Asymmetric modelling of the revenue-expenditure nexus: evidence from aggregate state and local government in the US
AbstractThis study examines the time series dynamics between US aggregate state and local government receipts and expenditures in differentiating between four hypotheses related to the revenue-expenditure nexus: tax-spend, spend-tax, fiscal synchronization and institutional separation hypotheses. Unlike previous research at the state and local level, the possibility of asymmetries in the budgetary process is explored using the threshold autoregressive (TAR) and momentum threshold autoregressive (MTAR) cointegration framework of Enders and Siklos (2001). The results indicate the absence of any asymmetries (TAR or MTAR) in the adjustment towards budgetary equilibrium. The symmetric error correction model provides support for the spend-tax hypothesis.
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Bibliographic InfoArticle provided by Taylor and Francis Journals in its journal Applied Economics Letters.
Volume (Year): 16 (2009)
Issue (Month): 9 ()
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Web page: http://www.tandf.co.uk/journals/routledge/13504851.html
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- 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.
- HYE, Qazi Muhammad Adnan & M Anwar, Jalil, 2010. "Revenue and Expenditure Nexus: A Case Study of Romania," MPRA Paper 32132, University Library of Munich, Germany.
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