mjodo, Lunga
- Date: 2019
- Subjects: Corporate social responsibility
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/44571 , vital:38134
- Description: The South African banking industry is well developed and highly competitive. Banks offer homogenous products and services and are vulnerable to negative reputations. Banks can use corporate social responsibility (CSR) to respond to stakeholder needs and demands, achieve a competitive advantage, gain a positive reputation, achieve positive word of mouth referrals, and increase profitability. On the other hand, banks which neglect CSR, are faced with the threat of clients switching their buying behaviour to banks that profoundly invest in CSR. Therefore, CSR is a business obligation. Carroll (1991) conducted a landmark study and identified four elements of CSR; namely economic responsibilities, legal responsibilities, ethical responsibilities, and philanthropic responsibilities, ranging from the most important to the least important element. Currently, a plethora of studies have been conducted which utilise Carroll’s pyramid of CSR and have found that in different countries and different industries, the pyramid takes a different hierarchical order, while other studies identify the limitation of Carroll’s pyramid as being created from a developed country’s perspective. Therefore, it is not clear which CSR elements are likely to build positive customer responses more than others. The primary objective of this study is to ascertain whether the various elements of CSR influence bank clients’ perceptions of their respective banks. If affirmative, what is the hierarchical order of preference from the most important to the least important CSR element? To achieve this objective, a positivist research paradigm is adopted for the study, utilising a quantitative research design. The empirical results revealed that the various elements of CSR influence bank clients’ perceptions of their respective banks. Bank clients ranked the four elements of CSR from the most important to the least important in the following order: the economic responsibilities, the philanthropic responsibilities, the ethical responsibilities, and the legal responsibilities respectively. Likewise, this confirms the assertion by other researchers who argue that Carroll’s pyramid takes a different hierarchical order in different countries, and in different industries within the borders of a country. The results of the study can assist banks in South Africa to understand bank clients’ experiences, interests, motives, attitudes, and expectations of CSR. Consequently, this can effectively and efficiently help the banks in planning and developing their CSR interventions.
- Full Text:
- Date Issued: 2019
Personal branding through social networking
- Authors: Wait, John-Pierre
- Date: 2019
- Subjects: Branding (Marketing) -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/42440 , vital:36660
- Description: This study explores people’s insights of personal branding by means of social networking. The continuously increasing competitive marketplace is creating a situation where people find it difficult to stand out from their peers. Personal branding affords the opportunity for people to be noticeable in competitive environments. This study used a qualitative research method employing two phases. The semi-structured personal interviews using a semi-structured interview schedule was conducted in the first phase, while the content analysis using criterion schedules analysing participants’ Facebook and LinkedIn social networks was done in phase two. The results of phase one of the study revealed that the majority of participants did not know what a personal brand was, but they believed they possessed a personal brand. Phase two of the study revealed that only a few participants had a coherently perceived personal brand and presented personal brands on both Facebook and LinkedIn. Phase two of the study also revealed that the majority of participants more prominently presented the skills necessary for the future work environment on Facebook rather than LinkedIn. In conclusion, the findings showed that most participants did not actively manage their personal brands across multiple social networking sites. They also did not effectively present the necessary skills for the future work environment on their social networking profiles.
- Full Text:
- Date Issued: 2019
- Authors: Wait, John-Pierre
- Date: 2019
- Subjects: Branding (Marketing) -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/42440 , vital:36660
- Description: This study explores people’s insights of personal branding by means of social networking. The continuously increasing competitive marketplace is creating a situation where people find it difficult to stand out from their peers. Personal branding affords the opportunity for people to be noticeable in competitive environments. This study used a qualitative research method employing two phases. The semi-structured personal interviews using a semi-structured interview schedule was conducted in the first phase, while the content analysis using criterion schedules analysing participants’ Facebook and LinkedIn social networks was done in phase two. The results of phase one of the study revealed that the majority of participants did not know what a personal brand was, but they believed they possessed a personal brand. Phase two of the study revealed that only a few participants had a coherently perceived personal brand and presented personal brands on both Facebook and LinkedIn. Phase two of the study also revealed that the majority of participants more prominently presented the skills necessary for the future work environment on Facebook rather than LinkedIn. In conclusion, the findings showed that most participants did not actively manage their personal brands across multiple social networking sites. They also did not effectively present the necessary skills for the future work environment on their social networking profiles.
- Full Text:
- Date Issued: 2019
Personal development preferences across generations and implications for organisations
- Authors: Berry, Simone Michelle
- Date: 2019
- Subjects: Career development
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/36544 , vital:33964
- Description: Due to generational differences in organisations, it is sensible to determine the learning preferences of professional employees across generations so that organisations can provide learning opportunities that these employees will embrace. The purpose of this study was therefore to determine the personal development preferences of professional employees from different generations within corporate organisations in Cape Town. The research intends to aid organisations that upskill their employees and to ensure they are utilising the most effective and efficient methods. To this effect, a survey with a self-administered questionnaire was provided to 59 professional employees across several generations utilising a Likert scale where the participants were able to rate the different developmental strategies based on their preferences. The results revealed that similarities existed between the generations in relation to their preferences; however, younger generations were more likely to be open to several personal development strategies, whereas older generations had a refined preference they have developed over the years. It is consequently recommended to organisations to customise their training methods to the different generational groups, based on their preferences and thereby to use this method to aid professional employees in understanding each other.
