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The relationship of government revenue and government expenditure: a case study of Malaysia

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  • Ullah, Nazim

Abstract

Malaysia is a developing Islamic state that faced budget deficit since 1998. But it is not accepted by all and hopes that state should be in a position of either balance budget or surplus budget. The optimum level of Government budget is the state where government expenditure is totally offset by source of government revenue and that can be achieved through increasing tax revenue or decreasing expenditure. The aim of this study to find out the theoretical relationship between the revenue and the expenditure in Malaysia using the four hypotheses from literature study. The study finds out that although majority of the government revenue is from direct tax, the government spending only varies due to change in indirect tax revenue and non-tax revenue. Basically the study is analytical in nature and based on data collected from published sources focusing on the impact of the revenue and the expenditure on the continuous development of the Malaysia. Finally, we try to suggest to the authority to follow the proper rules and guidelines at the time policy making whereby they will be able to coup up with the optimum revenue and relevant expenditure in the state.

Suggested Citation

  • Ullah, Nazim, 2016. "The relationship of government revenue and government expenditure: a case study of Malaysia," MPRA Paper 69123, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:69123
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    References listed on IDEAS

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    1. Mr. Qing Wang & Mr. Ugo Fasano-Filho, 2002. "Testing the Relationship Between Government Spending and Revenue: Evidence From GCC Countries," IMF Working Papers 2002/201, International Monetary Fund.
    2. Goh, Soo Khoon & Dawood, Mithani, 1999. "Causality between government revenue and expenditure in Malaysia: A seasonal cointegration test," MPRA Paper 49383, University Library of Munich, Germany.
    3. Roshaiza Taha & Nanthakumar Loganathan, 2008. "Causality Between Tax Revenue And Government Spending In Malaysia," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 2(2), pages 63-73.
    4. Damian C Nwosu & Harrison O Okafor, 2014. "Government Revenue and Expenditure in Nigeria: A Disaggregated Analysis," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(7), pages 877-892.
    5. Damian C. NWOSU & Harrison O. OKAFOR, 2014. "Government Revenue and Expenditure in Nigeria: A Disaggregated Analysis," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(7), pages 877-892, July.
    6. Eita, Joel Hinaunye & Mbazima, Daisy, 2008. "The Causal Relationship Between Government Revenue and Expenditure in Namibia," MPRA Paper 9154, University Library of Munich, Germany.
    7. Neelesh Gounder & Paresh Kumar Narayan & Arti Prasad, 2007. "An empirical investigation of the relationship between government revenue and expenditure," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 34(3), pages 147-158, February.
    8. Jaka Sriyana, 2009. "A causality relationship between tax revenue and government expenditure in Indonesia," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 1(2), pages 93-101, April.
    9. Takumah, Wisdom, 2014. "The Dynamic Causal Relationship between Government Revenue and Government Expenditure Nexus in Ghana," MPRA Paper 58579, University Library of Munich, Germany.
    10. Tuck Cheong Tang, 2002. "Demand for M3 and expenditure components in Malaysia: assessment from bounds testing approach," Applied Economics Letters, Taylor & Francis Journals, vol. 9(11), pages 721-725.
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    Cited by:

    1. Agnieszka Alińska & Beata Zofia Filipiak & Aneta Kosztowniak, 2018. "The Importance of the Public Sector in Sustainable Development in Poland," Sustainability, MDPI, vol. 10(9), pages 1-24, September.
    2. Mohammad Ali Al Hayek, 2018. "The Relationship between Revenues Size and Actual Expenditures through the Closing Account Result of the Jordanian Government," International Journal of Business and Management, Canadian Center of Science and Education, vol. 13(2), pages 1-40, January.
    3. Firend Al. R., 2018. "Marketing Strategies of Services and Purchasing Incentives in Asia," GATR Journals jmmr187, Global Academy of Training and Research (GATR) Enterprise.
    4. Volkan Yurdadog & Neslihan Coskun Karadag & Murat Albayrak & Oguzhan Bozatli, 2022. "Analysis of Non-tax Revenue: Evidence from the European Union," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 24(60), pages 485-485, April.

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    More about this item

    Keywords

    government revenue; government expenditure; budget deficit; Malaysia;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General

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