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The Causal Relationship Between Government Revenue and Expenditure in Namibia

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  • Eita, Joel Hinaunye
  • Mbazima, Daisy

Abstract

The relationship between government revenue and government expenditure is important, given its relevance for policy especially with respect to the budget deficit. The purpose of this paper is to investigate the relationship between government revenue and government expenditure in Namibia. It investigates the causal relationship between government revenue and government expenditure using Granger causality test through cointegrated vector autoregression (VAR) methods for the period the period 1977 to 2007. The paper tests whether government revenue causes government expenditure or whether the causality runs from government expenditure to government revenue, and if there is bi-directional causality. The results show that there is unidirectional causality from government revenue to government expenditure. This suggests unsustainable fiscal imbalances (deficit) can be mitigated by policies that stimulate government revenue.

Suggested Citation

  • Eita, Joel Hinaunye & Mbazima, Daisy, 2008. "The Causal Relationship Between Government Revenue and Expenditure in Namibia," MPRA Paper 9154, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:9154
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    References listed on IDEAS

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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. A. Phiri, 2019. "Asymmetries in the revenue–expenditure nexus: new evidence from South Africa," Empirical Economics, Springer, vol. 56(5), pages 1515-1547, May.
    3. 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.
    4. Dizaji, Sajjad Faraji, 2014. "The effects of oil shocks on government expenditures and government revenues nexus (with an application to Iran's sanctions)," Economic Modelling, Elsevier, vol. 40(C), pages 299-313.
    5. Dizaji, S.F., 2012. "The effects of oil shocks on government expenditures and government revenues nexus in Iran (as a developing oil-export based economy)," ISS Working Papers - General Series 540, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    6. Shamsideen Adewale Yusuff & Abisoye Abolaji, 2020. "The Impact of Budget Deficit on Economic Growth in an Emerging Market: An Application of the ARDL Technique," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(4), pages 351-361, December.
    7. Ahmad Zubaidi Baharumshah & Aliyu Alhaji Jibrilla & Abdalla Sirag & Hamisu Sadi Ali & Ibrahim Muye Muhammad, 2016. "Public Revenue-Expenditure Nexus in South Africa: Are there Asymmetries?," South African Journal of Economics, Economic Society of South Africa, vol. 84(4), pages 520-537, December.
    8. Adel Shakeeb MOHSEN, 2016. "Effects of oil returns and external debt on the government investment: A case study of Syria," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(606), S), pages 255-262, Spring.
    9. Aliyu Alhaji Jibrilla, 2016. "Fiscal sustainability in the presence of structural breaks: Does overconfidence on resource exports hurt government’s ability to finance debt? Evidence from Nigeria," Cogent Economics & Finance, Taylor & Francis Journals, vol. 4(1), pages 1170317-117, December.
    10. Magazzino, Cosimo, 2010. "Public expenditure and revenue in Italy, 1862-1993," MPRA Paper 27308, University Library of Munich, Germany.
    11. Nemanja Lojanica, 2015. "Government Expenditure and Government Revenue: The Causality on the Example of the Republic of Serbia," MIC 2015: Managing Sustainable Growth; