ERSA’s Working Paper Series was established in 2004 with the first Working Paper being published in February of 2005. The Working Paper Series remains one of the central mechanisms through which ERSA supports the quantity, quality and relevance of economic research produced in South Africa.
Poverty Reduction Under Structural Constraints: Growth, Inequality and Policy Trade-Offs in South Africa
South Africa faces the intertwined challenges of weak economic growth, persistently high poverty and extreme income inequality. This paper assesses what levels of poverty reduction and distributional change are realistically achievable over the next fifteen years under plausible growth scenarios, given binding structural and fiscal constraints. Using a stylised log-normal income distribution calibrated to 2023 data, the analysis simulates poverty outcomes under sustained per capita growth rates of 1–2 per cent (consistent with GDP growth of 2–3 per cent) and cumulative Gini reductions of 0, 2, 4 and 6 points. The results reveal a clear asymmetry. Moderate growth generates substantial reductions in poverty at both lower- and upper-bound poverty lines, while plausible medium-term reductions in inequality make a smaller incremental contribution. van der Berg, S. (2026). Poverty Reduction Under Structural Constraints: Growth, Inequality and Policy Trade-Offs in South Africa (ERSA Policy Paper No. 48). Economic Research Southern Africa. https://doi.org/10.71587/rr3y8746
Copyright (c) 2026 https://creativecommons.org/licenses/by/4.0
Power, People, and Productivity: Skills Development for South Africa’s Just Energy Transition
Just over 60 million people call South Africa home; at the same time, the country faces an unemployment rate of 33.2%, alongside persistent inequality, entrenched poverty, and economic stagnation. The Just Energy Transition (JET) presents a critical opportunity to address some of these structural challenges. While the JET is not a panacea, it offers scope to simultaneously strengthen energy security, stimulate the economy and job creation, and address long-standing skills constraints. In what the International Energy Agency terms the “Age of Electricity”, global demand for clean energy is accelerating, and it will not wait for South Africa’s education and skills systems to adjust. Failure to proactively align human capital development with the energy transition risks entrenching existing inequalities and creating new ones, undermining long-term inclusive growth. This paper argues that skills debates surrounding the energy transition must place greater emphasis on basic education, alongside post-school education and training, despite its relative neglect in the existing literature. This paper employs a qualitative policy analysis and develops a conceptual framework linking basic education, skills formation, labour market outcomes, and the energy transition to economic growth. A constraint-based diagnostic approach is used to identify key bottlenecks in South Africa’s energy skills pipeline. As a result, this paper identifies four interlinked reform levers. First, it recommends a clearly mandated convening authority to align education, skills, energy, and labour-market policies. Second, it highlights basic education as a foundational constraint, calling for the integration of JET-relevant content to expand the future skills pipeline. Third, it points to misalignment in post-school education and training, motivating reforms to SETAs and deeper public-private collaboration. Finally, it emphasises the need for stronger and more decentralised industry participation in skills development. Together, these recommendations emerge from tracing how weaknesses in education, skills formation, and coordination shape employment outcomes, energy security, and long-run economic growth under the energy transition. Inglesi-Lotz, R., Kritzinger, W., Nkuna, V., & Nqosa, T. (2026). Power, people, and productivity: Skills development for South Africa’s just energy transition (ERSA Policy Paper No. 47). Economic Research Southern Africa. https://doi.org/10.71587/2tx4qz05
Fiscal r-star and macroeconomic coordination in South Africa
South Africa’s fiscal and monetary authorities now operate in a more difficult environment than they did a decade ago. Debt has risen, growth has disappointed, and sovereign risk premia have remained elevated. At the same time, inflation has fallen and the policy debate has shifted toward whether lower inflation can support growth. Our research shows that these developments are tightly connected. This brief is based on the ERSA working paper and a forthcoming South African Journal of Economics article, “Monetary-fiscal coordination in South Africa: Aligning the stars.” The paper introduces a new policy concept for South Africa: the fiscal-neutral real interest rate, or fiscal r-star. This is the real interest rate consistent with keeping the debt-to-GDP ratio stable for a given primary balance, growth rate, and debt stock. We compare this with the usual monetary r-star, the real interest rate consistent with inflation at target and output at potential.
The Structural Change Emergency in South Africa
In the decade up to 2019, South Africa underwent what may reasonably be described as a structural change emergency. Aggregate annual labour productivity growth was negative on average across the decade; this was accounted for by negative or negligible efficiency gains within all major sectors, and by growth-reducing structural change overall. Growth-reducing structural change implies that labour moved on average from more-to-less productive sectors. The underwhelming structural change and sectoral productivity growth performance of South Africa in this period stand out when compared with earlier periods in post-apartheid South Africa and in international comparison with Africa and the BRICS. Since 2020, there are green shoots of recovery, implying that the structural change emergency may be over. Nevertheless, this recovery is both non-transformative and highly unbalanced sectorally, although it is quite balanced geographically across the provinces of South Africa. The recovery is driven entirely by productivity growth or labour reallocation within, and reallocation of labour towards, the services sector. Recent evidence in the academic literature suggests that services can drive rapid growth through structural transformation, but the current situation in South Africa where non-services sectors are still acting as a drag on growth remains clearly sub-optimal. Hamilton, C., & Mensah, E. (2026). The structural change emergency in South Africa (ERSA Policy Paper No. 46). Economic Research Southern Africa. https://doi.org/10.71587/7tgeja02
Over the past decade, South Africa has experienced a pronounced and persistent decline in fixed investment, with real gross fixed capital formation contracting and capital stock growth slowing to near zero. Investment to GDP fell to 13.9% in 2025, excluding COVID the worst ratio since 1950. This paper documents the stylised facts of the investment slowdown and examines its underlying drivers. It argues that weak business confidence, elevated political and economic uncertainty, rising long-term real interest rates associated with fiscal deterioration, and unproductive public-sector investment have jointly constrained private capital formation. Using survey-based measures of sentiment and uncertainty, together with simple econometric tests, the paper finds evidence of a meaningful relationship between business confidence and private-sector investment, including indications of Granger causality and cointegration. At the same time, higher borrowing costs and limited evidence of fiscal crowding-in have further dampened capital deepening. The consequence has been stagnant capital accumulation, declining capital productivity, and subdued economic growth. The paper proposes a focused reform agenda aimed at restoring a virtuous cycle between confidence, investment and growth. Scenario analysis suggests that under a credible reform and fiscal consolidation pathway, growth could rise toward and potentially exceed 3 percent, materially improving employment and poverty outcomes. Havemann, R. (2026). Reigniting investment in South Africa (ERSA Policy Paper No. 45). Economic Research Southern Africa. https://doi.org/10.71587/7egp8e64
Enhancing merger control to support economic growth in South Africa
Competition policy – and merger control in particular – is an important policy to support productivity and innovation, investment, and long-run economic growth. This paper argues that merger control, when compared to anti-cartel enforcement, has become dominated by discretionary policy preferences fuelled by the expansive ‘public interest’ provisions of the amended Competition Act. Drawing on theoretical and empirical evidence, the paper identifies ministerial discretion, an outsized and opaque role for public interest concerns and the introduction of “vulnerability” as factors that limit the focus of merger control on competition matters. Boshoff, W. (2026). Enhancing merger control to support economic growth in South Africa (ERSA Policy Paper No. 44). Economic Research Southern Africa. https://doi.org/10.71587/4z4q0k71
Understanding South Africa’s mining slowdown
South Africa’s mining sector presents a significant economic paradox: despite possessing a mineral endowment of global significance—particularly in platinum group metals (PGMs), manganese, and chromium—the industry has experienced a profound structural decline since the 1970s. This paper investigates the binding constraints that have prevented the sector from capitalising on global commodity booms and the green energy transition. Applying the Growth Diagnostics framework developed by Hausmann, Rodrik, and Velasco (2005), the study argues that the sector's decline is primarily endogenous, driven by human-made constraints rather than geological exhaustion. Botha, R. (2026). Understanding South Africa’s mining slowdown (ERSA Policy Paper No. 43). Economic Research Southern Africa. https://doi.org/10.71587/0jznvd71
Why Higher Trend Inflation Makes Monetary Policy More Costly in South Africa
Most inflation-targeting central banks target a small but positive underlying rate of inflation, often called trend inflation1. Yet its appropriate level remains uncertain. The extended deliberation in South Africa to move from a 3 - 6% target band to a 3% point target (with a ±1% tolerance band) illustrates this tension. In our working paper (Trend Inflation and the Costs of Price Dispersion in a Fiscal DSGE Model), we examine the role of trend inflation in an economy and argue that, all else equal, lower trend inflation is better for the economy.
