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Tax or Spend, What Causes What: Taiwan's Experience

Author

Listed:
  • Tsangyao Chang

    (Department of Economics, Feng Chia University, Taiwan)

  • Yuan-Hong Ho

    (Department of Public Finance, Feng Chia University, Taiwan)

Abstract

In this paper we tested the hypothesis of tax-and-spend, spend-and-tax, or fiscal synchronization for Taiwan using annual data covering the 1967 to 1999 period. Granger causality test results based on the corresponding vector error-correction models (ECM) suggest unidirectional causality running from government revenues to government expenditures, thus supporting the tax-and-spend hypothesis for Taiwan.

Suggested Citation

  • Tsangyao Chang & Yuan-Hong Ho, 2002. "Tax or Spend, What Causes What: Taiwan's Experience," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 1(2), pages 157-165, August.
    • Handle: RePEc:ijb:journl:v:1:y:2002:i:2:p:157-165
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    References listed on IDEAS

    as
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    5. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
    6. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    7. Zivot, Eric & Andrews, Donald W K, 2002. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 25-44, January.
    8. Perron, Pierre, 1997. "Further evidence on breaking trend functions in macroeconomic variables," Journal of Econometrics, Elsevier, vol. 80(2), pages 355-385, October.
    9. Wu, Jyh-lin, 1998. "Are budget deficits "too large"?: The evidence from Taiwan," Journal of Asian Economics, Elsevier, vol. 9(3), pages 519-528.
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    Citations

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    Cited by:

    1. Yuan-Hong Ho & Chiung-Ju Huang, 2009. "Tax-Spend, Spend-Tax, or Fiscal Synchronization: A Panel Analysis of the Chinese Provincial Real Data," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 5(2), pages 257-272, July.
    2. repec:eur:ejfejr:81 is not listed on IDEAS
    3. Arcade NDORICIMPA, 2017. "Analysis of Asymmetries in the Tax-Spending Nexus in Burundi," Journal of Economics and Political Economy, KSP Journals, vol. 4(1), pages 53-70, March.
    4. Rashid, Abdul, 2008. "Macroeconomic Variables and Stock Market Performance: Testing for Dynamic Linkages with a Known Structural Break," MPRA Paper 26937, University Library of Munich, Germany.
    5. Scott M. Fuess, Jr. & Jack W. Hou & Meghan Millea, 2003. "Tax or Spend, What causes What? Reconsidering Taiwan's Experience," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 2(2), pages 109-119, August.
    6. Yaya Keho, 2010. "Spending Cuts or Tax Adjustments: How Can UEMOA Countries Control Their Budget Deficits?," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 9(3), pages 233-252, December.
    7. Teresa Famulska & Jan Kaczmarzyk & Malgorzata Grzaba, 2020. "The Relationship Between Tax Revenue and Public Social Expenditure in the EU Member States," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 1136-1156.
    8. repec:kap:iaecre:v:12:y:2006:i:2:p:203-211 is not listed on IDEAS
    9. Sima Siami-Namini & Daniel Muhammad & Fahad Fahimullah, 2018. "The Short and Long Run Effects of Selected Variables on Tax Revenue - A Case Study," Applied Economics and Finance, Redfame publishing, vol. 5(5), pages 23-32, September.
    10. Yu Hsing, 2006. "Analysis of Output Fluctuations in Taiwan: An Application of the IS–MP–AS Model," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 12(2), pages 203-211, May.
    11. repec:eur:ejfejr:83 is not listed on IDEAS
    12. Azem Duraku, 2019. "Public Expenditures Through Public Procurement," European Journal of Engineering and Formal Sciences Articles, Revistia Research and Publishing, vol. 2, ejef_19.

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    More about this item

    Keywords

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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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