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A Multicountry Perspective on Causality between Government Revenue and Government Expenditure

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  • Ram, Rati

Abstract

Using a well-recommended procedure and recent annual data for twenty-two countries, Ganger-causality between government revenue and government expenditure, in both current and constant price terms, is assessed for each country. Evidence of statistically-significant causal flow is lacking in at least 50 percent of the cases, and the results indicate enormous cross-country diversity; one can find almost any causal order by focusing on limited data sets. Despite some differences, the causal patterns are broadly similar for developed and underdeveloped countries, in current and constant price series, and for several different lag specifications.

Suggested Citation

  • Ram, Rati, 1988. "A Multicountry Perspective on Causality between Government Revenue and Government Expenditure," Public Finance = Finances publiques, , vol. 43(2), pages 261-270.
    • Handle: RePEc:pfi:pubfin:v:43:y:1988:i:2:p:261-70
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    1. repec:kap:iaecre:v:15:y:2009:i:2:p:143-155 is not listed on IDEAS
    2. Koren, Stephan & Stiassny, Alfred, 1998. "Tax and Spend, or Spend and Tax? An International Study," Journal of Policy Modeling, Elsevier, vol. 20(2), pages 163-191, April.
    3. Francisco de Castro & José M. González-Páramo & Pablo Hernández de Cos, 2001. "Evaluating the dynamics of fiscal policy in Spain: patterns of interdependence and consistency of public expenditure and revenues," Working Papers 0103, Banco de España.
    4. Mr. Jean-Claude Nachega & Mr. Ousmane Dore, 2000. "Budgetary Convergence in the WEAMU: Adjustment Through Revenue or Expenditure?," IMF Working Papers 2000/109, International Monetary Fund.
    5. Bradley T. Ewing & James E. Payne & Mark A. Thompson & Omar M. Al‐Zoubi, 2006. "Government Expenditures and Revenues: Evidence from Asymmetric Modeling," Southern Economic Journal, John Wiley & Sons, vol. 73(1), pages 190-200, July.
    6. Reicher, Claire, 2014. "Systematic fiscal policy and macroeconomic performance: A critical overview of the literature," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-37.
    7. Silika Prohl, 2010. "Test of Fiscal Sustainability and Causality Hypotheses for Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 146(II), pages 481-506, June.
    8. Michael A. Conte & Ali F. Darrat, 1993. "Testing Alternative Views Of Government Budgeting," Review of Financial Economics, John Wiley & Sons, vol. 3(1), pages 19-40, September.
    9. Luis Gil-Alana, 2009. "Government Expenditures and Revenues: Evidence of Fractional Cointegration in an Asymmetric Modeling," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 15(2), pages 143-155, May.
    10. Ali F. Darrat, 1998. "Tax and Spend, or Spend and Tax? An Inquiry into the Turkish Budgetary Process," Southern Economic Journal, John Wiley & Sons, vol. 64(4), pages 940-956, April.
    11. James E. Payne, 2003. "A Survey of the International Empirical Evidence on the Tax-Spend Debate," Public Finance Review, , vol. 31(3), pages 302-324, May.
    12. Paul Alagidede & George Tweneboah, 2015. "On the Sustainability and Synchronization of Fiscal Policy in Latin America," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 52(2), pages 213-240, November.
    13. Teresa Famulska & Jan Kaczmarzyk & Malgorzata Grzaba, 2020. "The Relationship Between Tax Revenue and Public Social Expenditure in the EU Member States," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 1136-1156.
    14. Baffes, John & Shah, Anwar, 1990. "Taxing choices in deficit reduction," Policy Research Working Paper Series 556, The World Bank.
    15. Moisio, Antti, 2000. "Spend and Tax or Tax and Spend? Panel Data Evidence from Finnish Municipalities during 1985 - 1999," Discussion Papers 242, VATT Institute for Economic Research.
    16. George A. Vamvoukas, 2011. "Panel Data Modeling and the Tax-Spend Controversy in the Euro Zone," Post-Print hal-00716629, HAL.
    17. Narayan, Paresh Kumar, 2005. "The government revenue and government expenditure nexus: empirical evidence from nine Asian countries," Journal of Asian Economics, Elsevier, vol. 15(6), pages 1203-1216, January.
    18. R Premalatha, 2020. "Pattern of Public Expenditure on Social Sector in India," Shanlax International Journal of Economics, Shanlax Journals, vol. 9(1), pages 57-62, December.
    19. Krasnopeeva, Natalia, 2023. "Revenues and expenditures of Russian regional budgets: Granger causality analysis," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 70, pages 5-33.
    20. Michele Salvi & Christoph A. Schaltegger, 2023. "Tax more or spend less? Historical evidence from Switzerland’s federal budget plans," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(3), pages 678-705, June.

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