Quantifying the impact of international food price spillovers on South Africa domestic market: Short- and long-term dynamics and transmission channels
This study quantifies the degree of return and volatility risk transmission from the global food market to the South African food market for the period from January 2010 to December 2023. It employs the TVP-VAR-based frequency connectedness to quantify and observe the evolution of both return and volatility risk transmission from the global food market to the South African food market. It also uses the quantile regression technique to identify the main driving factors of both return and volatility spillover from the international food market into the South African market. Results show a slightly higher level of return connectedness than volatility connectedness among the food markets and that shocks from the global food market dominate shocks from the South African food market. While return shocks appear to be more of a short-term phenomenon, volatility shocks are mainly driven by long-term factors. The degrees of shocks transmission are significantly higher when we use the five main global food types (meat, dairy, cereals, oil, and sugar) instead of the composite index of global food prices, especially in terms of volatility. In addition, an increase in geopolitical risks, equity market returns in South Africa, oil prices, and the COVID-19 pandemic were the main drivers of the transmission of return risk from the global food market to the South African food market. However, the depreciation of the Rand value decreased the spillover level. Regarding volatility risk transmission, the gold price, the South African equity, and the fixed income market return are the main drivers of volatility shock transmission from the global food market into the South African food market. The study recommends that South Africa strengthen domestic food production and diversify to build resilience against global food market shocks, especially by supporting vulnerable crops like barley, sorghum, and wheat. Policymakers should also implement strategic reserves, develop short-term risk management tools, integrate energy and food policy, monitor financial-commodity market linkages, and apply macroprudential regulations to mitigate the impact of global return and volatility spillovers on local food markets. JEL:C13,C32,E31
Unlocking sustainable and inclusive growth in South Africa: Advancing the electricity reform agenda
South Africa continues to face deep structural bottlenecks to growth, including weaknesses in the business environment, limited workers’ employability and access to jobs, and persistent inefficiencies in key network industries such as transport, water, and electricity. These challenges are underscored in the 2025 Economic Survey of South Africa, released in June 2025. Although notable progress has been made under Operation Vulindlela, significant obstacles remain, including within the electricity sector (OECD, 2025). Electricity is a foundational input for economic activity, central to firms’ production decisions and to the functioning of the broader economy. This note examines how restoring energy security, accelerating renewable deployment, and reforming municipal and pricing structures can stimulate growth and support a just and sustainable green transition.
Copyright (c) 2025 https://creativecommons.org/licenses/by/4.0
Monetary-fiscal coordination in South Africa: Aligning the stars
Monetary-fiscal policy tensions build-up when debt is rising and inflation is falling. The consequence is that either fiscal policy must achieve fiscal consolidation with monetary policy maintaining price stability (passive FP-active MP) or monetary policy must accommodate fiscal policy in debt stabilisation leaving fiscal policy free to achieve its spending and redistribution objectives (passive MP-active FP). We introduce the concept of a fiscal neutral rate (fiscal r-star) into a two-agent new Keynesian dynamic stochastic general equilibrium model estimated with South African data. We show two persistent gaps: (i) monetary r-star exceeds fiscal r-star, indicating a misalignment between monetary and fiscal policy; and (ii) market interest rates exceed fiscal r-star, implying that, without policy action, the risk premium on borrowing will continue to be a drag on growth and debt service costs are likely to crowd out other spending. Our model simulations show that the optimal welfare outcomes are achieved by taking steps to align fiscal r-star with monetary r-star, through introducing a credible fiscal anchor.
Nominal versus Real Deposit Dollarization in Zambia: Determinants and Monetary Policy Insights
This study investigates the determinants of deposit dollarization in Zambia after transition of monetary policy to inflation targeting and introduction of a Monetary Policy Rate (MPR). Using quarterly data from 2012 to 2023, two indices of dollarization are constructed — nominal and real (adjusted for exchange rate fluctuations). We find that while nominal dollarization has remained elevated, real dollarization has trended downward over time. Empirical estimates from an autoregressive distributed lag (ARDL) model indicate that nominal dollarization is largely driven by money supply, output, and the exchange rate, whereas real dollarization is determined primarily by output and exchange rate volatility. The MPR exerts a modest but statistically significant effect on nominal dollarization. Impulse responses obtained using local projection framework show that MPR hikes yield short-term reductions in nominal dollarization, whereas exchange rate innovations have a more pronounced and sustained influence over both indices time. These findings underscore the need for coordinated monetary and exchange rate stabilization policies to effectively manage dollarization pressures in developing economies with multiple currencies in circulation.
