The Impact of Macro-Economic Policies on the South African Economy: Analysis Based on a Social Accounting Matrix

Abstract

A planning model has been developed for South Africa which can be used to explore or simulate the direct and indirect impacts of a wide range of macro-economic policies and of changing economic and technological conditions on many aspects of the economy. The model is based on the structure of economic interrelationships captured in a social accounting matrix (SAM) of South Africa and has been named the SAMSIM model. A few specific situations concerning the effects of a public works project (PWP), direct versus indirect taxation, and White versus Black consumption patterns are explored Alternative means of financing the PWP are investigated. Deficit financing is seen to provide a strong stimulus for growth and employment generation, and need not be inflationary. Comparisons are made with results obtained for a similar model developed by Wang and Mullins (1988). These are comparable in some respects but also exhibit incompatible characteristics.