Government Expenditures and Revenues: Evidence from Asymmetric Modeling
AbstractIn this article, we examine the relationship between U.S. federal revenues and expenditures while relaxing the assumption of a symmetric adjustment process underlying the conventional cointegration and error correction model. Threshold autoregression and momentum threshold autoregression models are used to ascertain the empirical link between the two variables of the budgetary process. Our results suggest that revenues and expenditures are cointegrated and that the adjustment process of the budgetary disequilibrium is asymmetric. The application of the asymmetric error correction model indicates that revenues and expenditures respond to the long-run requirements of the budgetary balance only when the budget is worsening.
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Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 73 (2006)
Issue (Month): 1 (July)
Find related papers by JEL classification:
- 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
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
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- James Payne & Hassan Mohammadi, 2006. "Are Adjustments in the U.S. Budget Deficit Asymmetric? Another Look at Sustainability," Atlantic Economic Journal, International Atlantic Economic Society, vol. 34(1), pages 15-22, March.
- Saunoris, James W. & Payne, James E., 2010. "Tax more or spend less? Asymmetries in the UK revenue-expenditure nexus," Journal of Policy Modeling, Elsevier, vol. 32(4), pages 478-487, July.
- Luis Gil-Alana, 2009. "Government Expenditures and Revenues: Evidence of Fractional Cointegration in an Asymmetric Modeling," International Advances in Economic Research, Springer, vol. 15(2), pages 143-155, May.
- Kausik Chaudhuri & Bodhisattva Sengupta, 2009. "Revenue-Expenditure Nexus For Southern States : Some Policy Oriented Econometric Observations," Governance Working Papers 22937, East Asian Bureau of Economic Research.
- Yaya KEHO, 2013. "Threshold Cointegration and Asymmetric Adjustment between Government Spending and Revenue in Cote D’ivoire," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 3(4), pages 420-432, April.
- Magazzino, Cosimo, 2010. "Public expenditure and revenue in Italy, 1862-1993," MPRA Paper 27308, University Library of Munich, Germany.
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