Template-type: ReDIF-Paper 1.0
Author-Name: Habiyaremye, Alexis
Author-Email: habiyaremye@merit.unu.edu
Author-Workplace-Name: Human Sciences Research Council, and UNU-MERIT
Author-Name: Jacobs, Peter
Author-Name: Molewa, Olebogeng 
Author-Name: Lekomanyane, Pelontle
Title: Macroeconomic stimulus packages and income inequality in developing countries: 
	 Lessons from the 2007-9 Great Recession for the Covid-19 crisis in South Africa
Abstract: In 2020, the South African government announced that it was planning to
	 implement an ambitious macroeconomic rescue package worth about 10% of
	 the country's gross domestic product (GDP) to cushion the economy from
	 the socioeconomic impact of Covid-19 lockdown. However, it was unclear
	 what the likely eects of the package's measures would be on income
	 growth and employment in the post-crisis recovery period. This paper
	 uses a fiscal multiplier framework to examine the links between such
	 packages and patterns of growth, employment and inequality in nine
	 developing counties during the recovery period following the Great
	 Recession of 2007- 2009. The findings indicate that countries which
	 privileged larger fiscal packages enacted through public infrastructure
	 investments had more favourable outcomes in terms of employment recovery
	 and preventing the worsening of poverty. Moreover, the implementation of
	 deficit-financed stimulus packages did not lead to unsustainable debt
	 levels or persistent in inflation. As South Africa contemplates rolling out
	 a sizable new infrastructure stimulus package to tow the economy out of
	 the current crisis, insights from those experiences may provide useful
	 lessons for building a more equitable and more shock-resilient post-Covid-19
	 economy.
Classification-JEL: E12, E24, E25, E52, E62, O15, O47, O55
Keywords: Monetary policy, fiscal multipliers, wage-led growth, income distribution,
	 structural reforms
Series: UNU-MERIT Working Papers
Creation-Date: 20210224
Number: 2021-006
File-URL: https://unu-merit.nl/publications/wppdf/2021/wp2021-006.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2021006