FISCAL POLICY (2017)

Transcription

1 DEPARTMENT OF ECONOMICS ECONOMICS 348 FISCAL POLICY (2017) LECTURER: Dr Krige Siebrits Room 509A CGW Schumann Building Tel: (021) INTERNAL MODERATOR: Prof Pierre de Villiers 1

2 OBJECTIVE AND OUTCOMES The objective of this part of the module is to familiarise you with the sustainability and stabilisation aspects of fiscal policy in South Africa. Historical trends as well as current policy challenges will be discussed. The discussion of these issues will take place against the backdrop of relevant theoretical principles and developments in other countries. Mastering the contents of this part of the module should enable you to: Explain the meaning and importance of fiscal sustainability and the difficulty of measuring it Discuss the sustainability of fiscal policy in South Africa Outline the evolution of views about the stabilisation role of fiscal policy Discuss fiscal stabilisation policy in South Africa in terms of the objectives of policymakers and the effects of such policy on the economy Explain the link between fiscal policymaking institutions and outcomes Outline the institutional framework for fiscal policymaking in South Africa and discuss various options for strengthening it Discuss the relevance for South Africa of findings in other countries about the most appropriate ways to reduce budget deficits. ASSESSMENT Please consult the Economics 348 information brochure for general information about assessment in this module. The following are examples of possible test and examination questions about fiscal policy (please note that questions will not necessarily be drawn from this list): Explain the four main instruments for the financing of budget deficits and the macroeconomic risks associated with each. Discuss the meaning of the concept "fiscal sustainability" and explain how it is measured. Also explain the importance of the primary budget balance for the assessment of fiscal sustainability. 2

3 "Fiscal policy has been sustainable in South Africa since 1970." Do you agree with this statement? Explain your answer. Discuss the evolution of approaches to the macroeconomic role of fiscal policy from the Great Depression to the Great Recession. "The timespan and effectiveness of South African Governments attempts to implement systematic countercyclical fiscal policymaking were very similar to those of most other countries." Do you agree with this statement? Explain your answer. Summarise the most important stabilisation-related developments in fiscal policy in South Africa since 1994, and comment on the achievements and failures of the fiscal authorities in this period. Explain why appropriate fiscal policymaking frameworks are important for achieving good fiscal outcomes. "The adoption of numerical fiscal rules would undoubtedly improve fiscal outcomes in South Africa." Do you agree with this statement? Explain your answer. Give a critical appraisal of South Africa s fiscal policymaking framework from an institutional perspective. Summarise the most important findings of research into the determinants of the success of attempted fiscal consolidations. What lessons can South Africa learn from these episodes about strategies to reduce large budget deficits? Discuss the challenges the South African fiscal authorities have to deal with in the next three years. PRESCRIBED MATERIAL Blanchard, O. & D. Johnson Macroeconomics: Global and South African Perspectives. Cape Town: Pearson: Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (edited by P.A. Black, E. Calitz & T.J. Steenekamp). 6 th edition. Cape Town: Oxford University Press: Calitz, E., S.A. du Plessis & F.K. Siebrits Fiscal sustainability in South Africa: Can history repeat itself? Journal for Studies in Economics and Econometrics, 38(3): Calitz, E., F.K. Siebrits & I. Stuart Enhancing the accuracy of fiscal projections in South Africa. South African Journal for Economics and Management Sciences, 19(3):

