National Saving And Fiscal Policy In South Africa: An Empirical Analysis

Concerns have been raised in regards to how to redress a decreasing trend in national saving in South Africa. A number of authors have suggested that redressing government saving, through fiscal discipline characterized by a low government budget deficit ratio, should be a key in redressing the national saving trend in South Africa. In order to assess this hypothesis, this paper studies the dynamics of gross national saving, government saving and private saving in response to fiscal shocks, by using the Impulse Response Functions (IRF) obtained from the Structural Vector Autoregressive (SVAR).