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This paper aims to examine the effects of fiscal policy associated with increases in government expenditures, tax revenue and budget deficit on the South African economy.

Structural VARs based on the Blanchard‐Quard decomposition identification scheme were used in the empirical analysis. With the aid of quarterly data covering the period 1990:1 to 2008:4, the identified true models are used to estimate various impulse‐response functions. The impulse‐response functions represent the responses of real output and interest rates to shocks from tax revenue, budget deficit and government consumption and investment expenditures.

The results suggest that the fiscal policy instruments have varied effects on output and interest rates. The effect of the fiscal policy on output appears to be quite modest but persistent; however, the response from interest rate is temporary and substantial most cases.

The debate on the efficacy of fiscal policy in stimulating growth seems to have assumed new prominence in the wake of the recent global financial crisis. This paper contributes to the discourse from a South African focused empirical effort. Other fiscal policy authorities may find the paper valuable.

The paper seeks to estimate agricultural commodity supply response at three levels of aggregation namely, all commodities, food commodities and exports commodities.

The study used cointegration and error correction modelling techniques with the aid of annual data. The aggregate price and quantity indices were constructed using the Tornqvist formula, which has been found more superior to the traditional Laspeyres approach of index construction.

The producers were responsive to price incentives in the long‐run for all three commodity aggregates but in the short‐run only producers of export commodities were responsive to price incentives.

Producers respond to price signals as predicted but structural features of the agricultural commodity sector that results in high transaction cost may account for the absence of price response in the short‐run. Interventions in lowering transaction cost in agricultural commodity production has the potential of stimulating a faster and considerable response to price incentives.

Despite the policy relevance of agricultural commodity supply response, the extent of the response in Ghana is largely unknown, and it is this gap that the present paper helps to bridge.

Drawing first on stylised facts, the purpose of this paper is to isolate the impact of trade liberalisation policies pursued for the past two decades on poverty in agricultural households in Ghana.

Two samples of agricultural households are drawn from the most recently published Ghana Living Standards Survey. Using terms of trade as a channel of the reforms, an econometric estimate of the impact of terms of trade on per‐capita expenditure, of these agricultural households, is run on both samples using two cross‐sectional models.

The results suggest that trade liberalisation had an adverse welfare impact on agricultural households immediately after the reforms‐1992; however, trade positively influenced welfare much later‐1999. Even though agricultural producers' terms of trade have improved they still constitute the largest segment of the poor in Ghana.

Targeted trade policy instruments are required to positively impact mainstream agricultural households in poverty alleviation efforts. The absence of repeated cross‐sections in the Living Standards Survey limits the possibility of exploring dynamic effects.

This paper isolates welfare effects of trade on agriculture households in Ghana – a departure from previous studies which examine the effect of trade on all households. This distinction is important since welfare effects of trade in Ghana are more likely to impact households whose livelihoods depend on agriculture than on other households.