We rank the forecast accuracy of 21 individuals and 8 institutions which have participated in Media 24’s “Economist of the Year” forecasting competition for at least 10 of the past 14 years. Participants predict 12 macroeconomic and financial variables at the read more

We rank the forecast accuracy of 21 individuals and 8 institutions which have participated in Media 24’s “Economist of the Year” forecasting competition for at least 10 of the past 14 years. Participants predict 12 macroeconomic and financial variables at the start of the year, and update their predictions during the course of the year. Over the 14-year period the “consensus forecast” (i.e. the average of the various forecasts) has outperformed all other participants. There is substantial variation in predictive accuracy among participants. Having won the competition at some point is not an indicator of producing consistently accurate forecasts.

There is growing evidence that the dramatic increase in real commodity prices from 2002-2011 cannot be attributed solely to fundamental (demand and supply) factors. Over this period, there was major growth in the trading activities of financial investors in read more

There is growing evidence that the dramatic increase in real commodity prices from 2002-2011 cannot be attributed solely to fundamental (demand and supply) factors. Over this period, there was major growth in the trading activities of financial investors in commodity derivative markets. This process, termed “financialization”, had important effects on price dynamics. This paper calculates rolling correlations for futures and spot returns for different commodities both for the period 20022011 when commodity prices were rising, and also from 2011-2015, when prices were falling. The paper finds a rise in correlations of index-based commodities during the period of rising prices, when commodity assets under management grew rapidly, and a fall during the period of declining prices, when commodity assets under management halved, supporting the view that financialization played a role in driving prices. This conclusion is reinforced by the finding that the same increase and decrease in correlations did not occur for bulk commodities. Granger causality tests reveal evidence of futures prices driving spot prices during the financialization period when prices were rising. However, there is a shift to more bi-directional relationships when prices (and correlations) fell. These findings support the role of financialization during the period of rising prices, as investor exposure to index-based commodities was usually achieved through the futures market.

This paper investigates the implications of exchange rate regimes for monetary independence in SADC countries, by examining the impact of a prominent international interest rate (a U.S. interest rate) on the domestic interest rate. The study relies on a read more

This paper investigates the implications of exchange rate regimes for monetary independence in SADC countries, by examining the impact of a prominent international interest rate (a U.S. interest rate) on the domestic interest rate. The study relies on a General Methods of Moments (GMM) model. The estimated results concur with traditional theories of the so-called impossible trinity. In fixed exchangerate regimes (soft pegs and hard pegs) the relevant domestic interest rate responds to the international interest rate, in contrast to floating exchange-rate regimes (free-floating and managed floats). SADC countries may eventually engage in full global financial integration. Our results suggest that this will require countries either to opt for exchange-rate stability and financial integration, while sacrificing monetary autonomy or, alternatively, for monetary independence with financial integration, while sacrificing exchange-rate stability.

Previous studies on the J-curve hypothesis for South Africa have relied on aggregate trade data between South Africa and the rest of the world, or on similar data for trade between South Africa and its major trading partners. The evidence of J-curve effects read more

Previous studies on the J-curve hypothesis for South Africa have relied on aggregate trade data between South Africa and the rest of the world, or on similar data for trade between South Africa and its major trading partners. The evidence of J-curve effects in South Africa’s bilateral trade have been mixed. In this paper, we revisit this issue by examining the short- and long-run effects of exchange-rate changes on trade flows using disaggregated industry data on bilateral trade between South Africa and the United States. From estimates of trade balance models using the autoregressive distributed lag (ARDL) approach, we find evidence of significant J-curve effects, as a depreciation of the South African currency has favourable short–run effects on trade balances for eight industries. These short-run effects continue into the long run for a quarter of the industries considered in the study. The results also show that income has significant long-run effects on trade flows in industries that account for almost 55% of trade flows between South Africa and the United States.

Any African countries experience power shortages and regular interruptions in electricity supply. We use stochastic frontier models to study the impact of power disruptions on the efficiency of African manufacturing firms. Power disruptions appear to have read more

Any African countries experience power shortages and regular interruptions in electricity supply. We use stochastic frontier models to study the impact of power disruptions on the efficiency of African manufacturing firms. Power disruptions appear to have negative effects on efficiency and the use of generators further exacerbates the impact. The interaction of power outages with generator ownership result in a negative effect on efficiency and this could probably be explained by the high cost of running these alternative power sources. Our results support a policy of investment in the electricity sector, to improve the maintenance and quality of infrastructure that is used to generate power in African countries.