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Balancing The Budget Through Revenue Or Spending Adjustments? The Case Of Greece

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  • Panagiotis T. Konstantinou

    (Faculty of Economics, University of Rome III)

Abstract

This paper examines the solvency of the Greek fiscal policy. Employing a cointegrated VAR as a benchmark, evidence of a long-run link between revenues and spending is presented, although intertemporal solvency is violated. Utilizing Granger-causality tests, a test for fiscal adjustment neutrality and Generalized Impulse Responses, this paper provides evidence in favor of the ¡®tax and spend¡¯ hypothesis for Greece. Additionally, the empirical evidence indicates that fiscal adjustment should take place through spending rather than revenue adjustment.

Suggested Citation

  • Panagiotis T. Konstantinou, 2004. "Balancing The Budget Through Revenue Or Spending Adjustments? The Case Of Greece," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 29(2), pages 81-105, December.
    • Handle: RePEc:jed:journl:v:29:y:2004:i:2:p:81-105
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    Cited by:

    1. Kurniawan, Rudi, 2012. "Sustainability of Fiscal Policy and Government Revenue-Expenditure Nexus: The Experience of Indonesia," MPRA Paper 65883, University Library of Munich, Germany.

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    More about this item

    Keywords

    Budget Balance; Government Revenue and Spending; Causality; Generalized Impulse Responses; Greece;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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