Deposit dollarization; real and nominal dollarization; monetary policy; Zambia
South Africa's inflation: Monetary or fiscal
Conventional macroeconomics has viewed inflation as a monetary phenomenon through the Quantity Theory of Money. Ever-increasing sovereign debt globally has caused concern among economists. These concerns follow not from the ability of governments to repay their debt, but rather from the impact of sizeable debt portfolios on price levels. The Fiscal Theory of the Price Level epitomizes these concerns, contrasting the traditional view on inflation by arguing that it is a fiscal phenomenon caused by debt issuance without real backing. This study uses this fiscal inflation theory to analyse South Africa's inflation through a fiscal-monetary VAR model, finding that South Africa's inflation dynamics are accurately described by both monetary and fiscal factors, but more so by the latter.
Monetary and fiscal interactions, Fiscal theory of the price level, Inflation
Resolving the friction between Turnbull's (1983) and Klemperer-Meyer's (1989) Nash equilibria in affine supply functions
Turnbull (1983) describes unique symmetric Nash equilibria for supply function competition under demand uncertainty which consist of affine strategies that are nonlinear. For the same economy Klemperer and Meyer (1989) derive unique Nash equilibria that are linear. This note shows that the friction between both results comes from a mathematical error in Turnbull (1983). Correcting this error establishes the same linear Nash equilibria for both models.
Supply function competition; Demand uncertainty; Uniqueness of Nash equilibria
Governance, and regional dynamics of inflation persistence: Evidence from South Africa
Regional inflation patterns within a single economy can have important implications for the effectiveness of fiscal and monetary policy. Yet, much of the existing research has focused on cross-country or monetary union dynamics, under the assumption that intra-country regions are sufficiently homogeneous for national policy to transmit uniformly. This assumption may be particularly problematic in countries like South Africa, where significant regional disparities in economic activity, infrastructure, and governance exist — each of which affects how policy is transmitted to the subnational level. This study uses consumer price index (CPI) data from 27 local municipalities between 2008 and 2023 to examine the extent of variation in inflation and inflation persistence across South African regions. Employing an autoregressive model, the study assesses the role of municipal governance, measured by audit outcomes from the Auditor-General of South Africa, in mediating this persistence. The results indicate marked regional differences in both inflation levels and persistence. Regions with lower economic activity tend to experience higher inflation persistence, suggesting a compounding vulnerability for already marginalised populations. Governance quality appears to mitigate inflation persistence, particularly in market-determined prices, while its effect is weaker in administered price categories, likely due to slower adjustment processes. The findings contribute to understanding the sub-national drivers of inflation and inform the development of targeted policy interventions to address regional disparities and enhance overall economic stability in South Africa.
Macroeconomic effects of lowering South Africa’s inflation target: An SVAR analysis
The paper estimates the macroeconomic effects of shifting to a lower inflation target for South Africa, within a Structural Vector Autoregressive (SVAR) framework identified using the Max Share Identification strategy and estimated with Bayesian methods. We find that a decrease of 1% (in terms of percentage points change) in the inflation target leads to output expanding over the next few quarters after an initial muted response, with a peak of about 1.20% after about two years and remains positive and statistically significant for nearly three years after the shock. We also observe a short and medium-term co-movement of inflation and the nominal policy rate in response to the inflation target shock, reminiscent of Neo-Fisherian effects. However, unlike most of the findings in the literature whereby the effects of inflation target shocks are persistent, we find that they are less persistent for the South African economy with this finding being robust to using an alternative identification approach. We find a strongly operative sovereign credit risk and asset price channels through which lower inflation target increases output. These findings are relevant for emerging markets where sovereign credit risks tend to be elevated compared to developed economies.
Institutional Quality: A hurdle or a catalyst to eliminating energy poverty in sub-Saharan Africa?
