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Revisiting the Government Revenue-Expenditure Nexus: Evidence from 15 OECD Countries Based on the Panel Data Approach

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Abstract

This paper utilizes panel unit root, panel cointegration, and panel Granger causality test techniques to examine the inter-temporal relationship between government revenues and government expenditures in a panel of 15 OECD countries over the period 1992–2006. The authors find evidence of bidirectional causality between government revenues and government expenditures, supporting the fiscal synchronization hypothesis. The findings of this paper have important implications for fiscal policy decision-making in these 15 OECD countries after the signing of the EU Treaty in Maastricht on February 7, 1992.

Suggested Citation

  • Tsangyao Chang & Gengnan Chiang, 2009. "Revisiting the Government Revenue-Expenditure Nexus: Evidence from 15 OECD Countries Based on the Panel Data Approach," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 59(2), pages 165-172, June.
  • Handle: RePEc:fau:fauart:v:59:y:2009:i:2:p:165-172
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    Citations

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    Cited by:

    1. Phiri, Andrew, 2016. "Asymmetries in the revenue-expenditure nexus: New evidence from South Africa," MPRA Paper 75224, University Library of Munich, Germany.
    2. Johann Bröthaler & Michael Getzner, 2015. "The Tax-Spend Debate and Budgetary Policy in Austria," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(3), pages 299-315, August.
    3. repec:rjr:romjef:v::y:2017:i:4:p:152-165 is not listed on IDEAS
    4. Dizaji, Sajjad Faraji, 2014. "The effects of oil shocks on government expenditures and government revenues nexus (with an application to Iran's sanctions)," Economic Modelling, Elsevier, vol. 40(C), pages 299-313.
    5. repec:kap:iaecre:v:21:y:2015:i:3:p:299-315 is not listed on IDEAS
    6. Yousef Elyasi & Mohammad Rahimi, 2012. "The Causality between Government Revenue and Government Expenditure in Iran," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 5(1), pages 129-145, April.
    7. Obeng, Samuel, 2015. "A Causality Test of the Revenue-Expenditure Nexus in Ghana," MPRA Paper 63735, University Library of Munich, Germany, revised 25 Feb 2015.
    8. Adel Shakeeb MOHSEN, 2016. "Effects of oil returns and external debt on the government investment: A case study of Syria," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(606), S), pages 255-262, Spring.
    9. Janda, Karel & Torkhani, Marouan, 2016. "Energy, carbon, and economic growth: Brief literature review," MPRA Paper 75439, University Library of Munich, Germany.
    10. Takumah, Wisdom, 2014. "The Dynamic Causal Relationship between Government Revenue and Government Expenditure Nexus in Ghana," MPRA Paper 58579, University Library of Munich, Germany.
    11. Mihai Mutascu, 2015. "Government revenues and expenditures in the EU ex-communist countries: a bootstrap panel Granger causality approach," Working Papers halshs-01109233, HAL.

    More about this item

    Keywords

    government revenues; expenditures; panel unit root; panel cointegration; panel Granger causality; tax-and-spend hypothesis; spend-and-tax hypothesis; fiscal synchronization hypothesis; institutional separation hypothesis;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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