Current account sustainability: evidence from South Africa

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dc.contributor.advisorKahn, Brianen_ZA
dc.contributor.authorNorth, Andrewen_ZA
dc.date.accessioned2015-02-17T13:00:02Z
dc.date.available2015-02-17T13:00:02Z
dc.date.issued1999en_ZA
dc.descriptionBibliography : p. 83-88.en_ZA
dc.description.abstractThis paper investigates a set of "leading indicators" behind large and persistent reductions ('reversals') in South Africa's current account. It begins by providing a theoretical analysis of current account sustainability based on the intertemporal optimisation of consumption, saving and investment decisions. Drawing on these theoretical concepts, a non-structural approach is then adopted in considering a broad range of indicators that are instructive in evaluating the sustainability of current account deficits. In particular, a country's macroeconomic structure and policy, its external position, and other factors such as expectations, socio-political stability and credibility, are identified as important. Based on event study methodology (Eichertgreen et al, 1995) and work by Milesi-Ferretti and Razin (1997, 1998), a multivariate probit model for South Africa's current account 'reversals' is estimated. Using quarterly data from 1965 to 1996, a binary dependent variable is constructed and used to analyse the impact of various theoretically important variables. The results show that South Africa's current account reversals have been influenced mainly by changes in the country's external macroeconomic environment. These include increases in the OECD economic growth rate, improvements in the country's terms of trade (especially through rises in the dollar gold price), and increasing levels of foreign debt. Reversal periods are typically also associated with rising levels of exports and falling levels of imports. While developments on the capital account were expected, prime facie, to have had a significant impact on the current account, this is not borne out well in the regression results. FDI flows, however, are found to be a statistically significant indicator of current account reversals over the sample period.en_ZA
dc.identifier.apacitationNorth, A. (1999). <i>Current account sustainability: evidence from South Africa</i>. (Thesis). University of Cape Town ,Faculty of Commerce ,School of Economics. Retrieved from http://hdl.handle.net/11427/12509en_ZA
dc.identifier.chicagocitationNorth, Andrew. <i>"Current account sustainability: evidence from South Africa."</i> Thesis., University of Cape Town ,Faculty of Commerce ,School of Economics, 1999. http://hdl.handle.net/11427/12509en_ZA
dc.identifier.citationNorth, A. 1999. Current account sustainability: evidence from South Africa. University of Cape Town.en_ZA
dc.identifier.ris TY - Thesis / Dissertation AU - North, Andrew AB - This paper investigates a set of "leading indicators" behind large and persistent reductions ('reversals') in South Africa's current account. It begins by providing a theoretical analysis of current account sustainability based on the intertemporal optimisation of consumption, saving and investment decisions. Drawing on these theoretical concepts, a non-structural approach is then adopted in considering a broad range of indicators that are instructive in evaluating the sustainability of current account deficits. In particular, a country's macroeconomic structure and policy, its external position, and other factors such as expectations, socio-political stability and credibility, are identified as important. Based on event study methodology (Eichertgreen et al, 1995) and work by Milesi-Ferretti and Razin (1997, 1998), a multivariate probit model for South Africa's current account 'reversals' is estimated. Using quarterly data from 1965 to 1996, a binary dependent variable is constructed and used to analyse the impact of various theoretically important variables. The results show that South Africa's current account reversals have been influenced mainly by changes in the country's external macroeconomic environment. These include increases in the OECD economic growth rate, improvements in the country's terms of trade (especially through rises in the dollar gold price), and increasing levels of foreign debt. Reversal periods are typically also associated with rising levels of exports and falling levels of imports. While developments on the capital account were expected, prime facie, to have had a significant impact on the current account, this is not borne out well in the regression results. FDI flows, however, are found to be a statistically significant indicator of current account reversals over the sample period. DA - 1999 DB - OpenUCT DP - University of Cape Town LK - https://open.uct.ac.za PB - University of Cape Town PY - 1999 T1 - Current account sustainability: evidence from South Africa TI - Current account sustainability: evidence from South Africa UR - http://hdl.handle.net/11427/12509 ER - en_ZA
dc.identifier.urihttp://hdl.handle.net/11427/12509
dc.identifier.vancouvercitationNorth A. Current account sustainability: evidence from South Africa. [Thesis]. University of Cape Town ,Faculty of Commerce ,School of Economics, 1999 [cited yyyy month dd]. Available from: http://hdl.handle.net/11427/12509en_ZA
dc.language.isoengen_ZA
dc.publisher.departmentSchool of Economicsen_ZA
dc.publisher.facultyFaculty of Commerceen_ZA
dc.publisher.institutionUniversity of Cape Town
dc.subject.otherEconomicsen_ZA
dc.titleCurrent account sustainability: evidence from South Africaen_ZA
dc.typeMaster Thesis
dc.type.qualificationlevelMasters
dc.type.qualificationnameMAen_ZA
uct.type.filetypeText
uct.type.filetypeImage
uct.type.publicationResearchen_ZA
uct.type.resourceThesisen_ZA
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