Standard computable general equilibrium (CGE) models are based on the assumption of perfect competition in labour and product markets. However, the South African economy is characterised by high levels of concentration in many industries with significant barriers to entry.
In addition labour market rigidities and union power play a major role in the labour market. These issues make a model based on perfect competition less realistic and the results it generates more questionable. The project expands the dynamic National Treasury CGE model of South Africa to include imperfect competition in the product markets and provides training for Treasury staff in applying the revised model for policy analysis.
Key contacts