- Full Text:
- Date Issued: 2019
- Authors: Berry, Simone Michelle
- Date: 2019
- Subjects: Career development
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/36544 , vital:33964
- Description: Due to generational differences in organisations, it is sensible to determine the learning preferences of professional employees across generations so that organisations can provide learning opportunities that these employees will embrace. The purpose of this study was therefore to determine the personal development preferences of professional employees from different generations within corporate organisations in Cape Town. The research intends to aid organisations that upskill their employees and to ensure they are utilising the most effective and efficient methods. To this effect, a survey with a self-administered questionnaire was provided to 59 professional employees across several generations utilising a Likert scale where the participants were able to rate the different developmental strategies based on their preferences. The results revealed that similarities existed between the generations in relation to their preferences; however, younger generations were more likely to be open to several personal development strategies, whereas older generations had a refined preference they have developed over the years. It is consequently recommended to organisations to customise their training methods to the different generational groups, based on their preferences and thereby to use this method to aid professional employees in understanding each other.
- Full Text:
- Date Issued: 2019
Purchasing power parity in a newly industrialised country
- Authors: De Villiers, David James
- Date: 2019
- Subjects: Foreign exchange rates -- Econometric models , Purchasing power parity -- Econometric models , Purchasing power
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/39578 , vital:35292
- Description: A newly industrialised country (NIC) is a nation whose rapid industrial growth is delivering high levels of economic development. The ‘NIC’ term is however inappropriately applied: thus this study develops a fresh exposition of the concept. Argentina, Brazil, China, Egypt, India, Indonesia, Malaysia, Mexico, Philippines, Russia, Thailand, Turkey, Vietnam, and South Africa are identified as supposed present-day NICs. Regardless of the industrialisation strategy being pursued, NICs experience exchange rates misaligned in terms of equilibrium value. This can lead to an unpredictable exchange rate, and the failure of the empirical validation of the purchasing power parity (PPP) hypothesis. Theory suggests that there exist several frictions to price movements which manifest themselves as nonlinear adjustment processes. Common empirical methodologies for evaluating PPP are however inadequate in accounting for these phenomena. To close the gap between theory and empirical evidence, the Kapetanois-Shin-Snell unit root test, augmented with flexible Fourier functions with fractional frequencies (KSS-FFFFF), is conducted in order to empirically validate the PPP hypothesis when applied to NICs. This model is capable of capturing heterogeneous smooth transitions in regime switching, and approximating unknown structural breaks in the time series. The researcher developed a novel numerical method in the form of a binary search algorithm for selecting the optimal fractional frequency of the flexible Fourier functions. This procedure significantly reduces both the approximation error and the computational cost of flexible Fourier functions with fractional frequencies. The main result of the study is that all NIC’s real exchange rates are mean-reverting over the annual and monthly periods of 1960-2016 and 1970:1-2017:11. Therefore the traditional Casselian version of PPP holds true in each NIC.
- Full Text:
- Date Issued: 2019
- Authors: De Villiers, David James
- Date: 2019
- Subjects: Foreign exchange rates -- Econometric models , Purchasing power parity -- Econometric models , Purchasing power
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/39578 , vital:35292
- Description: A newly industrialised country (NIC) is a nation whose rapid industrial growth is delivering high levels of economic development. The ‘NIC’ term is however inappropriately applied: thus this study develops a fresh exposition of the concept. Argentina, Brazil, China, Egypt, India, Indonesia, Malaysia, Mexico, Philippines, Russia, Thailand, Turkey, Vietnam, and South Africa are identified as supposed present-day NICs. Regardless of the industrialisation strategy being pursued, NICs experience exchange rates misaligned in terms of equilibrium value. This can lead to an unpredictable exchange rate, and the failure of the empirical validation of the purchasing power parity (PPP) hypothesis. Theory suggests that there exist several frictions to price movements which manifest themselves as nonlinear adjustment processes. Common empirical methodologies for evaluating PPP are however inadequate in accounting for these phenomena. To close the gap between theory and empirical evidence, the Kapetanois-Shin-Snell unit root test, augmented with flexible Fourier functions with fractional frequencies (KSS-FFFFF), is conducted in order to empirically validate the PPP hypothesis when applied to NICs. This model is capable of capturing heterogeneous smooth transitions in regime switching, and approximating unknown structural breaks in the time series. The researcher developed a novel numerical method in the form of a binary search algorithm for selecting the optimal fractional frequency of the flexible Fourier functions. This procedure significantly reduces both the approximation error and the computational cost of flexible Fourier functions with fractional frequencies. The main result of the study is that all NIC’s real exchange rates are mean-reverting over the annual and monthly periods of 1960-2016 and 1970:1-2017:11. Therefore the traditional Casselian version of PPP holds true in each NIC.
