A NOTE ON PRICING MECHANISM IN THE INDUSTRIALIZATION OF THE U.S.S.R.

When we consider the price policy of the Soviet Union, which was enforced to facilitate the creation and establishment of heavy industries, in relation to the price mechanism as it actually functions in the economic process, it may be said that its function should be found within, and not without, the price mechanism. This not only indicates the transitional character of the Soviet price policy but presents suggestions for a genuine socialist price mechanism.     

ECONOMIC GROWTH AND THE STRUCTURE OF TAXES IN SOUTH AFRICA: 1960–2002*

One tenet of taxation is its distorting effect on economic behaviour. Despite the economic inefficiencies resulting from taxation, it is widely believed that taxes impact minimally on the economy's growth rate. Evidence in developing countries generally supports this view. In this paper, we present evidence that tax distortions in South Africa may be much more severe. Using tax and economic data from 1960 to 2002 and a two‐stage modelling technique to control for unobservable business cycle variables, we examine the relationship between total taxation, the mix of taxation and economic growth. We find that decreased tax burdens are strongly associated with increased economic growth potential; in addition, contrary to most theoretical research, decreased indirect taxation relative to direct taxation is strongly correlated with increased economic growth potential.     

FORECASTING RECESSION IN SOUTH AFRICA: A COMPARISON OF THE YIELD CURVE AND OTHER ECONOMIC INDICATORS

The paper uses the standard probit model proposed by Estrella and Mishkin (1996) , as well as the modified probit model suggested by Dueker (1997) , to examine the ability of the yield curve to predict recessions in South Africa, and compares its predictive power with other commonly used variables such as the growth rate of real money supply, changes in stock prices and the index of leading economic indicators. Compared with other indicators, real M3 growth does not provide much information about future recessions, whilst movements in the All‐Share index provide information for up to 12 months but do not do better than the yield curve. The index of leading economic indicators outperforms the yield spread in the short run up to 4 months but the yield spread performs better at longer horizons.