Energy poverty is considered a significant challenge in sub-Saharan Africa (SSA), significantly impeding economic growth and social development. This study examines the role of institutional quality in addressing energy poverty across 45 SSA countries from 2002 to 2022, focusing on two critical indicators: access to clean cooking technologies and fuels and access to electricity. This study explores six institutional quality indicators—Control of Corruption, Regulatory Quality, Government Effectiveness, Rule of Law, Voice and Accountability, and Political Stability—and finds that corruption control is a key factor in reducing energy poverty across various income groups. Political stability is also linked to lower access to clean cooking, while the rule of law supports electricity access. Additionally, urbanisation is identified as a crucial factor for improving electricity access. This study underscores the central role of institutional quality in addressing energy poverty in SSA and calls for further research that includes infrastructure investment, affordability, and sustainability to better understand the complexities of energy access challenges in SSA.
Time to rethink skills development An independent review of the Sector Education and Training Authority system
South Africa’s persistent skills shortage remains a critical barrier to economic growth. The Sector Education and Training Authority (SETA) system was a well-intentioned state-led intervention 0established to address critical skills shortages. The report finds that the system has proven to be inefficient and ineffective and proposes moving to a more effective approach that prioritises skills for growth.
Public Transport, Sexual Harassment, and Social Norms: Some Evidence from South Africa
<span style="font-size: 11.0pt; line-height: 107%; font-family: 'Calibri',sans-serif; mso-ascii-theme-font: minor-latin; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin; mso-bidi-font-family: 'Times New Roman'; mso-bidi-theme-font: minor-bidi; mso-ansi-language: EN-ZA; mso-fareast-language: EN-US; mso-bidi-language: AR-SA; mso-bidi-font-weight: bold;">South Africa has been experiencing rapid urbanisation, with 8 in 10 people expected to be living in urban areas by 2050. This structural change necessitates improved coverage and frequency of transport systems in the country, especially since a significant proportion of the population relies on public transport. According to existing evidence, women and men have different experiences with the usage of public transport. For example, women tend to have non-linear travel patterns (“trip-chains”) between home, work, childcare and shopping, whereas men tend to have more linear travel patterns from home to work and back. This trip-chaining makes transport more costly for women. Women are also more likely to be travelling with babies and children, which means they require safety and easy accessibility on public transport.
Home Foreclosure Discounts in Auctions Without Reserve Prices: Evidence from Cape Town
In South Africa, when a homeowner defaults on their mortgage, the lender may obtain a court order to repossess the property. Subsequently, the property is sold through a public auction at the local sheriff’s office. While it is common for auctioned properties to sell at a discount, global evidence indicates that these discounts are usually small, due to legislative safeguards at auctions. The most common of these safeguards is the use of reserve prices at auctions, which set a minimum acceptable bid and are typically based on the outstanding mortgage balance, unpaid taxes, or the property's appraised value. These safeguards are crucial, as economic theory suggests that without them, prices for properties sold at auction tend to be lower than if the same property were sold on the non-auction market.
Trend Inflation and the Costs of Price Dispersion in a Fiscal DSGE Model
Most inflation-targeting frameworks implicitly endorse a positive trend inflation rate as desirable. Yet, consensus on an optimal inflation target remains elusive, particularly for economies such as South Africa, which employs a broad target band of 3% to 6%. Using a medium-scale New Keynesian DSGE model with fiscal dynamics, this paper demonstrates that even moderate levels of trend inflation (between 4% and 6%) entail substantial real resource costs due to increased price dispersion. Elevated trend inflation amplifies resource misallocation between supply and demand sectors, flattens the Phillips curve, increases markup variability among firms, and weakens the economy’s responsiveness to shocks. Consequently, steady-state output declines, welfare losses escalate nonlinearly, and the sacrifice ratio—measured as the output cost of reducing inflation—rises markedly. Bayesian estimation on South African data (2000Q1–2024Q2) confirms that excluding trend inflation in a Taylor rule framework exaggerates policy inertia and understates the aggressiveness required to stabilise inflation. Allowing trend inflation to drift toward the upper bound of the target range thus increases macroeconomic volatility and erodes welfare. In contrast, anchoring inflation expectations closer to 3% mitigates price dispersion, restores a steeper Phillips curve, and improves macroeconomic welfare outcomes.
