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Browsing Economics by Author "Contogiannis, E."
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- ItemThe determinants of self-employment relative to being a wage earner in Ladysmith, KZN(2017) Kumalo, Siboniso Nhlanhla; Kaseeram, I.; Contogiannis, E.Following the unprecedented increase in the self-employment rates in South Africa, the study probes the determinants of self-employment relative to being a wage earner within the context of black owned businesses in Ladysmith, KZN. A questionnaire was administered to 450 respondents comprising 299 gainfully employed and 151 self-employed blacks, using a combination of convenience and snowball sampling for the self-employed and random methods to identify wage/salary earners. The study employed a logistic regression model to estimate the probability of being self-employed relative to being a wage/salary earner focusing on household income per capita, education, age, marital status, family business background, risk propensity, gender and access to finance as independent variables, gathered from the questionnaire, to shed new light on self-employment determinants. The study used the Hosmer-Lemeshow test to assess goodness of fit and the Wald test to assess the contribution of individual predictors in the model. Supported by descriptive statistics and chi squared test, the logistic results showed a positive and meaningful relationship between self-employment and age suggesting that as one becomes older each year increases the probability of being self-employed by 3.27%. With regards to gender, the results showed a positive relationship suggesting that being female increases the possibility of being self-employed by 57.35%. On the other hand, marital status results suggested that being single decreases the chances of being self-employed by 55.56% indicating that single people are more likely to be gainfully employed. Furthermore results revealed that an additional year of education increases the possibility of being of self-employed by 13.07%. When a person has a family business background, the possibility of that person being self-employed is higher by 146%, and lastly, increased funding opportunities cause an increase in self-employment by 397%.
- ItemEconomic impact of HIV/AIDS on rural households in KwaDlangezwa(2012) Langeni, Innocentia, Nothando; Contogiannis, E.This study investigates the economic impacts of HIV/AIDS on the rural households in KwaDlangezwa. The study also investigates the hypothesis that Aids has massive economic impact on families infected and affected by HIV/AIDS. At the level of the household, AIDS results in the loss of income, assets, savings and an increase in spending on health care by the households. HIV/AIDS epidemic slows down the pace of economic growth. UNAIDS (2009) estimated that the number of people living with HIV worldwide continued to grow in 2008, reaching an estimated 33.4 million (31.1 million–35.8 million). The total number of people living with the virus in 2008 was more than 20% higher than the number in 2000, and the prevalence was roughly threefold higher than in 1990. South Africa is one of the countries most severely affected by the AIDS epidemic, with the largest number of HIV infections in the world. UNAIDS estimated that in 2009, the total number of persons living with HIV in South Africa was 5.7 million. South Africa’s generalised HIV epidemic is defined as being hyper-endemic due to the high rate of HIV prevalence and the modes and drivers of HIV transmission. Heterosexual sex is recognized as the predominant mode of HIV transmission in the country followed by mother-to-child transmission, and drivers of the epidemic include migration, low perceptions of risk, and multiple concurrent sexual partnership (UNAIDS, 2010). xiii The HIV/AIDS epidemic is a global concern of every country in the world particularly, in most African countries where the spread of the virus is increasing at an alarming rate. Coupled with other socio economic and political problems such as poverty, high fertility, low literacy and, the incidence of HIV/AIDS in most African countries like South Africa is becoming a serious challenge. The rural households are the most affected because of the lack of service delivery. Data is collected using quantitative and qualitative method. Quantitative results are in consensus with qualitative results. Results reveal that seventy one percent (71%) of the respondents believe that AIDS has a negative impact on the level of income, and fifty seven percent (57%) of the respondents believe that AIDS has negative impact on assets and household members who are infected with HIV/AIDS do not get any assistance. The overall results reveal that HIV/AIDS has negative economic impact on the rural household in KwaDlangezwa.
- ItemAn empirical analysis of exchange rate pass-through to prices in South Africa(University of Zululand, 2017) Maduku, Harris; Contogiannis, E.; Kaseeram, I.The South African Reserve Bank (SARB) adopted an inflation targeting monetary policy with the effect from the 2000 in an attempt to curb inflation in the country. The band that was adopted was that of a minimum of 3% and a maximum of 6%. The main problem to the current monetary policy is the monthly inflation and other provincial inflation rates that are sometimes going outside the upper band of the target. Finding the duration taken by the price indices to respond to exchange rate fluctuations took a central interest to this research and also to find out the magnitude of the exchange rate fluctuations that are passed on to prices. This research did a comparative analysis from a SVAR and Recursive VAR to investigate exchange rate pass-through (ERPT) to tradable prices in South Africa for the period 2002-2015. Using monthly data, both estimations find the producer price index as the most contributing factor to inflation with an average of 22% of exchange rate fluctuations passed to prices. The argument behind the high pass-through in producer prices is mainly because of the high volumes of intermediate goods that are imported by the South African producers for local production. The results reveal that the impulse response functions are not very strong but the prices do not take long to respond to any exchange rate changes. We find that prices respond within 2 months to fluctuations in the exchange rate. It takes between 3 to 4 months for other price indices to respond to import prices. Also there is reverse causation on all the variables in the model but the magnitude differs from one variable to another. Large and persistent ERPT especially on import and producer prices accompanied by high wage demands and a depreciating currency are worrying factors for South Africa. Monetary policy makers are advised to put in place targeting measures on the exchange rate if inflation could be kept under control. Since inflation expectations play a pivotal role on inflation, it is wise for the upper band to be increased probably by 1% so that high inflation expectations that are influenced by inflation that is sometimes going outside the upper band can be held down.
