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Asymmetric modelling of the revenue-expenditure nexus: evidence from aggregate state and local government in the US


  • Matthew Zapf
  • James Payne


This study examines the time series dynamics between US aggregate state and local government receipts and expenditures in differentiating between four hypotheses related to the revenue-expenditure nexus: tax-spend, spend-tax, fiscal synchronization and institutional separation hypotheses. Unlike previous research at the state and local level, the possibility of asymmetries in the budgetary process is explored using the threshold autoregressive (TAR) and momentum threshold autoregressive (MTAR) cointegration framework of Enders and Siklos (2001). The results indicate the absence of any asymmetries (TAR or MTAR) in the adjustment towards budgetary equilibrium. The symmetric error correction model provides support for the spend-tax hypothesis.

Suggested Citation

  • 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.
  • Handle: RePEc:taf:apeclt:v:16:y:2009:i:9:p:871-876 DOI: 10.1080/13504850701222095

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    References listed on IDEAS

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    Cited by:

    1. HYE, Qazi Muhammad Adnan & M Anwar, Jalil, 2010. "Revenue and Expenditure Nexus: A Case Study of Romania," MPRA Paper 32132, University Library of Munich, Germany.
    2. repec:bla:sajeco:v:84:y:2016:i:4:p:520-537 is not listed on IDEAS
    3. repec:asi:ajoerj:2013:p:420-432 is not listed on IDEAS
    4. Phiri, Andrew, 2016. "Asymmetries in the revenue-expenditure nexus: New evidence from South Africa," MPRA Paper 75224, University Library of Munich, Germany.
    5. repec:seb:journl:v:15:y:2017:i:1:p:47-61 is not listed on IDEAS
    6. 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.

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