Balancing The Budget Through Revenue Or Spending Adjustments? The Case Of Greece
AbstractThis 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.
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Bibliographic InfoArticle provided by Chung-Ang Unviersity, Department of Economics in its journal Journal Of Economic Development.
Volume (Year): 29 (2004)
Issue (Month): 2 (December)
Budget Balance; Government Revenue and Spending; Causality; Generalized Impulse Responses; Greece;
Find related papers by 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
- 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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