- Full Text:
- Date Issued: 2019
Testing the efficient market hypothesis in the cryptocurrency market
- Authors: Apopo, Natalya Camilla
- Date: 2019
- Subjects: Digital currency
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/42427 , vital:36662
- Description: Digital currencies are rising in popularity owing to their purported benefits and the speculative profits that investors are making in the market. These currencies, though decentralised in substance, can be purchased using digital wallets from cryptocurrency exchange platforms around the world. In Africa, these platforms are still at the nascent stages of growth and development, but evidence suggests a burgeoning potential in these markets. Volatility in these markets has been a topic of concern for many empirical investigations with most finding corroborative evidence of excess volatility in the digital currency market. However, there is a conflicting body of evidence when it comes to the studies evaluating the efficiency of the virtual currency market. The efficient market hypothesis ( EMH)is a controversial theory in finance. Proponents argue that it provides a basis for understanding financial markets whereas opponents suggest that the hypothesis is premature in its assumptions of the real functioning of these markets. Though not perfect, the efficient markets model provides a sufficient baseline against which capital markets may be analysed. Besides being one of the most empirically investigated theories in finance, its utility led to the development of later models such as the capital asset pricing model. In postulating that the prices of securities reflect all available information in capital markets, the efficient markets theory lends itself to testing the efficacy levels of the cryptocurrency market. For the purposes of this study, the weak version of the efficient markets theory was evaluated as itis considered the lowest possible form of efficiency attainable. Using both linear and nonlinear unit root testing methodologies, a significant subset of the cryptocurrency market was investigated for inefficiencies via the null hypothesis of non-stationarity. There were mixed results from the testing process, but a substantial portion of the currencies investigated rejected the null of a unit root in favour of stationarity, providing some evidence against weak form efficiency. For these reasons, it is recommended that further research be conducted in the virtual currency markets to offer more conclusive findings.
- Full Text:
- Date Issued: 2019
- Authors: Apopo, Natalya Camilla
- Date: 2019
- Subjects: Digital currency
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/42427 , vital:36662
- Description: Digital currencies are rising in popularity owing to their purported benefits and the speculative profits that investors are making in the market. These currencies, though decentralised in substance, can be purchased using digital wallets from cryptocurrency exchange platforms around the world. In Africa, these platforms are still at the nascent stages of growth and development, but evidence suggests a burgeoning potential in these markets. Volatility in these markets has been a topic of concern for many empirical investigations with most finding corroborative evidence of excess volatility in the digital currency market. However, there is a conflicting body of evidence when it comes to the studies evaluating the efficiency of the virtual currency market. The efficient market hypothesis ( EMH)is a controversial theory in finance. Proponents argue that it provides a basis for understanding financial markets whereas opponents suggest that the hypothesis is premature in its assumptions of the real functioning of these markets. Though not perfect, the efficient markets model provides a sufficient baseline against which capital markets may be analysed. Besides being one of the most empirically investigated theories in finance, its utility led to the development of later models such as the capital asset pricing model. In postulating that the prices of securities reflect all available information in capital markets, the efficient markets theory lends itself to testing the efficacy levels of the cryptocurrency market. For the purposes of this study, the weak version of the efficient markets theory was evaluated as itis considered the lowest possible form of efficiency attainable. Using both linear and nonlinear unit root testing methodologies, a significant subset of the cryptocurrency market was investigated for inefficiencies via the null hypothesis of non-stationarity. There were mixed results from the testing process, but a substantial portion of the currencies investigated rejected the null of a unit root in favour of stationarity, providing some evidence against weak form efficiency. For these reasons, it is recommended that further research be conducted in the virtual currency markets to offer more conclusive findings.
