Time-Varying Elasticity of Cyclically Adjusted Primary Balance and Effect of Fiscal Consolidation on Domestic Government Debt in South Africa

This paper investigates the impact of time-varying elasticity cyclically adjusted primary balance (CAPB) and fiscal consolidation on government debt. The parameter structural vector autoregression (TVP-VAR) model is used a time series data from 1979 to 2022. contribution this understanding domestic debt need use when calculating cyclical provide more accurate representation discretionary actions taken by authorities. It found that there variation in CAPB with than constant elasticity. Constant not effective capturing episodes, better alternative. There evidence increases shocks through expenditure cuts reduce long run, while taxes increase recommended authorities related inefficient expenditure. In event expenditure, needs be productive sectors economy will bring about an revenue rather tax rate. Given result, should something are using effort stimulate economic growth or