Newsletter of Department of Economics 2019 1 - First semester 2019

31 August 2019
This newsletter covers activities and achievements of the Department of Economics, University of Pretoria

Research Highlights

Prof Alexander Zimper at Finance Seminar Frankfurt
Prof Alexander Zimper

On 09 April 2019 Prof. Alexander Zimper presented a paper at the Finance Seminar joint with SAFE (sustainable architecture for Finance in Europe) Visitors Program, at the Loewe Centre in Frankfurt

The title of the paper is Bargaining over Loan Contracts with Market-Savvyness Signaling and combines a sequential bargaining game between banks and an entrepreneur about loan contracts with a signaling game. The entrepreneur invests ex ante in the quality of her loan application. The higher ability type of the entrepreneur is characterized by a greater `market-savvyness' on the lending market rather than by a greater quality of her investment project. Researchers characterize subgame-perfect Nash equilibrium loan contracts that are supported by separating Bayesian equilibria in the signaling game. Two novel findings emerge from their analysis. Firstly, lower quality investment projects might be rewarded with more favorable loan conditions. Secondly, socially wasteful signaling costs increase in the number of banks so that a banking monopoly maximizes the aggregate welfare in their model.

- Author: A Zimper
Prof Roula Inglesi-Lotz at the 5th cohort of the Africa Science Leadership Programme (ASLP)
Prof Inglesi-Lotz together with other participants of the ASLP

The Africa Science Leadership Programme (ASLP) is an initiative of the University of Pretoria and the Global Young Academy, with the support of the Robert Bosch Stiftung that took place at the newly launched UP Future Africa campus from the 21st to the 27th of March.

The Africa Science Leadership Programme (ASLP) is an initiative of the University of Pretoria and the Global Young Academy, with the support of the Robert Bosch Stiftung that took place at the newly launched UP Future Africa campus from the 21st to the 27th of March.  The purpose of the programme is to expose mid-career African Academics to topics of leadership, team management and research development. The activities of the week-long interactions enabled the group to think widely about science in the African continent, the hurdles of the academic community, and the benefits of collaborative efforts into finding solutions for the challenges that the continent and the world face currently.

Prof Roula Inglesi-Lotz was selected within the 20 academics of the fifth cohort of the programme that have already demonstrated leadership potential and an interest in developing key leadership skills. During the programme, a network of academic leaders was created in a multidisciplinary context across African countries.

- Author: R Inblesi-Lotz
Senior lecturers at Allied Social Science Meeting Atlanta January 2019
Ms Zawaira in front of the CNN broadcasting centre in Atlanta

Three senior lecturers (Drs. Carolyn Chisadza, Matthew Clance and Jesse Naidoo) and a doctoral student (Ms. Tendai Zawaira) had the opportunity to present their research papers at the Allied Social Science Associations Meeting in Atlanta, USA in January.

Three senior lecturers (Drs. Carolyn Chisadza, Matthew Clance and Jesse Naidoo) and a doctoral student (Ms. Tendai Zawaira) had the opportunity to present their research papers at the Allied Social Science Associations Meeting in Atlanta, USA in January. This conference is one of the largest gatherings of academics, that brings together economists, historians, environmentalists, financial economists, health economists, etc. from various associations and institutions across the world. The  organisations include the American Economic Association, the African Finance and Economic Association, the Econometric Society, the African Development Bank, the European Central Bank, the World Bank, to name a few. Despite its size, it is difficult to get a research paper accepted into the conference; therefore, it is a commendable achievement for the Department of Economics at the University of Pretoria to be represented. The conference proved to be a great networking opportunity with some of the best researchers in economics, and provided valuable feedback for our faculty members’ research which included household, conflict and gender inequality issues.

- Author: C Chisadza

SARB Chair

The SARB Chair in Monetary Policy Studies' Highlights for 2018
Prof Nicola Viegi, Director of the SARB chair

Researchers, international collaborations and Annual Monetary Economics Workshop

The Chair's research capacity was augmented by the appointment of four Post-Doctoral students from June 2018. This research group is rapidly integrating their work with the research at the SA Reserve Bank and the partnership is clearly developing very useful synergies with great potential for the Chair and the SARB. They presented papers at several renowned national and international banking and finance conferences.  Of these papers have subsequently progressed into articles that have been submitted to renowned journals like International Economics and International Journal of Central Banking.

Three international academics visited the Department during the year to take part in various international research collaborations. Amongst them, Prof Romain Houssa of the University of Namur visited the Department of Economics for a week. He formalised a research partnership, by signing a partnership agreement between the Department of Economics and the University of Namur in Belgium.

The 6th Annual Monetary Economics Workshop was held in Pretoria on 29 and 30 November 2018. The theme of the Workshop was:  Macroeconomic and Financial Modeling for Monetary Policy. Fifteen papers were presented. Three International guests attended and two of the SARB research staff presented papers. 

The Chair produced two Phds and four master's students in 2018 while several more PhDs, master's and honours students' research was supervised.

- Author: N Viegi
SARB Post doc Dr Pirozhkova at conference in Santiago December 2018
Dr E Pirozhkova

Dr Pirozhkova presented a paper at the International Finance and Banking Society conference in Santiago December 2018

The conference gave an opportunity to academics, policy-makers and practitioners to discuss recent empirical and theoretical research on the topics of finance and banking. The general topic of the 2018 conference - Financial Decisions in the Changing Global Environment - allowed participants to debate and analyse the issues of financial crises and financial regulation, green finance and climate change, risk measures and stress-testing. As a young researcher, she greatly appreciated the chance to network with colleagues from all over the world and to meet renowned academics, who work in the area of macro-financial linkages that she is interested in. She presented a paper that studies the impact of economic uncertainty on allocation of portfolios of commercial banks. A useful discussion followed the presentation, where she received well-informed questions and valuable suggestions for her future work.