- Full Text:
- Date Issued: 2019
Testing the validity of Okun’s law in South Africa within the democratic era
- Authors: Mavikela, Nomahlubi
- Date: 2019
- Subjects: Labor market -- South Africa , South Africa -- Economic conditions Unemployment -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/41559 , vital:36512
- Description: The challenge of high unemployment rates coupled with sluggish growth rates is an important issue in developing economies. The presence of high unemployment rates implies the lack of utilisation of labour resources efficiently. Hence, it being of grave importance for government to prioritise as a major macroeconomic goal the attainment of full employment due to its ability of maximising output. Okun’s law is a well-known relationship postulating an inverse relationship between unemployment and output, implying that an increase in unemployment would be associated with a decline in output and vice versa. Since the pioneer work of Okun (1962), a large volume of empirical studies have been conducted looking at the relationship between economic growth and the rate of unemployment. However, their findings are varied due to differences in the model specification, choice of variables used, econometric models and time periods. The main objective of this dissertation is to test the validity of Okun’s law in South Africa using quarterly data for the period 1994-2016. The importance of determining the effect of the association will inform policy decisions. A variety of detrending methods are utilised such as the Hodrick-Prescott filter, Corbae Ouliaris FD filter and L1 trend filter to decomposed output and unemployment into their trend and cyclical components. Furthermore, the linear and nonlinear autoregressive distributed lag (ARDL) model together with the error correction model (ECM) are employed to obtain the short and long-run estimates. Overall, the empirical results revealed that the Okun’s coefficients magnitude differed over time; however, only a selected few were found to be statistically significant for the tested time periods. Using the ARDL model the study found that in the long-run a 1% increase in GDP for the 2001-2008 time period was associated with a 0.17% decline in unemployment. While a 1% increase in unemployment in the long-run resulted in 0.78% decline in GDP. Meanwhile, in the short-run, the study confirmed that a 1% increase in GDP is associated with 0.21%-0.69% decline in unemployment. While a 1% increase in unemployment resulted in a 0.10%-0.14% decline in GDP. These findings reveal that measures aimed at boosting economic growth will have a bigger impact in reducing unemployment levels. Furthermore, these findings reiterate the need for effective policies to reduce the gradually increasing unemployment rate and improving growth levels.
- Full Text:
- Date Issued: 2019
- Authors: Mavikela, Nomahlubi
- Date: 2019
- Subjects: Labor market -- South Africa , South Africa -- Economic conditions Unemployment -- South Africa
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/41559 , vital:36512
- Description: The challenge of high unemployment rates coupled with sluggish growth rates is an important issue in developing economies. The presence of high unemployment rates implies the lack of utilisation of labour resources efficiently. Hence, it being of grave importance for government to prioritise as a major macroeconomic goal the attainment of full employment due to its ability of maximising output. Okun’s law is a well-known relationship postulating an inverse relationship between unemployment and output, implying that an increase in unemployment would be associated with a decline in output and vice versa. Since the pioneer work of Okun (1962), a large volume of empirical studies have been conducted looking at the relationship between economic growth and the rate of unemployment. However, their findings are varied due to differences in the model specification, choice of variables used, econometric models and time periods. The main objective of this dissertation is to test the validity of Okun’s law in South Africa using quarterly data for the period 1994-2016. The importance of determining the effect of the association will inform policy decisions. A variety of detrending methods are utilised such as the Hodrick-Prescott filter, Corbae Ouliaris FD filter and L1 trend filter to decomposed output and unemployment into their trend and cyclical components. Furthermore, the linear and nonlinear autoregressive distributed lag (ARDL) model together with the error correction model (ECM) are employed to obtain the short and long-run estimates. Overall, the empirical results revealed that the Okun’s coefficients magnitude differed over time; however, only a selected few were found to be statistically significant for the tested time periods. Using the ARDL model the study found that in the long-run a 1% increase in GDP for the 2001-2008 time period was associated with a 0.17% decline in unemployment. While a 1% increase in unemployment in the long-run resulted in 0.78% decline in GDP. Meanwhile, in the short-run, the study confirmed that a 1% increase in GDP is associated with 0.21%-0.69% decline in unemployment. While a 1% increase in unemployment resulted in a 0.10%-0.14% decline in GDP. These findings reveal that measures aimed at boosting economic growth will have a bigger impact in reducing unemployment levels. Furthermore, these findings reiterate the need for effective policies to reduce the gradually increasing unemployment rate and improving growth levels.
