This paper applies the technique of Granger Causality to determine the relationship between total government expenditures and total tax revenue using annual revised estimates. The analysis discovers a firm unidirectional effect from expenditure to revenue suggesting the preference of controlling the spending decisions to reduce the tax revenue-expenditure deficit.
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Paper provided by EconWPA in its series Macroeconomics with number
0509014.
Find related papers by JEL classification: E - Macroeconomics and Monetary Economics
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