4 Debrun, X., D. Hauner & M.S. Kumar Discretion, institutions, and fiscal discipline. In Promoting Fiscal Discipline (edited by M.S. Kumar & T. Ter-Minassian). Washington, D.C.: The International Monetary Fund: Fischer, S. & W. Easterly The economics of the government budget constraint. World Bank Research Observer, 5(2): National Treasury Fiscal policy. In Medium-Term Budget Policy Statement Pretoria: National Treasury: National Treasury Fiscal policy. In Budget Review Pretoria: National Treasury: Saxegaard, M. & J. Torres A discussion of fiscal consolidation options in South Africa. In South Africa Selected Issues Paper (IMF Country Report No. 14/339). Washington, D.C.: The International Monetary Fund: Siebrits, F.K Policymaking institutions to restrain Leviathan. Unpublished paper. Stellenbosch: Stellenbosch University (Department of Economics). Besides partial summaries of the prescribed readings, the class presentations contain examples and important background and supplementary material. Please study the presentations with the prescribed readings. LECTURES The Economics 348 information brochure contains the lecture times and venues. The topics and prescribed material are listed below. Session 1 (18 September) Introduction Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (edited by P.A. Black, E. Calitz & T.J. Steenekamp). 6 th edition. Cape Town: Oxford University Press: ; Session 2 (19 September) The Financing of Budget Deficits Blanchard, O. & D. Johnson Macroeconomics: Global and South African Perspectives. Cape Town: Pearson: Fischer, S. and W. Easterly The economics of the government budget constraint. World Bank Research Observer, 5(2):

5 Session 3 (19 September) Fiscal Sustainability Blanchard, O. & D. Johnson Macroeconomics: Global and South African Perspectives. Cape Town: Pearson: Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (edited by P.A. Black, E. Calitz & T.J. Steenekamp). 6 th edition. Cape Town: Oxford University Press: Calitz, E., S.A. du Plessis & F.K. Siebrits Fiscal sustainability in South Africa: Can history repeat itself? Journal for Studies in Economics and Econometrics, 38(3): Session 4 (20 September) The Sustainability of Fiscal Policy in South Africa Calitz, E., S.A. du Plessis & F.K. Siebrits Fiscal sustainability in South Africa: Can history repeat itself? Journal for Studies in Economics and Econometrics, 38(3): Session 5 (22 September) Views about Fiscal Stabilisation Policy Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (edited by P.A. Black, E. Calitz & T.J. Steenekamp). 6 th edition. Cape Town: Oxford University Press: Session 6 (22 September) Fiscal Stabilisation Policy in South Africa (1) Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (edited by P.A. Black, E. Calitz & T.J. Steenekamp). 6 th edition. Cape Town: Oxford University Press: Session 7 (26 September) Fiscal Stabilisation Policy in South Africa (2) Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (edited by P.A. Black, E. Calitz & T.J. Steenekamp). 6 th edition. Cape Town: Oxford University Press: Session 8 (26 September) Fiscal Institutions and Fiscal Discipline Debrun, X., D. Hauner & M.S. Kumar Discretion, institutions, and fiscal discipline. In Promoting Fiscal Discipline (edited by M.S. Kumar & T. Ter-Minassian). Washington, D.C.: The International Monetary Fund: Siebrits, F.K Policymaking institutions to restrain Leviathan. Unpublished paper. Stellen-bosch: Stellenbosch University (Department of Economics): 1-12,

6 Session 9 (27 September) Options for Improving the Fiscal Policymaking Framework in South Africa (1) Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (edited by P.A. Black, E. Calitz & T.J. Steenekamp). 6 th edition. Cape Town: Oxford University Press: ; ; Calitz, E., F.K. Siebrits & I. Stuart Enhancing the accuracy of fiscal projections in South Africa. South African Journal for Economics and Management Sciences, NS 19(3): Siebrits, F.K Policymaking institutions to restrain Leviathan. Draft paper. Stellenbosch: Stellenbosch University (Department of Economics): Session 10 (29 September) Options for Improving the Fiscal Policymaking Framework in South Africa (2) Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (edited by P.A. Black, E. Calitz & T.J. Steenekamp). 6 th edition. Cape Town: Oxford University Press: ; ; Calitz, E., F.K. Siebrits & I. Stuart Enhancing the accuracy of fiscal projections in South Africa. South African Journal for Economics and Management Sciences, NS 19(3): Siebrits, F.K Policymaking institutions to restrain Leviathan. Unpublished paper. Stellen-bosch: Stellenbosch University (Department of Economics): Session 11 (2 October) The 2016 Budget and Beyond: Fiscal Policy in the Medium Term (1) Calitz, E., S.A. du Plessis & F.K. Siebrits Fiscal sustainability in South Africa: Can history repeat itself? Journal for Studies in Economics and Econometrics, 38(3): National Treasury Fiscal policy. In Medium-Term Budget Policy Statement Pretoria: National Treasury: National Treasury Fiscal policy. In Budget Review Pretoria: National Treasury: Saxegaard, M. & J. Torres (2014): A discussion of fiscal consolidation options in South Africa. In South Africa - Selected Issues Paper (IMF Country Report No. 14/339). Washington, D.C.: The International Monetary Fund:

7 Session 12 (3 October) The 2016 Budget and Beyond: Fiscal Policy in the Medium Term (2) National Treasury Fiscal policy. In Medium-Term Budget Policy Statement Pretoria: National Treasury: National Treasury Fiscal policy. In Budget Review Pretoria: National Treasury: Saxegaard, M. & J. Torres (2014): A discussion of fiscal consolidation options in South Africa. In South Africa - Selected Issues Paper (IMF Country Report No. 14/339). Washington, D.C.: The International Monetary Fund:

8 DEPARTEMENT EKONOMIE EKONOMIE 348 FISKALE BELEID (2017) DOSENT: Dr Krige Siebrits Kamer 509A CGW Schumanngebou Tel: (021) E-pos: INTERNE MODERATOR: Prof Pierre de Villiers 8

9 DOEL EN UITKOMSTE Die doel van hierdie deel van die module is om u vertroud te maak met die volhoubaarheidsen stabilisasie-aspekte van fiskale beleid in Suid-Afrika. Historiese neigings en huidige beleidsuitdagings sal bespreek word. Die bespreking van hierdie kwessies sal geskied teen die agtergrond van tersaaklike teoretiese beginsels en ontwikkelings in ander lande. Bemeestering van die inhoud van hierdie deel van die module sal u in staat stel om: Die betekenis en belangrikheid van fiskale volhoubaarheid en die kompleksiteit van die meting daarvan te verduidelik Die volhoubaarheid van fiskale beleid in Suid-Afrika te bespreek Die evolusie van sienings oor die stabilisasierol van fiskale beleid uiteen te sit Fiskale stabilisasiebeleid in Suid-Afrika te bespreek met verwysing na die oogmerke van beleidmakers en die invloed van die beleid op die ekonomie Die verband tussen fiskale beleidmakingsinstellings en uitkomste te verduidelik n Uiteensetting te gee van die institusionele raamwerk vir fiskale beleidmaking in Suid-Afrika en verskillende opsies om dit te versterk n Bespreking te gee van die tersaaklikheid vir Suid-Afrika van bevindinge in ander oor die mees toepaslike maniere om begrotingstekorte te verklein. ASSESSERING Raadpleeg asseblief die ekonomie 348-inligtingsbrosjure vir algemene inligting oor assessering in hierdie module. Die volgende is voorbeelde van moontlike toets- en eksamenvrae oor fiskale beleid (neem asseblief kennis dat vrae nie noodwendig uit hierdie lys sal kom nie): Verduidelik die vier vernaamste instrumente vir die finansiering van begrotingstekorte en die makro-ekonomiese risiko s wat met elkeen geassosieer word. Bespreek die betekenis van die begrip fiskale volhoubaarheid en verduidelik hoe dit gemeet word. Verduidelik ook die belangrikheid van die primêre begrotingsaldo vir die beoordeling van fiskale volhoubaarheid. 9