- Full Text:
- Date Issued: 2019
The determinants of economic growth in BRICS Countries
- Authors: Nyirenda, Chimwemwe
- Date: 2019
- Subjects: Economic development -- BRIC countries , BRIC countries -- Economic conditions
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/42946 , vital:36713
- Description: One of the key goals of the formation of BRICS (Brazil, Russia, India, China and South Africa) was to promote stability in trade and investment which would boost growth as the five BRICS countries recovered from the 2009 global financial crisis. This however has not been the case for all BRICS countries where only certain members have experienced a substantial increase in growth while others have experienced declining growth rates. The objective of this study was to analyse the determinants of economic growth in BRICS countries in order to investigate the causes of growth rates varying amongst the BRICS economies. This paper considered various economic theories for proximate and fundamental determinants of growth which included: The Harrod-Domar model, The Neoclassical Growth Theory, The Endogenous Growth Model, The New Growth Theory, Institutions and Economic Growth, Democracy, The Quality of Governance and Growth, Finance and Growth, Trade and Economic Growth and lastly Financial Openness and Growth. The study was conducted for a period covering from 1995 to 2016 and made use of the Autoregressive Distributed Lag (ARDL) model for the single-country analysis and Pooled Mean Group (PMG) was used for the panel analysis. In the single-country analysis, the descriptive statistics indicated that individually all of the BRICS members on average experienced positive GDP growth, positive investment (capital formation) and trade openness between 1995 to 2016. The single-country analysis made use of the ARDL Bounds test to investigate cointegration in each country and a long-run relationship was established in all BRICS countries except for China. The augmented Solow model was extended to incorporate both proximate and fundamental determinants of growth. The estimated results for the ARDL model found that capital and trade openness were significant in determining GDP growth for all of the BRICS countries except for China. FDI was insignificant in determining growth in BRICS countries except for India and the remaining variables gave mixed results between the countries. The error correction term (ECT) was significant and negative in all of the BRICS countries (except for China) which indicated that there was convergence. In the panel analysis, a long-run relationship was established using the KAO Residual cointegration test. The panel correlations test for BRICS revealed that GDP growth had a positive correlation with all the variables under analysis except for inflation which was in line with the anticipated correlations. The PMG estimated results for BRICS found that the proximate determinants (capital and labour) were both significant in determining growth in the long-run where capital had a positive relationship and labour had a negative relationship with growth. Trade openness, inflation and FDI were significant in determining growth in the long-run, though government expenditure was insignificant in determining growth. The error correction term for BRICS illustrated that there was convergence and 92% of the disequilibrium in the short-run is corrected each year. The analysis revealed that BRICS economies should adopt more policies that encourage domestic investment and trade in order to boost growth. Policies such as relaxing local corporation taxes can encourage domestic investment which will aid local businesses in competing against foreign competition. Countries such as Brazil, India and South Africa can adopt more policies that encourage the development and growth of SMME’s. An area for future research would be to incorporate a location variable into the fundamental determinants of growth where the analysis could be conducted per region in each of the BRICS countries, which would give a broader view on which regions are determining growth in BRICS countries.
- Full Text:
- Date Issued: 2019
- Authors: Nyirenda, Chimwemwe
- Date: 2019
- Subjects: Economic development -- BRIC countries , BRIC countries -- Economic conditions
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/42946 , vital:36713
- Description: One of the key goals of the formation of BRICS (Brazil, Russia, India, China and South Africa) was to promote stability in trade and investment which would boost growth as the five BRICS countries recovered from the 2009 global financial crisis. This however has not been the case for all BRICS countries where only certain members have experienced a substantial increase in growth while others have experienced declining growth rates. The objective of this study was to analyse the determinants of economic growth in BRICS countries in order to investigate the causes of growth rates varying amongst the BRICS economies. This paper considered various economic theories for proximate and fundamental determinants of growth which included: The Harrod-Domar model, The Neoclassical Growth Theory, The Endogenous Growth Model, The New Growth Theory, Institutions and Economic Growth, Democracy, The Quality of Governance and Growth, Finance and Growth, Trade and Economic Growth and lastly Financial Openness and Growth. The study was conducted for a period covering from 1995 to 2016 and made use of the Autoregressive Distributed Lag (ARDL) model for the single-country analysis and Pooled Mean Group (PMG) was used for the panel analysis. In the single-country analysis, the descriptive statistics indicated that individually all of the BRICS members on average experienced positive GDP growth, positive investment (capital formation) and trade openness between 1995 to 2016. The single-country analysis made use of the ARDL Bounds test to investigate cointegration in each country and a long-run relationship was established in all BRICS countries except for China. The augmented Solow model was extended to incorporate both proximate and fundamental determinants of growth. The estimated results for the ARDL model found that capital and trade openness were significant in determining GDP growth for all of the BRICS countries except for China. FDI was insignificant in determining growth in BRICS countries except for India and the remaining variables gave mixed results between the countries. The error correction term (ECT) was significant and negative in all of the BRICS countries (except for China) which indicated that there was convergence. In the panel analysis, a long-run relationship was established using the KAO Residual cointegration test. The panel correlations test for BRICS revealed that GDP growth had a positive correlation with all the variables under analysis except for inflation which was in line with the anticipated correlations. The PMG estimated results for BRICS found that the proximate determinants (capital and labour) were both significant in determining growth in the long-run where capital had a positive relationship and labour had a negative relationship with growth. Trade openness, inflation and FDI were significant in determining growth in the long-run, though government expenditure was insignificant in determining growth. The error correction term for BRICS illustrated that there was convergence and 92% of the disequilibrium in the short-run is corrected each year. The analysis revealed that BRICS economies should adopt more policies that encourage domestic investment and trade in order to boost growth. Policies such as relaxing local corporation taxes can encourage domestic investment which will aid local businesses in competing against foreign competition. Countries such as Brazil, India and South Africa can adopt more policies that encourage the development and growth of SMME’s. An area for future research would be to incorporate a location variable into the fundamental determinants of growth where the analysis could be conducted per region in each of the BRICS countries, which would give a broader view on which regions are determining growth in BRICS countries.
