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The Causal Relationship Between Government Revenue and Expenditure in Namibia

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  • Eita, Joel Hinaunye
  • Mbazima, Daisy

Abstract

The relationship between government revenue and government expenditure is important, given its relevance for policy especially with respect to the budget deficit. The purpose of this paper is to investigate the relationship between government revenue and government expenditure in Namibia. It investigates the causal relationship between government revenue and government expenditure using Granger causality test through cointegrated vector autoregression (VAR) methods for the period the period 1977 to 2007. The paper tests whether government revenue causes government expenditure or whether the causality runs from government expenditure to government revenue, and if there is bi-directional causality. The results show that there is unidirectional causality from government revenue to government expenditure. This suggests unsustainable fiscal imbalances (deficit) can be mitigated by policies that stimulate government revenue.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9154.

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Date of creation: 26 May 2008
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Handle: RePEc:pra:mprapa:9154

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Keywords: government expenditure; government revenue; causality; cointegration test; revenue-spend; spend-revenue; fiscal synchronisation; Namibia;

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  1. Zapata, Hector O. & Rambaldi, Alicia N., 1996. "Monte Carlo Evidence On Cointegration And Causation," Staff Papers, Louisiana State University, Department of Agricultural Economics and Agribusiness 31690, Louisiana State University, Department of Agricultural Economics and Agribusiness.
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Cited by:
  1. Magazzino, Cosimo, 2010. "Public expenditure and revenue in Italy, 1862-1993," MPRA Paper 27308, University Library of Munich, Germany.
  2. 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.
  3. Dizaji, S.F., 2012. "The effects of oil shocks on government expenditures and government revenues nexus in Iran (as a developing oil-export based economy)," ISS Working Papers - General Series, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague 540, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.

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