The impact of economic shocks in the rest of the world on South Africa : evidence from a global VAR
Loading...
Date
Authors
De Waal, Annari
Van Eyden, Renee
Journal Title
Journal ISSN
Volume Title
Publisher
Routledge
Abstract
The substantial change in South Africa’s trade patterns over the past two decades has
affected the impact of economic shocks in major world economies on South Africa. To investigate the
effect, we use a global vector autoregression (GVAR) model with time-varying trade weights to account
for changing international trade linkages. We show that the long-term impact of a shock to Chinese
GDP on South African GDP is much stronger in 2009 than in 1995, due to the substantial increase in
South Africa’s trade with China since the mid-1990s. At the same time, the importance of the U.S.
economy to South Africa diminished considerably. The results indicate one of the possible reasons why
the recent global crisis did not affect South Africa as much as it affected developed economies. It also
stresses the increased risk, to the South African and other economies, should China experience slower
GDP growth.
Description
Keywords
Developing economies, Global macroeconomic modelling, Global vector autoregression (GVAR), Trade linkages, South Africa (SA), Gross domestic product (GDP)
Sustainable Development Goals
Citation
Annari De Waal & Reneé van Eyden (2016) The Impact of Economic Shocks in the Rest of the World on South Africa: Evidence from a Global VAR, Emerging Markets Finance and Trade, 52:3, 557-573, DOI: 10.1080/1540496X.2015.1103141