Lindokuhle Talent Zungu

By Lindokuhle Talent Zungu, Yolanda Nomusa Nkomo, Bongumusa Prince Makhoba and Lorraine Greyling

A panel data analysis of the nonlinear dynamics of economic-development in a macroprudential policy regime was conducted in a panel of 25 emerging markets who were grouped together based on their regions: 10 African countries, 8 Asian countries, and 7 European countries covering the period 2000–2019. The paper explored the validity of the Kuznets hypothesis in a prudential policy regime as well as the threshold level at which economic-development reduces inequality, using the Bayesian Spatial Lag Panel Smooth Transition Regression model. This model was adopted due to its ability to address the problems of endogeneity, heterogeneity, and time and spatial-varying in a nonlinear framework. We found evidence of a non-linear effect between the two variables, where the threshold was found to be US$15,900, above which reduces inequality in the African emerging markets; while for emerging Asian and emerging European markets, we documented a U-shape relationship with an optimal level of economic-development estimated at US$17,078 and US$19,000, respectively. Unconventional and macroprudential policies were found to trigger development-inequality relationships. The result supported the S-curve relationship in these regions. Our evidence largely suggests that policymakers ought to formulate policies aiming at increasing agricultural productivity through land redistribution, investment, trade, and promoting human development. Policymakers should also be cautious when implementing macroprudential and unconventional monetary policies.

Part of the book: Global Market and Trade

By Silindile Nobuhle Mkhwanazi, Lindokuhle Talent Zungu and Irrshad Kaseeram

This study examines the impact of US and UN economic sanctions on income inequality in African- and Asian-targeted states from 1980–2019, using the Bayesian Generalized Method of Moment’s (BGMM) technique. One essential weapon of international politics for promoting peaceful international cohabitation is the imposition of political and economic sanctions, despite ongoing debates on the effectiveness of punishments in generating disutility. The BGMM was chosen due to its ability to address the dynamics of several entities in the data. The study reveals a positive relationship between economic sanctions and income inequality, except for pre-tax income held by the top 10%, indicating a significant contribution to income inequality. The study further finds that African countries seem to suffer the most from the execution of these sanctions compared to Asian countries. From a policy perspective, the study suggests implementing targeted assistance programs such as financial support and job training programs for vulnerable groups, such as low-income workers and small businesses, affected by sanctions. Additionally, policymakers should prioritize investments in less-impacted sectors, creating alternative job opportunities, and reducing income disparities. This approach can mitigate the negative effects of economic sanctions on income inequality by addressing specific needs and diversifying the economy.

Part of the book: Economic Recessions - Navigating Economies in a Volatile World and the Path for Economic Resilience and Development [Working title]