- Full Text:
- Date Issued: 2019
The effect of the exchange rate on economic growth in South Africa
- Authors: Maxwele, Chuma
- Date: 2019
- Subjects: Foreign exchange rates -- South Africa , Foreign exchange rates -- South Africa -- Econometric models Economic development -- South Africa South Africa -- Economic conditions -- Econometric models
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/41548 , vital:36505
- Description: The study examines the effect of the exchange rate on South African economic growth rate, as this relationship is of paramount importance in South Africa, since the country has a highly volatile exchange rate in among emerging economies, and this has a significant impact on economic growth. The exchange rate can be explained or defined as the value of the home country or domestic currency in relation to foreign currencies, and economic growth, which is measured in terms of gross domestic product (GDP), which is the measure of currently produced final output in a country at a specific time period, usually a year or quarter. It has been long known that an inadequately or poorly managed exchange rate can be problematic in a country’s economic growth rate. Some economists point out that management of a country’s foreign exchange market is of utmost importance. Furthermore, bad exchange rate management can lead to unstable international relations that detrimentally affect the international trade of a country and cause large speculative financial flows, which could cause financial markets to be disrupted and also lead inefficient allocation of funds. At the same time, competitive exchange rate promotes a suitable economic environment that is a precondition when it comes to expanding of international trade and investment, and gaining of higher economic growth in a country. The purpose of this study is to investigate the effect of the exchange rate on economic growth in South Africa. This study employs a newly developed econometric technique known as non-linear autoregressive distributive lag (NARDL). This study employs annual data for the period of 1970 to 2017. The first variable is the real effective exchange rate of the rand, and the study compares the value of the rand against the currencies of the twenty trading partners. The second variable is economic growth, which is measured in terms of the gross domestic product (GDP). GDP is the value of output produced within the region or borders of a country during a period of time, usually a year or quarter. Investment is another variable used, and it is categorised into economic investment (capital formation) and financial investment but the study adopts economic investment. Economic investment is the quantity of capital stock in a society, simple put it is goods used in the making of other goods. Government expenditure is also used in the study, and government expenditure is about public goods and services provided to society, and is a major component of gross domestic product. The last variable employed in the study is broad money supply as a percentage of GDP, which can be explained as the sum of the currency outside financial institutions, such as demand deposits other than the ones for government, the time, savings, and foreign currency of residents other than the government. GDP data was obtained from the electronic data bases of South African Reserve Bank, and all the remaining variables were obtained from the electronic data bases of the World Bank. The results of the NARDL model indicate that a positive change of the real effective exchange rate has a positive and significant effect on the gross domestic product in the long-run, while a negative change of the real effective exchange rate has a negative and significant effect on the gross domestic product in the long-run. In the short-run, the results also behave in the same manner as in the long-run. The study recommends that the real effective exchange rate should not be the only area to look into when trying to improve economic growth in South Africa. Investments must be looked into as well, and South Africa needs more growth desperately.
- Full Text:
- Date Issued: 2019
- Authors: Maxwele, Chuma
- Date: 2019
- Subjects: Foreign exchange rates -- South Africa , Foreign exchange rates -- South Africa -- Econometric models Economic development -- South Africa South Africa -- Economic conditions -- Econometric models
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/41548 , vital:36505
- Description: The study examines the effect of the exchange rate on South African economic growth rate, as this relationship is of paramount importance in South Africa, since the country has a highly volatile exchange rate in among emerging economies, and this has a significant impact on economic growth. The exchange rate can be explained or defined as the value of the home country or domestic currency in relation to foreign currencies, and economic growth, which is measured in terms of gross domestic product (GDP), which is the measure of currently produced final output in a country at a specific time period, usually a year or quarter. It has been long known that an inadequately or poorly managed exchange rate can be problematic in a country’s economic growth rate. Some economists point out that management of a country’s foreign exchange market is of utmost importance. Furthermore, bad exchange rate management can lead to unstable international relations that detrimentally affect the international trade of a country and cause large speculative financial flows, which could cause financial markets to be disrupted and also lead inefficient allocation of funds. At the same time, competitive exchange rate promotes a suitable economic environment that is a precondition when it comes to expanding of international trade and investment, and gaining of higher economic growth in a country. The purpose of this study is to investigate the effect of the exchange rate on economic growth in South Africa. This study employs a newly developed econometric technique known as non-linear autoregressive distributive lag (NARDL). This study employs annual data for the period of 1970 to 2017. The first variable is the real effective exchange rate of the rand, and the study compares the value of the rand against the currencies of the twenty trading partners. The second variable is economic growth, which is measured in terms of the gross domestic product (GDP). GDP is the value of output produced within the region or borders of a country during a period of time, usually a year or quarter. Investment is another variable used, and it is categorised into economic investment (capital formation) and financial investment but the study adopts economic investment. Economic investment is the quantity of capital stock in a society, simple put it is goods used in the making of other goods. Government expenditure is also used in the study, and government expenditure is about public goods and services provided to society, and is a major component of gross domestic product. The last variable employed in the study is broad money supply as a percentage of GDP, which can be explained as the sum of the currency outside financial institutions, such as demand deposits other than the ones for government, the time, savings, and foreign currency of residents other than the government. GDP data was obtained from the electronic data bases of South African Reserve Bank, and all the remaining variables were obtained from the electronic data bases of the World Bank. The results of the NARDL model indicate that a positive change of the real effective exchange rate has a positive and significant effect on the gross domestic product in the long-run, while a negative change of the real effective exchange rate has a negative and significant effect on the gross domestic product in the long-run. In the short-run, the results also behave in the same manner as in the long-run. The study recommends that the real effective exchange rate should not be the only area to look into when trying to improve economic growth in South Africa. Investments must be looked into as well, and South Africa needs more growth desperately.
