Model Closure and Observed Movements from 2006-2013

Type Report
Title Model Closure and Observed Movements from 2006-2013
Author(s)
Publication (Day/Month/Year) 2014
URL http://www.econrsa.org/system/files/publications/working_papers/working_paper_416.pdf
Abstract
This paper uses a dynamic CGE model to help explain some apparent
contradictions between changes in the structure of the South African
economy and movements in related variables over the 2006 to 2013 period.
Most notably, an increase in the capital-labour ratio was identified,
despite a relative increase in the price of capital rentals. To calibrate this
result with conventional economic theory suggests that a change in the
preferred capital-labour ratio of industries must have occurred. We quantify
this change and comment on what this means for policymakers trying
to reduce the country’s high level of unemployment. Other changes to the
economy over this period are also quantified and explained.

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