10 "Fiskale beleid is sedert 1970 volhoubaar in Suid-Afrika." Stem u met hierdie stelling saam? Verduidelik u antwoord. Bespreek die evolusie van sienings oor die makro-ekonomiese rol van fiskale beleid van die Groot Depressie tot die Groot Resessie. "Die tydsduur en doeltreffendheid van Suid-Afrikaanse Regerings se pogings om sistematiese teensikliese fiskale beleid toe te pas, het sterk ooreengestem met dié van die meeste ander lande." Stem u met hierdie stelling saam? Verduidelik u antwoord. Gee n opsomming van die vernaamste stabilisasieverwante ontwikkelings in fiskale beleid in Suid-Afrika sedert 1994, en lewer kommentaar op die prestasies en mislukkings van die fiskale owerhede in dié tydperk. Verduidelik waarom gepaste fiskale beleidmakingsraamwerke belangrik is vir die bereiking van goeie fiskale uitkomste. "Die instelling van numeriese fiskale reëls sal ongetwyfeld beter fiskale uitkomste in Suid-Afrika meebring." Stem u met hierdie stelling saam? Verduidelik u antwoord. Gee n kritiese beoordeling van Suid-Afrika se fiskale beleidmakingsraamwerk vanuit n institusionele perspektief. Som die vernaamste bevindinge van navorsing oor die determinante van die sukses van pogings tot fiskale konsolidasie op. Wat kan Suid-Afrika uit hierdie episodes leer oor strategieë om groot begrotingstekorte te verklein? Bespreek die fiskale uitdagings wat die Suid-Afrikaanse fiskale owerhede die volgende drie jaar die hoof moet bied. VOORGESKREWE MATERIAAL Blanchard, O. & D. Johnson Macroeconomics: Global and South African Perspectives. Kaapstad: Pearson: Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (onder redaksie van P.A. Black, E. Calitz & T.J. Steenekamp). 6 de uitgawe. Kaapstad: Oxford University Press: Calitz, E., S.A. du Plessis & F.K. Siebrits Fiscal sustainability in South Africa: Can history repeat itself? Journal for Studies in Economics and Econometrics, 38(3): Calitz, E., F.K. Siebrits & I. Stuart Enhancing the accuracy of fiscal projections in South Africa. South African Journal for Economics and Management Sciences, 19(3):

11 Debrun, X., D. Hauner & M.S. Kumar Discretion, institutions, and fiscal discipline. In Promoting Fiscal Discipline (onder redaksie van M.S. Kumar & T. Ter-Minassian). Washington, D.C.: Die Internasionale Monetêre Fonds: Fischer, S. & W. Easterly The economics of the government budget constraint. World Bank Research Observer, 5(2): Nasionale Tesourie Fiscal policy. In Medium-Term Budget Policy Statement Pretoria: Nasionale Tesourie: Nasionale Tesourie Fiscal policy. In Budget Review Pretoria: Nasionale Tesourie: Saxegaard, M. & J. Torres A discussion of fiscal consolidation options in South Africa. In South Africa Selected Issues Paper (IMF Country Report No. 14/339). Washington, D.C.: Die Internasionale Monetêre Fonds: Siebrits, F.K Policymaking institutions to restrain Leviathan. Ongepubliseerde dokument. Stellenbosch: Universiteit van Stellenbosch (Departement Ekonomie). Benewens gedeeltelike opsommings van die voorgeskrewe leeswerk bevat die klasaanbiedings ook voorbeelde en belangrike agtergronds- en aanvullende materiaal. Bestudeer asseblief die klasaanbiedings saam met die voorgskrewe leeswerk. LESINGS Die Ekonomie 348-inligtingsbrosjure bevat die lesingtye en -lokale. Die onderwerpe en voorgeskrewe materiaal word hieronder gelys. Sessie 1 (18 September) Inleiding Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (onder redaksie van P.A. Black, E. Calitz & T.J. Steenekamp). 6 de uitgawe. Kaapstad: Oxford University Press: ; Sessie 2 (19 September) Die Finansiering van Begrotingstekorte Blanchard, O. & D. Johnson Macroeconomics: Global and South African Perspectives. Kaapstad: Pearson: Fischer, S. and W. Easterly The economics of the government budget constraint. World Bank Research Observer, 5(2):

