A Tale of Two Models: Comparing structuralist and neoclassical computable general equilibrium models for South Africa

This paper compares two working models of the South African economy, an orthodox, neoclassical computable general equilibrium model in which savings drive investment, and a more structuralist, eclectic, model for which there is an independent investment function. Both models are calibrated to the same social accounting matrix. Comparative statics of simplified prototype models are presented and identical simulations with the corresponding applied versions are compared. It is seen that the neoclassical model fully supports the principles of the 'Washington Consensus' while the structuralist model requires a far more heterodox set of policies to avoid slow growth or high inflation.