Modelling the impact of automatic fiscal stabilisers on output stabilisation in South Africa

Abstract

This paper investigates ways in which an efficiency model like DEA Window analysis can be utilised, under strictly defined conditions, to assess the level of efficiency of automatic fiscal stabilisers (AFS). The size of AFS is obtained through gaps in both revenue and expenditures variables such as tax revenue (current tax on income and wealth), social grants/benefits, and compensation of employees. The results obtained support evidence of AFS action between 1991 and 2005 and explain distinct cointegrating vectors that exist between the obtained efficiency scores and some selected variables, such as a corruption perception index (CPI), a conversion factor (exports), and the level of openness in the economy.