- Full Text:
- Date Issued: 2019
The effect of the exchange rate on inflation in South Africa
- Authors: Gwili, Lutho Olwethu
- Date: 2019
- Subjects: Inflation (Finance) -- South Africa , Foreign exchange rates -- Africa South Foreign exchange rates -- Econometric models -- Africa South South Africa -- Economic conditions
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/39643 , vital:35341
- Description: The depreciation of the rand in recent years has been one of the indicators of recession in South Africa. The unpredictability of the rand and its volatility has led to great inflationary pressure. The process of examining the relationship between South Africa’s exchange rate and inflation rate has become increasingly relevant down the years. This study analyses the relationship between exchange rate and inflation in South Africa from 1994Q1 to 2017Q4. Its objective is to establish the effect of the exchange rate on inflation in South Africa. The non-linear autoregressive distributed lag (NARDL) model is employed as the method of estimation. Trends in exchange rate and inflation between 1980 and 2017 are analysed. Monetary régimes and shifts in inflation down the years are discussed. Key events like the Asian financial crisis of 1998, the introduction of the inflation targeting framework in 2000, the significant depreciation of the rand in 2001 and the global financial crisis in 2008/09 all contributed majorly in the way the country’s monetary policy and inflation take the form they have today. The literature identifies the exchange rate pass-through, purchasing power parity (PPP) and absolute power parity (APP) as exchange rate theories, all in which are discussed in detail. Empirical evidence suggests a predominantly positive relationship between inflation rate and exchange rate in other African countries as well as in developed countries. The exchange rate pass-through in South Africa appears to have lessened down the years. The NARDL model is discussed in detail in the research methodology chapter. The main reason for using this method of estimation is to capture asymmetry effects that may exist between inflation and exchange rate. First and second generation unit root tests, like Ng-Perron, DF-GLS and KSS, are discussed in detail to capture the stationarity of the variables. The variables of interest include nominal effective exchange rate, Brent crude oil prices, prime lending rate, unemployment rate and M3 money supply. This is done in line with the literature. The vector autoregressive (VAR) model is briefly discussed in the research methodology chapter. The findings of the study reveal that an appreciation in the exchange rate decreases the inflation rate. The results also reveal that a depreciation in the exchange rate decreases the inflation rate, which happens not to be in line with economic theory. This implies that a depreciation has a negative effect on inflation. A positive relationship between oil price and inflation is found to exist. A negative relationship is found to exist between M3 money supply and inflation. There is a positive relationship between prime lending rate and inflation. The study found that the Phillips curve does not hold in South Africa. The estimated VAR model results reveal that there exists unidirectional causality running from nominal effective exchange rate to inflation rate. The impulse response function reveals a negative relationship between exchange rate and inflation. Therefore, the study proposes that policymakers evolve means of evaluating exchange rate volatility, and that lending rates be made flexible. This will help curb inflation in South Africa.
