IDEAS home Printed from https://ideas.repec.org/a/sae/sagope/v13y2023i1p21582440231161265.html
   My bibliography  Save this article

Government Expenditures and Tax Revenues in the United States of America

Author

Listed:
  • Dervis Kirikkaleli
  • Bugra Ozbeser

Abstract

This study explores the time-frequency dependency between government expenditures and tax revenues by employing the wavelet coherence approach using data from the United States of America (USA) for the period of 1960Q2 to 2019Q3. The four leading concepts regarding the correlation between government expenditures and tax revenues are the tax-and-spend, spend-and-tax, fiscal synchronization and institutional separation hypotheses. Our results indicate that government expenditures lead to tax revenues in both the short and long run for specific time intervals as proposed by the spend-and-tax hypothesis.

Suggested Citation

  • Dervis Kirikkaleli & Bugra Ozbeser, 2023. "Government Expenditures and Tax Revenues in the United States of America," SAGE Open, , vol. 13(1), pages 21582440231, March.
    • Handle: RePEc:sae:sagope:v:13:y:2023:i:1:p:21582440231161265
    DOI: 10.1177/21582440231161265
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/21582440231161265
    Download Restriction: no
    File URL: https://libkey.io/10.1177/21582440231161265?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Oluwole Owoye, 1995. "The causal relationship between taxes and expenditures in the G7 countries: cointegration and error-correction models," Applied Economics Letters, Taylor & Francis Journals, vol. 2(1), pages 19-22.
    2. Koren, Stephan & Stiassny, Alfred, 1998. "Tax and Spend, or Spend and Tax? An International Study," Journal of Policy Modeling, Elsevier, vol. 20(2), pages 163-191, April.
    3. Magazzino, Cosimo, 2013. "Revenue and expenditure nexus: A case study of ECOWAS," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-27.
    4. Muhammad Islam, 2001. "Structural break, unit root, and the causality between government expenditures and revenues," Applied Economics Letters, Taylor & Francis Journals, vol. 8(8), pages 565-567.
    5. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 940-971, October.
    6. James W. Saunoris, 2015. "The Dynamics of the Revenue–Expenditure Nexus," Public Finance Review, , vol. 43(1), pages 108-134, January.
    7. Andrew T. Young, 2009. "Tax-Spend or Fiscal Illusion?," Cato Journal, Cato Journal, Cato Institute, vol. 29(3), pages 469-485, Fall.
    8. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
    9. James E. Payne, 2003. "A Survey of the International Empirical Evidence on the Tax-Spend Debate," Public Finance Review, , vol. 31(3), pages 302-324, May.
    10. Biljana Tashevska & Borce Trenovski & Marija Trpkova - Nestorovska, 2020. "The Government Revenue–Expenditure Nexus in Southeast Europe: A Bootstrap Panel Granger-Causality Approach," Eastern European Economics, Taylor & Francis Journals, vol. 58(4), pages 309-326, July.
    11. Kevin L. Ross & James E. Payne, 1998. "A Reexamination of Budgetary Disequilibria," Public Finance Review, , vol. 26(1), pages 67-79, January.
    12. Hyunjoo Kim Karlsson, 2020. "Investigation of the time-dependent dynamics between government revenue and expenditure in China: a wavelet approach," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 25(2), pages 250-269, April.
    13. Fabricio Linhares & Glauber Nojosa & Rogerio Bezerra, 2021. "Changes in the revenue–expenditure nexus: confronting evidence with fiscal policy in Brazil," Applied Economics, Taylor & Francis Journals, vol. 53(44), pages 5051-5067, September.
    14. Pal, Debdatta & Mitra, Subrata K., 2017. "Time-frequency contained co-movement of crude oil and world food prices: A wavelet-based analysis," Energy Economics, Elsevier, vol. 62(C), pages 230-239.
    15. Tsangyao Chang & Wen Rong Liu & Steven Caudill, 2002. "Tax-and-spend, spend-and-tax, or fiscal synchronization: new evidence for ten countries," Applied Economics, Taylor & Francis Journals, vol. 34(12), pages 1553-1561.
    16. Vaseem Akram & Badri Narayan Rath, 2019. "Is there any evidence of tax-and-spend, spend-and-tax or fiscal synchronization from panel of Indian state?," Applied Economics Letters, Taylor & Francis Journals, vol. 26(18), pages 1544-1547, October.
    17. George A Vamvoukas, 2012. "Panel data modelling and the tax-spend controversy in the euro zone," Applied Economics, Taylor & Francis Journals, vol. 44(31), pages 4073-4085, November.
    18. Lusine Lusinyan & John Thornton, 2012. "The intertemporal relation between government revenue and expenditure in the United Kingdom, 1750 to 2004," Applied Economics, Taylor & Francis Journals, vol. 44(18), pages 2321-2333, June.
    19. Matthew Zapf & James Payne, 2009. "Asymmetric modelling of the revenue-expenditure nexus: evidence from aggregate state and local government in the US," Applied Economics Letters, Taylor & Francis Journals, vol. 16(9), pages 871-876.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. A. Phiri, 2019. "Asymmetries in the revenue–expenditure nexus: new evidence from South Africa," Empirical Economics, Springer, vol. 56(5), pages 1515-1547, May.
    2. George A. Vamvoukas, 2011. "Panel Data Modeling and the Tax-Spend Controversy in the Euro Zone," Post-Print hal-00716629, HAL.
    3. Ntokozo Patrick Nzimande & Harold Ngalawa, 2022. "Tax-Spend or Spend-Tax? The Case of Southern Africa," Economies, MDPI, vol. 10(4), pages 1-10, April.
    4. James E. Payne, 2003. "A Survey of the International Empirical Evidence on the Tax-Spend Debate," Public Finance Review, , vol. 31(3), pages 302-324, May.
    5. Trachanas, Emmanouil & Katrakilidis, Constantinos, 2013. "Fiscal deficits under financial pressure and insolvency: Evidence for Italy, Greece and Spain," Journal of Policy Modeling, Elsevier, vol. 35(5), pages 730-749.
    6. Oyeyinka OMOSHORO-JONES, 2020. "Investigating The Government Revenue–Expenditure Nexus: Empirical Evidence For The Free State Province In A Multivariate Model," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 11(2), pages 138-156.
    7. Bradley T. Ewing & James E. Payne & Mark A. Thompson & Omar M. Al‐Zoubi, 2006. "Government Expenditures and Revenues: Evidence from Asymmetric Modeling," Southern Economic Journal, John Wiley & Sons, vol. 73(1), pages 190-200, July.
    8. George A Vamvoukas, 2012. "Panel data modelling and the tax-spend controversy in the euro zone," Applied Economics, Taylor & Francis Journals, vol. 44(31), pages 4073-4085, November.
    9. Saunoris, James W. & Payne, James E., 2010. "Tax more or spend less? Asymmetries in the UK revenue-expenditure nexus," Journal of Policy Modeling, Elsevier, vol. 32(4), pages 478-487, July.
    10. Krasnopeeva, Natalia, 2023. "Revenues and expenditures of Russian regional budgets: Granger causality analysis," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 70, pages 5-33.
    11. Taner TURAN & Mesut KARAKAŞ, 2018. "The Relationship between Government Spending and Revenue: Nonlinear Bounds Testing Approach (NARDL)," Sosyoekonomi Journal, Sosyoekonomi Society.
    12. Oluwole Owoye & Olugbenga A. Onafowora, 2011. "The Relationship between Tax Revenues and Government Expenditures in European Union and Non-European Union OECD Countries," Public Finance Review, , vol. 39(3), pages 429-461, May.
    13. Kollias, Christos & Papadamou, Stephanos & Psarianos, Iacovos, 2014. "Fiscal imbalances and asymmetric adjustment under Labour and Conservative governments in the UK," Research in Economics, Elsevier, vol. 68(3), pages 208-213.
    14. 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.
    15. Athanasios Athanasenas & Constantinos Katrakilidis & Emmanouil Trachanas, 2014. "Government spending and revenues in the Greek economy: evidence from nonlinear cointegration," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(2), pages 365-376, May.
    16. repec:asi:ajoerj:2013:p:420-432 is not listed on IDEAS
    17. G A Vamvoukas, 2011. "The Tax-Spend Debate with an Application to the EU," Economic Issues Journal Articles, Economic Issues, vol. 16(1), pages 65-88, March.
    18. Luis Gil-Alana, 2009. "Government Expenditures and Revenues: Evidence of Fractional Cointegration in an Asymmetric Modeling," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 15(2), pages 143-155, May.
    19. Solikin, Akhmad & Nizar, Muhammad Afdi, 2022. "Government Revenue and Government Spending Nexus: A Testing Hypothesis for Indonesia," MPRA Paper 118556, University Library of Munich, Germany.
    20. repec:prg:jnlpep:v:preprint:id:697:p:1-15 is not listed on IDEAS
    21. Edward Ghartey, 2010. "Cointegration and Causal Relationship between Taxes and Spending for Kenya, Nigeria and South Africa," International Economic Journal, Taylor & Francis Journals, vol. 24(2), pages 267-282.
    22. Michele Salvi & Christoph A. Schaltegger, 2023. "Tax more or spend less? Historical evidence from Switzerland’s federal budget plans," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(3), pages 678-705, June.

    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:sae:sagope:v:13:y:2023:i:1:p:21582440231161265. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: SAGE Publications (email available below). General contact details of provider: .

    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.