The Consequences of United States Tariff Increases for South African Exports
The imposition of widespread import tariffs by the United States (US) under President Donald Trump in 2025 has disrupted international trade patterns and poses serious risks to South Africa’s (SA’s) exports. These tariffs build on policies from President Trump’s first term that targeted steel and aluminium products under Section 232.1 These Section 232 tariffs have since been raised to 50% and expanded to also cover additional derivative products. Automobiles and parts (25% tariff), as well as copper products (50% tariff) have also been targeted this year. Earlier this year (2nd April), President Trump also invoked the International Emergency Economic Power Act (IEEPA) to impose a 10% reciprocal tariff on imports from most countries, with country-specific (30% for SA) reciprocal tariffs to kick in from the 1st of August, unless an alternative agreement is negotiated. Some countries, including United Kingdom (UK), European Union (EU), Japan, Indonesia, Philippines and Vietnam have made progress in negotiating trade deals that reduce reciprocal tariff rates, and in the case of Japan, EU and UK, lower tariffs (10% to 15%) on vehicles. Although, these don’t directly impact SA, they have an indirect effect by reducing the competitive advantage of SA exporters in the US market. The tariff measures pose serious risks to South African exports, undermining the competitiveness of key sectors and eroding the benefits of preferential access under the African Growth and Opportunity Act (AGOA).2 This brief quantifies the likely impact on South African exports, and recommends coordinated policy responses to the various tariff increases in 2025.
Do opinions on fair salaries vary with gender in South Africa?
This study uses two survey experiments to test whether South African respondents perceive fair salaries differently for male and female workers in identical roles. Respondents were randomly assigned to evaluate vignette-based job descriptions in which only the character’s gender (indicated by names) varied. Across both experiments (one using open-ended salary estimates and the other a closed-ended comparison), we find no evidence of gender bias in wage fairness perceptions. Respondents did not assign lower pay to women than to men, even after introducing signals of productivity or caregiving responsibilities. Instead, salary judgments varied by job type, with lower pay suggested for roles traditionally held by women (cashier and nurse), regardless of the character’s gender. These results suggest that public attitudes may support pay equity, with persistent gender wage gaps in South Africa perhaps rooted in occupational sorting and structural inequalities, rather than attitudinal bias.
Gender bias; gender wage gap; fair wage perceptions
Trade Turbulence: The Consequences of United States Tariff Increases for South African Exports
The imposition of widespread import tariffs by United States (US) President Donald Trump in 2025, invoking powers under Section 232 and the International Emergency Economic Powers Act (IEEPA), has introduced significant disruptions to global trade. South Africa (SA) is among the countries directly affected, with major export products such as vehicles, steel, and aluminium now subject to tariff hikes ranging from 25% to 50%. Additionally, a 10% reciprocal tariff on all imports into the US has been imposed, with a 30% rate scheduled to take effect from 1 August 2025 unless an alternative agreement is negotiated. These measures pose serious risks to South African exports, undermining the competitiveness of key sectors and eroding the benefits of preferential access under the African Growth and Opportunity Act (AGOA). This paper utilises multiple data sources, including the United States International Trade Commission (USITC), UN Comtrade, South African Revenue Services (SARS) and the World Trade Organisation (WTO) - Organisation for Economic Co-operation and Development (OECD) Balanced Trade in Services (BaTiS) database, to conduct a comprehensive analysis of the implications of the recent US tariff increases for South African exports. The analysis is carried out with an in-depth examination of bilateral trade between the US and South Africa, a detailed assessment of the tariff proclamations that have altered US duties on South African imports, and a simulation of the potential impact of these tariff changes on South Africa’s exports both to the US and to third country markets, specifically Sub-Saharan Africa (SSA).
Digital Infrastructure and Local Economic Development: Early Internet in Sub-Saharan Africa
We investigate the impact of early internet availability at basic speeds on local economic development in remote areas of developing countries by analyzing nighttime light emissions across towns in Sub-Saharan Africa. Using a difference-in-differences approach, we exploit submarine cable arrivals, which established countrywide internet connections, and the rollout of the national backbones, which defines internet access within countries. Estimating on incidentally connected mid-sized towns, we find that early internet availability increases nighttime light intensity by 10 percent. We consider increased employment as the main explanation. Our findings highlight the importance of closing the digital divide for regional development.