- Author: E Pirozhkova

Graduate achievement

Doctoral student Philton Makena presented paper at University of Oxford
Mr P Makena at the University of Oxford

Philton Makena, a third year PhD student, presented a paper titled “Income Inequality and Economic Growth: A re-examination of theory and evidence” at the University of Oxford’s Centre for the Study of African Economies (CSAE) conference held at St Catherine's College, Oxford on 17-19 March 2019.

Philton Makena, a third year PhD student, presented a draft research paper titled “Income Inequality and Economic Growth: A re-examination of theory and evidence” at the University of Oxford’s Centre for the Study of African Economies (CSAE) conference held at St Catherine's College, Oxford on 17-19 March 2019. He co-authored the paper with Prof Rangan Gupta, his supervisor, Prof Mehmet Balcilar and Dr Wei Ma. This international conference is held annually and offers a great and exceptional fora that brings together academics working on key issues pertinent to African economies.

In summary, the paper re-examines the theoretical and empirical relationship between income inequality and economic growth in an endogenous growth model with a flat tax on income, distributive conflicts among agents and median voter dynamics. The result is that when government spends tax revenue on the provision of public goods in the form of both production and consumption services, the theoretical relationship between inequality and economic growth is ambiguous. An empirical evaluation of the theoretical finding show that the relationship between income inequality and growth takes the form of an inverted-U shape in that income inequality initially has a positive impact on growth up to an average Gini coefficient threshold of 35.9 beyond which it negatively impacts on growth.

Philton was also a discussant for International Monetary Fund (IMF) Working Paper titled “A General Equilibrium Model for Gender and Income Inequality” authored by Lisa Kolovich, Vivian Malta, Marina Mendes Tavares and Angelica Martinez Leyva. This was in addition to his active participation in the general discussions of other papers in the conference programme.

- Author: P Makena
Master's student Hope Muronga awarded Fullbright Scholarship
Ms Muronga and the Southern Ilinois University

Ms Muronga was awarded a Fullbright Scholarship to pursue her doctoral degree at the Southern Ilinois University in the United States.

While completing her Master's dissertation under the supervision of Prof Viegi, Director of the SARB Chair of Monetary Policy Studies, Ms Muronga started applying for the Fullbright scholarship. 

The Fulbright is a prestigious scholarship that offers grants to students to pursue a master's or doctoral degree at a US university. Hope went through a rigorous application process, which started in March 2018 to January 2019 when she was officially declared a Fulbright principal candidate. The process included interviews and tests such as the GRE (Graduate Record Examination) and the TOEFL (Test of English as a Foreign Language). She was accepted to pursue her doctoral degree at Southern Illinois University and believes that working in an international environment will broaden her horizon to exceptional possibilities.

 

- Author: H Muronga
Master's graduate John Verner in Japan to study master's in Economics
Cherry trees between the East and West Campuses in Kunitachi City

While completing his master's in Economics at UP in 2018, Mr John Verner applied for the MEXT scholarship in order to study a master's degree in Economics at a Japanese University in 2020.

Mr Verner has won the MEXT (Ministry of Education, Culture, Sports, Science and Technology) scholarship that is granted by the Japanese government.  The Japanese Embassy selects and recommends foreign students who study at higher education institutions, to study in Japan. The process involved several screenings and applications at several universities in Japan, after which John was provisionally accepted by Hokkaido University and Hitotsubashi Universities.  He then had to go for the final screening and was accepted at Hitotsubashi University. This university was founded in 1875 and specialises in social sciences and is considered one of the best and most prestigious universities in Japan for economics and commerce related subjects.

- Author: J Verner
Honours' student Eduard van der Merwe awarded chancellor's medal
Mr Eduard van der Merwe

Honours' student Eduard van der Merwe was awarded a chancellor's medal for the best undergraduate student in the Faculty of Economic and Management Sciences

The award of the Vice-Chancellor and Principal consist of a silver medal, a cash prize and certificate and is awarded to candidates for outstanding undergraduate academic achievement during all the undergraduate years of study for any first bachelor’s degree in a faculty. Eduard van der Merwe received this award based on the fact that he was the best performing undergraduate student in the faculty of Economic and Management Sciences in any first bachelor’s degree.

- Author: E van der Merwe
Honours student André Lourens runner up Old Mutual Budget Competition
Mr A Lourens

André Lourens, an Economics honours student was nominated as the runner up in the undergraduate category of the annual Nedbank/Old Mutual Budget competition.

André Lourens, an Economics honours student was nominated as the runner up in the undergraduate category of the annual Nedbank/Old Mutual Budget competition. This is quite an achievement as there are more than 300 entries from all the universities country-wide.

His essay assessed the systemic risks associated with cryptocurrencies and made appropriate regulatory recommendations. “I delved into the characteristics of cryptocurrencies (such as blockchain or distributed ledger technology) and the demand-and-supply dynamics underlying cryptocurrencies. This led me to conclude that cryptocurrencies indeed posed current and possible future systemic risks such as price bubbles, market panic and contagion effects.”

This year the UP Department of Economics had two finalists under the top 10 entries. It is interesting to note that both students were registered for the Politics, Philosophy and Economics (PPE) course, which indicates that this interdisciplinary approach is effective. It seems to equip students to formulate and present academic arguments in a superior manner.

- Author: D Scholtz