Cyclicality of Revenue and Structural Balances in South Africa

September 1, 2010

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper applies a disaggregated method for the calculation of the cyclical component of the budget balance for South Africa with an emphasis on the effect of commodity and asset prices, and credit cycle. Results show that the cyclicality of tax revenue is mostly explained by the variations in tax bases. Change in the credit to private sector also has some affect on the revenue performance; however, asset and commodity prices are not significant in explaining the deviation of revenue from its trend. Nonetheless, quantitative effects of these prices are subject to assumptions used for long-run price levels.

Subject: Asset prices, Commodity prices, Fiscal policy, Fiscal stance, Output gap, Prices, Production, Revenue administration

Keywords: Africa, aggregate revenue, Asset prices, commodity and asset prices, Commodity prices, credit growth, cyclical revenue fluctuation, Fiscal stance, Output gap, price deflator, revenue cycle, revenue data, revenue performance, South Africa, structural balance, tax revenue, tax revenue regression, WP

Pages:
24
Volume:
2010
DOI:
https://doi.org/10.5089/9781455208814.001
Issue:
216
Series:
Working Paper No. 2010/216
Stock No:
WPIEA2010216
ISBN:
9781455208814
ISSN:
1018-5941

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