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Asymmetries in the revenue–expenditure nexus: new evidence from South Africa

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  • A. Phiri

    () (Nelson Mandela University)

Abstract

Abstract In this study, we relax the conventional assumption of a linear cointegration relationship in the revenue–expenditure nexus by examining asymmetric equilibrium effects in the South African fiscal budget using quarterly data collected between 1960:Q1 and 2016:Q2. Our mode of empirical investigation is the MTAR model supplemented with a TEC component. Our estimation results primarily point to a weakly sustainable budget in which there exists bidirectional causality between revenues and expenditures, a result which offers support in favour of the fiscal synchronization hypothesis. Collectively, our empirical results have important implications for South African fiscal policymakers.

Suggested Citation

  • A. Phiri, 2019. "Asymmetries in the revenue–expenditure nexus: new evidence from South Africa," Empirical Economics, Springer, vol. 56(5), pages 1515-1547, May.
  • Handle: RePEc:spr:empeco:v:56:y:2019:i:5:d:10.1007_s00181-017-1397-0
    DOI: 10.1007/s00181-017-1397-0
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    Cited by:

    1. Andrew Phiri, 2018. "How sustainable are fiscal budgets in the Kingdom of Swaziland?," Working Papers 1810, Department of Economics, Nelson Mandela University, revised Mar 2018.
    2. Ibrahim, Taofik, 2018. "Government expenditure-revenue nexus reconsidered for Nigeria: Does structural break matter?," MPRA Paper 86220, University Library of Munich, Germany, revised 21 Oct 2017.

    More about this item

    Keywords

    Revenue; Expenditure; Fiscal budget sustainability; Threshold cointegration; MTAR; Causality; South Africa;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • 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
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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