Essays on political economy using dynamic general equilibrium models

Abstract

English: This PhD thesis aims to look at four major issues in political economy and macroeconomics, namely, tax evasion, spirit of capitalism, globalisation and production structures involving delayed effects of inputs in dynamic general equilibrium models. These issues are of importance to any economy, but more so to an emerging economy like South Africa. The thesis will not only aim to obtain optimal policy responses in the presence of such distortions (deviations from the traditional Neoclassical world), but will also analyse the effects of these distortions on the growth and welfare of the economy. The thesis aims to have four separate papers based on dynamic general equilibrium (DGE) models: The first paper would aim to explain theoretically why tax evasion might depend on the level of financial development and the inflation rate in the economy. And then, it would try and test whether our proposed theoretical linkage holds in the data using panel data of 150 countries covering the period of 1980-2009. General equilibrium models that include the spirit of capitalism shows a positive relationship between growth and inflation – something unobserved in the data. The literature has tried to reconcile this theoretical and empirical mismatch by introducing human capital, cash-in-advance constraints applying to only specific kind of (non-productive) goods, etc. In the second paper, we, however, aim to show that a simpler way of achieving the negative inflation–growth relationship would be to introduce a banking system in the model subjected to cash reserve requirements. The third paper examines the effect of openness on economic growth, given a human capital accumulation function that captures the marginal benefit of knowledge spillovers in an economy. Two opposing effects are highlighted – one a positive effect from the increase in human capital on growth, the other a negative effect through an increase in seigniorage taxes – that would suggest there is a threshold value of openness, beyond which the impact of opening the economy even more becomes negative for economic growth. The fourth paper would aim to indicate that in the presence of lagged inputs, and especially lagged capital input, in the production structure of an economy, an inflation targeting country might experience “chaotic” growth behaviour if the inflation target is set too high.

Sepedi: Thesese ye ya PhD e ikemišeditše go lebeledišiša mathata a magolo a mane ka go ekonomi ya sepolotiki le ka go ekonomi ye kgolo ya naga, e lego, go efoga motšhelo, moya wa bokapitale, kamano ya lefaseng ka bophara le mananeo a tšweletšo ao a akaretšago diabe tše di ditetšwego tša ditsenyo ka go mekgwa ye e fetogago ya tekatekano ka kakaretšo. Mathata a a bohlokwa go ekonomi efe goba efe, eupša kudukudu go ekonomi ye e golago ya go swana le ya Afrika Borwa. Thesese ye e ka se ikemišetše fela go hwetša diphetolo tše di lekanego tša melawana ge go na le mathata a mehuta yeo (diphamogo go tloga go lefase la Tšwetšopele ya Dilo tša Kgale),eupša e tla sekaseka gape diabe tša mathata a kgolo le maemo a makaone a ekonomi. Thesese e ikemišeditše go ba le dipampiri tše nne tše di aroganego tšeo di theilwego go mekgwa ya phetogo ya tekatekano ya kakaretšo (DGE): Pampiri ya mathomo e tla ikemišetša go hlaloša ka teori gore ke ka lebaka la eng go efoga motšhelo go ka laolwa ke maemo a tlhabologo ya tša ditšhelete le kelo ya infoleišene go ekonomi. Gomme ka morago ga fao, e tla leka go lekola ge eba kamano ya rena ye e šišintšwego ya teori e a amega ka go tshedimošo go šomišwa tshedimošo ya phanele ya dinaga tše 150 mo go lebakanako la mengwaga ya bo 1980-2009. Mekgwa ya tekatekano ya kakaretšo ye e akaretšago moya wa bokapitale e laetša kamano ye kaone magareng ga kgolo le infoleišene - e lego seo se bonwego ka go tshedimošo. Dingwalwa di lekile go kopanya go se amane ga teori le bohlatse ka go tsebagatša letlotlo la batho, mathata a kabo ya sekoloto sa kheše ka pela ao a amago mohuta wo itšego wa (wa go hloka tšweletšo) dithoto, bjalobjalo. Ka go pampiri ya bobedi, re, le ge go le bjale, ikemišeditše gore mokgwa wo bonolo wa go fihlelela infoleišene ya nekethifi - kamano ya kgolo e tla ba go tsebagatša lenaneo la go panka ka go mokgwa wo o laolwago ke dinyakwa tša go šadiša tšhelete ye itšego ka pankeng. Pampiri ya boraro e lekola diabe tša go hloka sephiri go kgolo ya ekonomi, ka lebaka la mošomo wa khwetšo ya letlotlo la batho leo le akaretšago kholego ye nnyane ya kabagano ya tsebo ka ekonoming. Diabe tše pedi tše di thulanago di a gatelelwa - ya mathomo seabe se sekaone ka lebaka la koketšego ya letlotlo la batho go kgolo, ye nngwe seabe sa go se loke ka lebaka la koketšego ya metšhelo ya seinoretše - e lego seo se ka šišinyago gore go na le boleng bja mollwane bja tlhokego ya sephiri, bjo go feta fao seabe sa go bula ekonomi se bago sa go se loke go kgolo ya ekonomi. Pampiri ya bone e tla ikemišetša go laetša gore ge go na le ditsenyo tše di hlaelelago, le kudukudu tsenyo ya letlotlo ye e hlaelelago, ka lenaneong la tšweletšo la ekonomi, naga ye e nepišitšego infoleišene e ka itemogela maitshwaro a kgolo ya "mathata" ge e le gore nepišo ya infoleišene e bewa godimo kudu.

Afrikaans: Die vierde artikel sal daarop gerig wees om aan te dui dat in die teenwoordigheid van naloopinsette – veral naloopkapitaalinset – in die produksiestruktuur van 'n ekonomie, 'n land wat inflasieteikens nastreef "chaotiese" groeigedrag kan ervaar indien die inflasieteiken te hoog gestel word.