A scrutiny into fiscal policy in the South African economy: A Bayesian approach with hierarchical priors

This study analyses the impact of fiscal policy on South African economy during period 1972Q1-2020Q2. The adopted quarterly time series data to estimate a Bayesian Vector Autoregression (BVAR) model with selection hierarchical priors. variables employed for empirical investigation included GDP, government expenditure, public debt, and gross fixed-capital formation. results show that an unexpected shock in expenditure debt has significant negative persistent economic growth Africa, while investment positive effect growth. findings suggest escalating lead contraction. implies policy-makers ought be cautious excessive achieve consolidation. Policy-makers focus addressing structural challenges through implementation sound reform policies aim attract consistent job creation, development Africa’s economy.