12 Sessie 3 (19 September) Fiskale Volhoubaarheid Blanchard, O. & D. Johnson Macroeconomics: Global and South African Perspectives. Kaapstad: Pearson: Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (onder redaksie van P.A. Black, E. Calitz & T.J. Steenekamp). 6 de uitgawe. Kaapstad: Oxford University Press: Calitz, E., S.A. du Plessis & F.K. Siebrits Fiscal sustainability in South Africa: Can history repeat itself? Journal for Studies in Economics and Econometrics, 38(3): Sessie 4 (20 September) Die Volhoubaarheid van Fiskale Beleid in Suid-Afrika Calitz, E., S.A. du Plessis & F.K. Siebrits Fiscal sustainability in South Africa: Can history repeat itself? Journal for Studies in Economics and Econometrics, 38(3): Sessie 5 (22 September) Sienings oor Fiskale Stabilisasiebeleid Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (onder redaksie van P.A. Black, E. Calitz & T.J. Steenekamp). 6 de uitgawe. Kaapstad: Oxford University Press: Sessie 6 (22 September) Fiskale Stabilisasiebeleid in Suid-Afrika (1) Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (onder redaksie van P.A. Black, E. Calitz & T.J. Steenekamp). 6 de uitgawe. Kaapstad: Oxford University Press: Sessie 7 (26 September) Fiskale Stabilisasiebeleid in Suid-Afrika (2) Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (onder redaksie van P.A. Black, E. Calitz & T.J. Steenekamp). 6 de uitgawe. Kaapstad: Oxford University Press:

13 Sessie 8 (26 September) Fiskale Instellings en Fiskale Dissipline Debrun, X., D. Hauner & M.S. Kumar Discretion, institutions, and fiscal discipline. In Promoting Fiscal Discipline (onder redaksie van M.S. Kumar & T. Ter-Minassian). Washington, D.C.: Die Internasionale Monetêre Fonds: Siebrits, F.K Policymaking institutions to restrain Leviathan. Ongepubliseerde dokument. Stellenbosch: Universiteit van Stellenbosch (Departement Ekonomie): 1-12, Sessie 9 (27 September) Opsies om die Fiskale Beleidmakingsraamwerk in Suid-Afrika te Verbeter (1) Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (onder redaksie van P.A. Black, E. Calitz & T.J. Steenekamp). 6 de uitgawe. Kaapstad: Oxford University Press: ; ; Calitz, E., F.K. Siebrits & I. Stuart Enhancing the accuracy of fiscal projections in South Africa. South African Journal for Economics and Management Sciences, NS 19(3): Siebrits, F.K Policymaking institutions to restrain Leviathan. Ongepubliseerde dokument. Stellenbosch: Universiteit van Stellenbosch (Departement Ekonomie): Sessie 10 (29 September) Opsies om die Fiskale Beleidmakingsraamwerk in Suid-Afrika te Verbeter (2) Calitz, E. & F.K. Siebrits Fiscal policy. In Public Economics (onder redaksie van P.A. Black, E. Calitz & T.J. Steenekamp). 6 de uitgawe. Kaapstad: Oxford University Press: ; ; Calitz, E., F.K. Siebrits & I. Stuart Enhancing the accuracy of fiscal projections in South Africa. South African Journal for Economics and Management Sciences, NS 19(3): Siebrits, F.K Policymaking institutions to restrain Leviathan. Ongepubliseerde dokument. Stellenbosch: Universiteit van Stellenbosch (Departement Ekonomie): Sessie 11 (2 Oktober) Die 2017-Begroting en Daarna: Fiskale Beleid in die Mediumtermyn (1) Calitz, E., S.A. du Plessis & F.K. Siebrits Fiscal sustainability in South Africa: Can history repeat itself? Journal for Studies in Economics and Econometrics, 38(3):

14 Nasionale Tesourie Fiscal policy. In Medium-Term Budget Policy Statement Pretoria: Nasionale Tesourie: Nasionale Tesourie Fiscal policy. In Budget Review Pretoria: Nasionale Tesourie: Saxegaard, M. & J. Torres A discussion of fiscal consolidation options in South Africa. In South Africa Selected Issues Paper (IMF Country Report No. 14/339). Washington, D.C.: Die Internasionale Monetêre Fonds: Sessie 12 (3 Oktober) Die 2017-Begroting en Daarna: Fiskale Beleid in die Mediumtermyn (2) Nasionale Tesourie Fiscal policy. In Medium-Term Budget Policy Statement Pretoria: Nasionale Tesourie: Nasionale Tesourie Fiscal policy. In Budget Review Pretoria: Nasionale Tesourie: Saxegaard, M. & J. Torres A discussion of fiscal consolidation options in South Africa. In South Africa Selected Issues Paper (IMF Country Report No. 14/339). Washington, D.C.: Die Internasionale Monetêre Fonds: