IDEAS home Printed from https://ideas.repec.org/a/jda/journl/vol.49year2015issue2pp77-91.html
   My bibliography  Save this article

Short and long-run budgetary relationships: evidence from Lebanon

Author

Listed:
  • Bernard Ben Sita

    (Lebanese American University, Lebanon)

  • Salah Abosedra

    (American University in the Emirates Dubai, UAE)

  • Abdallah Dah

    (Lebanese American University, Lebanon)

Abstract

We empirically estimate the short- and the long-run effects of fiscal policy on the Lebanese economy. Such estimates should be valuable in shaping the administrative reforms of the budgetary process in Lebanon where the debt-to-GDP ratio reached about 146% in 2013 (Bank Audi, 2013)0. A Vector Error Correction model is estimated to determine the long-run relationship between government spending and government revenues and their short-run dynamics. The results indicate that long-run adjustments are better managed through government revenues and expenditures, whereas short-run imbalances should be offset by changes in spending. Two adjustment mechanisms leading to long-run equilibrium are identified and their dynamics are explained. The first is "value-based" which stipulates that government reduces spending and increases revenues when the economy is growing. The second is "cost-based" where reduction in government expenditures is called for when interest rates increase.

Suggested Citation

  • Bernard Ben Sita & Salah Abosedra & Abdallah Dah, 2015. "Short and long-run budgetary relationships: evidence from Lebanon," Journal of Developing Areas, Tennessee State University, College of Business, vol. 49(2), pages 77-91, April-Jun.
    • Handle: RePEc:jda:journl:vol.49:year:2015:issue2:pp:77-91
    as

    Download full text from publisher

    File URL: http://muse.jhu.edu/journal_of_developing_areas/v049/49.2.sita.html
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    VEC; government expenditures; government revenues; Lebanon; developing areas;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jda:journl:vol.49:year:2015:issue2:pp:77-91. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Abu N.M. Wahid (email available below). General contact details of provider: https://edirc.repec.org/data/cbtnsus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.