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The intertemporal relation between government revenue and expenditure in the United Kingdom, 1750 to 2004

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  • Lusine Lusinyan
  • John Thornton

Abstract

We examine the intertemporal relation between government revenue and expenditure in the UK during 1750 to 2004. We pay particular attention to long run trends by applying a battery of unit root and cointegration techniques to the data, and we use a modified Granger causality test on data spans organized around structural breaks in the series. The results suggest that, allowing for structural breaks, UK real revenue and spending are I (1) series and cointegrated and that Granger causality runs from government spending to revenue. As such, the ‘spend-tax’ hypothesis appears to best characterize the long run intertemporal relation between government revenue and spending in the UK.

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  • Lusine Lusinyan & John Thornton, 2012. "The intertemporal relation between government revenue and expenditure in the United Kingdom, 1750 to 2004," Applied Economics, Taylor & Francis Journals, vol. 44(18), pages 2321-2333, June.
    • Handle: RePEc:taf:applec:44:y:2012:i:18:p:2321-2333
    DOI: 10.1080/00036846.2011.564142
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    Cited by:

    1. 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.
    2. Syed Ali Raza & Syed Zaki Hassan & Arshian Sharif, 2019. "Asymmetric Relationship Between Government Revenues and Expenditures in a Developing Economy: Evidence from a Non-linear Model," Global Business Review, International Management Institute, vol. 20(5), pages 1179-1195, October.
    3. Dervis Kirikkaleli & Bugra Ozbeser, 2023. "Government Expenditures and Tax Revenues in the United States of America," SAGE Open, , vol. 13(1), pages 21582440231, March.
    4. Fabricio Linhares & Glauber Nojosa, 2020. "Changes in the tax-spend nexus: Evidence from selected European countries," Economics Bulletin, AccessEcon, vol. 40(4), pages 3077-3087.

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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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