- ItemEmpirical analysis of money demand in South Africa (1980-2011): an autoregressive distributed lag approach.(University of Zululand, 2013) Mutsau, Isaac; Kaseeram, I.; Contogiannis, E.The estimation of money demand function and determination of its stability is common practice in macroeconomic research due to its significance in the transmission mechanism of monetary policy. This study investigates stability of the long-run money demand for both narrow and broad money in South Africa over the period 1980 to 2011, using expenditure components of Gross Domestic Product (GDP) as scale variables, the real effective exchange rate, inflation and a representative short-term interest rate as opportunity cost variables. The bounds testing procedure, a single equation cointegration technique, is applied to test for cointegration between the endogenous and exogenous variables. To achieve this objective, the Autoregressive Distributed Lag (ARDL) approach (Pesaran et al., 2001) is employed to estimate the long-run equilibrium relationships between real money balances and disaggregated expenditure components of Gross Domestic Product in addition to the interest rate and inflation as variables reflecting the opportunity cost of holding money. Both short-run and long-run relationships are explored to understand the dynamic adjustments through the error correction mechanisms of the model. The CUSUM and CUSUMQ tests (Brown et al., 1975) are applied to examine the possibility of structural breaks in money demand functions, as well as parameter stability. Results indicate that M2 and M3 money aggregates are cointegrated and are maintaining a stable long-run relationship with their determinants. However, M0 and M1 monetary aggregates are found not co-integrated with their determinants. Different expenditure components have different influence on the demand for broad money. This research also gives evidence that demand for broad money has remained stable despite the external shocks experienced in the previous years due to the global economic meltdown.
- ItemEssays on the impact of inflation targeting in South Africa(2012) Kaseeram, Irrshad; Contogiannis, E.Through the literature review this study points out the debate as to whether inflation targeting (IT) has been effective in anchoring expectations, stabilizing output, reducing the inflation rate, and the volatility and persistence of inflation, is still an open question. Further, this study asserts that perhaps the perceived success of IT is nothing more than just ‘conservative window dressing’ (ie., raising interest rate to maintain low inflation at the expense of output losses). In the form of three separate essays this study attempts to contribute to the above debate about the effectiveness of IT and the conservative monetary policy assertion. The first essay undertakes a detailed econometric investigation into whether the inflation expectations of the various market players (viz., financial analysts, business executives and trade unionists) are anchored to an inflation target, and if so then it would imply that they find the central bank’s IT framework to be credible (termed the credibility proposition). However, if expectations are not anchored to the target then it implies that agents do not find the central bank’s IT policy to be credible. When the inflation and expectations data are stationary then the credibility proposition can be tested using the Cruijsen and Demertzis, (2010) vector autoregression framework, but when the mentioned data are nonstationary, as is the case of South Africa, then the Johansen (1991) cointegration and vector error correction modelling techniques must be used. The study found that only financial analysts tend to find the South African Reserve Bank’s IT framework to be credible while business executives and trade unionists do not find this policy framework to be credible. The second essay attempts to investigate whether inflation volatility and inflation persistence have declined since the adoption of IT, since IT purports to anchor expectations around a target or target band, thereby reducing inflation volatility and inflation persistence. This study contributes to the debate by examining South Africa’s IT performance in respect of inflation volatility and inflation persistence using the generalized autoregressive conditional heteroscedasticity (GARCH), GARCHM (-in mean) and AR (2) (second order autoregressive model) methodologies. In order to avoid erroneous conclusions the study accommodates for structural breaks in the data using the Bai and Perron, (2003), the Lee and Strazicich (2003), the Andrews and Ploberger (1994) and the Lumsdaine and Papell (1997) unit root tests. The study found no significant changes in inflation volatility and persistence over the pre and post IT periods. The third essay estimates forward-looking hybrid Taylor-type reaction functions using the general method of moments (GMM) technique. as was estimated by Clarida, Gertler and Gali (1998), Gerdesmeier and Roffia (2003), Hayo and Hofmann (2005). The results showed that over the IT period, South Africa followed a conservative (high weighting on inflation reduction and low weightings on output deviation in setting the repo rate) predictable monetary policy. The study also presented case studies of the IT experiences of Chile, Brazil, Turkey and compared them to South Africa. The findings suggest that in all the countries, IT is effective in reducing inflation and achieving sustainable economic growth. However, whether IT is effective in reducing inflation expectations, volatility and persistence and stabilizing output close to its normal levels, from a statistical perspective is still an open question. A synthesis of the three essays suggest that the authorities have not succeeded in convincing price and wage setters that IT can credibily maintain inflation within the target band, hence inflation and inflation volatility persists. Moreover the success of inflation targeting is hinged on raising the repo rate to prevent the second round effects of supply shocks (eg., oil price hikes, exchange depreciations) from manifesting itself, however the effect of this policy stance is at the expense of output stabilization, which poses challenges for the transformation of monetary policy in the future.