- Full Text:
- Date Issued: 2019
- Authors: Gwili, Lutho Olwethu
- Date: 2019
- Subjects: Inflation (Finance) -- South Africa , Foreign exchange rates -- Africa South Foreign exchange rates -- Econometric models -- Africa South South Africa -- Economic conditions
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/39643 , vital:35341
- Description: The depreciation of the rand in recent years has been one of the indicators of recession in South Africa. The unpredictability of the rand and its volatility has led to great inflationary pressure. The process of examining the relationship between South Africa’s exchange rate and inflation rate has become increasingly relevant down the years. This study analyses the relationship between exchange rate and inflation in South Africa from 1994Q1 to 2017Q4. Its objective is to establish the effect of the exchange rate on inflation in South Africa. The non-linear autoregressive distributed lag (NARDL) model is employed as the method of estimation. Trends in exchange rate and inflation between 1980 and 2017 are analysed. Monetary régimes and shifts in inflation down the years are discussed. Key events like the Asian financial crisis of 1998, the introduction of the inflation targeting framework in 2000, the significant depreciation of the rand in 2001 and the global financial crisis in 2008/09 all contributed majorly in the way the country’s monetary policy and inflation take the form they have today. The literature identifies the exchange rate pass-through, purchasing power parity (PPP) and absolute power parity (APP) as exchange rate theories, all in which are discussed in detail. Empirical evidence suggests a predominantly positive relationship between inflation rate and exchange rate in other African countries as well as in developed countries. The exchange rate pass-through in South Africa appears to have lessened down the years. The NARDL model is discussed in detail in the research methodology chapter. The main reason for using this method of estimation is to capture asymmetry effects that may exist between inflation and exchange rate. First and second generation unit root tests, like Ng-Perron, DF-GLS and KSS, are discussed in detail to capture the stationarity of the variables. The variables of interest include nominal effective exchange rate, Brent crude oil prices, prime lending rate, unemployment rate and M3 money supply. This is done in line with the literature. The vector autoregressive (VAR) model is briefly discussed in the research methodology chapter. The findings of the study reveal that an appreciation in the exchange rate decreases the inflation rate. The results also reveal that a depreciation in the exchange rate decreases the inflation rate, which happens not to be in line with economic theory. This implies that a depreciation has a negative effect on inflation. A positive relationship between oil price and inflation is found to exist. A negative relationship is found to exist between M3 money supply and inflation. There is a positive relationship between prime lending rate and inflation. The study found that the Phillips curve does not hold in South Africa. The estimated VAR model results reveal that there exists unidirectional causality running from nominal effective exchange rate to inflation rate. The impulse response function reveals a negative relationship between exchange rate and inflation. Therefore, the study proposes that policymakers evolve means of evaluating exchange rate volatility, and that lending rates be made flexible. This will help curb inflation in South Africa.
- Full Text:
- Date Issued: 2019
The effects of inflation on economic growth and unemployment in light of the global financial crisis in BRICS countries
- Authors: Falakahla, Lwazi
- Date: 2019
- Subjects: Inflation (Finance) -- BRIC countries , Economic development -- BRIC countries Unemployment -- BRIC countries Monetary policy , Global Financial Crisis, 2008-2009
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/39829 , vital:35477
- Description: The key critical role played by Central Banks’ monetary policy and government macroeconomic policy relies on precise and timely forecasts on economic growth along the business cycle periods. In the past, many emerging countries have been facing problems of high escalating inflationary prices. This dissertation is set out to examine the influence of inflation on output growth and unemployment considering the global financial crisis in BRICS countries using annual data collected over the period 1980 to 2016. The study is divided into two sections; namely macroeconomic policy and monetary policy principles. The empirical analyses are computed through using the Autoregressive Distributed Lag (ARDL) approach proposed by Pesaran et al. (2001). The macroeconomic policy findings show that there is a negative long run relationship between inflation and economic growth in Russia and South Africa. The study’s ARDL bounds test for cointegration results also indicated that there is statistically significant long run comovement between inflation and economic growth in all BRICS countries. The study results also provided that there is an existence of a negative short run relationship between inflation and economic growth in South Africa. The Phillips curve results indicated that a positive long run trade-off between inflation and unemployment is found and no short run relationship discovered. It is also revealed that the long run co-movement between inflation and unemployment only exists in Russia and South Africa. The study is significant because it contributes to the empirical determinants of long term prosperity of the BRICS partners.
- Full Text:
- Date Issued: 2019
- Authors: Falakahla, Lwazi
- Date: 2019
- Subjects: Inflation (Finance) -- BRIC countries , Economic development -- BRIC countries Unemployment -- BRIC countries Monetary policy , Global Financial Crisis, 2008-2009
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/39829 , vital:35477
- Description: The key critical role played by Central Banks’ monetary policy and government macroeconomic policy relies on precise and timely forecasts on economic growth along the business cycle periods. In the past, many emerging countries have been facing problems of high escalating inflationary prices. This dissertation is set out to examine the influence of inflation on output growth and unemployment considering the global financial crisis in BRICS countries using annual data collected over the period 1980 to 2016. The study is divided into two sections; namely macroeconomic policy and monetary policy principles. The empirical analyses are computed through using the Autoregressive Distributed Lag (ARDL) approach proposed by Pesaran et al. (2001). The macroeconomic policy findings show that there is a negative long run relationship between inflation and economic growth in Russia and South Africa. The study’s ARDL bounds test for cointegration results also indicated that there is statistically significant long run comovement between inflation and economic growth in all BRICS countries. The study results also provided that there is an existence of a negative short run relationship between inflation and economic growth in South Africa. The Phillips curve results indicated that a positive long run trade-off between inflation and unemployment is found and no short run relationship discovered. It is also revealed that the long run co-movement between inflation and unemployment only exists in Russia and South Africa. The study is significant because it contributes to the empirical determinants of long term prosperity of the BRICS partners.
- Full Text:
- Date Issued: 2019