Strategic market games with interim price information
Is it possible to incorporate the rational expectations concept of interim price information from competitive equilibrium models into simultaneous move games? In addressing consistency and measurability issues that arise from the "chicken-egg" problem of rational expectations, strategic market games with interim price information do exactly that. In these non-Bayesian games informed traders simultaneously submit their linear demand-schedules to a Walrasian auctioneer after they have observed their private signals and their interim price information. I show that a specific class of Bayesian Nash equilibria from Bayesian market games (Kyle 1989; Vives 2011) carries over to 'become' Nash equilibria of strategic market games with interim price information. I also show that conditioning on interim price information may give rise to Nash equilibria that support price-collusion between informed traders against a liquidity trader (e.g., the government in a procurement situation).
Rational expectations; Bayesian Nash equilibria; Measurability; Price-collusion
Financial stability under climate stress: Empirical evidence from Namibia
Climate change has emerged as one of the defining risks in recent years. These risks are associated with economic losses and, eventually, the financial system's stability. This paper empirically examines the impact of climate change on financial stability in Namibia. This study employs a Nonlinear Autoregressive Distributed Lag (NARDL) approach to examine how climate change asymmetrically affects the stability of Namibia’s financial system, using quarterly data from 2009 to 2023. The findings reveal that fluctuations in temperature and rainfall have a detrimental asymmetric effect on financial stability. Interestingly, both increases and decreases in CO2 emissions are associated with improvements in financial stability. Therefore, the study recommends the integration of climate-related risks into financial institutions’ risk assessment frameworks and the adoption of long-term risk monitoring and mitigation strategies. Furthermore, the study also recommends that regulators should conduct climate stress testing to assess the resilience of the financial system stability under varying climate scenarios.
asymmetric autoregressive distributed lag models
Macroeconomic Economics and Climate Change
Internal Markets and M&A Efficiency Gains: Evidence from Bank Branch-level Data
We study how firms reallocate internal resources after an M&A operation. We focus on the banking sector and leverage matched employee-branch data and branch-level financial information. Firms use the enlargement of internal labor and capital markets triggered by the M&A to reallocate resources within the organization. Labor and internal funds are reallocated to acquirer branches. Restructuring enhances profitability at both acquirer and target branches, even after accounting for local market power gains. We show that these effects are more prominent in municipalities where the consolidated bank had larger local internal labor markets at the time of the consolidation.
Unravelling the spatiotemporal dynamics of unemployment rates in district municipalities in South Africa: A disaggregated analysis for informed policymaking
Statistics South Africa serves as a crucial source of national and provincial data. However, obtaining detailed estimates of the unemployment rate at more localized levels often poses challenges due to insufficient sample sizes for reliable estimates. This issue is further complicated when data is disaggregated by gender and age groups. This study utilizes a spatiotemporal small area estimation technique to address these challenges. This approach combines spatial and temporal dimensions, employing data from the Quarterly Labour Force Survey and the 2016 Community Survey. The results indicate that women encounter greater barriers to employment than men. Additionally, unemployment rates are notably high among the youth age groups. The study also reveals a substantial gap between urban and rural districts in South Africa. These findings are vital for identifying districts and demographic groups with high unemployment rates. This information can inform targeted and effective policy measures to reduce unemployment and improve job opportunities.
Competition Policy in South Africa: From 1994 to Now
This paper examines the evolution of South African competition policy since the Competition Act of 1998, focusing on merger control and anti-cartel enforcement. Using a Bayesian decision-theoretic framework, the analysis evaluates whether enforcement trends are driven by research and policy experience or by shifting policy preferences. The findings reveal two divergent paths: merger control has become significantly more interventionist with broader theories of harm, largely driven by changing policy preferences rather than empirical evidence; meanwhile, anti-cartel enforcement expanded rapidly before stabilising, with its growth primarily supported by learning effects and international practices, though recent novel interpretations of collusion also reflect preference shifts. The paper identifies tensions between these approaches—one evolving based on economic literature and international precedent, the other shaped by policymaker preferences. It concludes that competition policy dominated by preferences rather than systematic, evidence-based evolution may undermine effective competition enforcement, even when pursuing broader objectives beyond economic efficiency.