- ItemThe estimation of the Cobb- Douglas production functions for the South African agricultural sector and a selection of its subsectors.(University of Zululand, 2015) Hlongwa, Lungani; Kaseeram, I.; Contogiannis, E.The main focus of this study is to apply a Cobb-Douglas production function to estimate agricultural production functions at both the aggregate and sub-sectorial levels in order to determine the productivity of land, labour and capital, while maintaining rainfall levels as a control variable for the South African economy over the period from 1975 to 2012. This task will be accomplished by applying cointegration techniques, Johansen’s (1988) vector auto regression (VAR) methodologies and error correction mechanisms to capture short run disequilibrium between agricultural production function and its determinants. Specifically the main objective of this study is to derive plausible estimates of the marginal productivities of land, labour and capital. Moreover this study will attempt to establish the nature of the long and short run relationships between land, labour and capital in the aggregate sector and the maize and wheat subsectors. However before the empirical analysis is conducted the study will first attempt to explain the relevant theories of growth and, which will then serve as a basis for examining South African growth experiences and policy prescription more specifically in the agricultural sector, for the purposes of understanding the South African agricultural sector growth phenomenon and choosing appropriate determinates of agricultural production growth. The findings of the VECM, FMOLS, CCR and DOLS methods strongly suggest that the marginal productivities of capital and land were positive while that of labour was negative; all the coefficients were statistically significant except for capital. Additionally the marginal productivity of land exceeded unity , thus implying that land productivity exhibits increasing returns to scale which confirms the trends that the number of farms have been decreasing but their land acreage have been increasing. While the negative marginal productivity of labour suggests that the South African aggregate agricultural sector is overwhelmed by severe diminishing marginal returns to labour, which explains the observed persistent decline in employment in the agricultural sector over the past three decades or more.
- ItemThe impact of infrastructure investment on economic growth in South Africa(University of Zululand, 2015) Vukeya, Veron; Kaseeram, I; Contogiannis, E.The South African government has, in recent years, set up various economic and social infrastructure programmes in an attempt to curb the country’s infrastructure deficit and hence accelerate economic growth and employment creation as prescribed by the national growth path (NGP), national development plan (NDP) and other authoritative documents. This research study uses single and multiple equation methodologies to provide an econometric assessment of the impact of government economic and social infrastructure investment on South African economic growth for the period 1983 – 2013. This study does so by ascertaining the relationship between these two forms of infrastructure investment and economic growth and analysing their impact on other macroeconomic variables such as private investment and employment. Overall findings reveal that in the long run, economic infrastructure investment is an important determinant of growth while social infrastructure investment crowds-out economic growth and private investment. The causality patterns found in this study suggest that growth tends to cause economic infrastructure investment. Conversely, no causal linkages were detected between growth and social infrastructure investment.
- ItemA VAR analysis of South Africa’s monetary policy with particular reference to inflation targeting policy(University of Zululand, 2013) Oni, Comfort; Kaaseram, I.; Contogiannis, E.The aim of this study is to analyze the response of South Africa‘s key macroeconomic variables to the monetary policy shocks from 1987 to 2009 through the use of variance autoregressive (VAR) technique developed by Sims (1986). The data is analyzed for pre-and post inflation targeting period as the research aims to establish how these macroeconomic variables have responded to the monetary shock under each of the periods. The literature is mixed in regard to the benefits of IT on the South African economy; this study attempted to shed further light on this matter and also explore whether the monetary policy currently used in South Africa is actually the most appropriate policy. Impulse reaction functions (IRF) and variance decomposition in the context of VAR are used to estimate the monetary shocks on the South African economy for the two periods. In addition, cointegration analysis and the vector error correction model (VECM) method was employed in the second phase of the study. The empirical findings from the IRF, variance decomposition as well as cointegration analysis however confirms that the monetary shock has more impact on the nominal variables more than on the real variables.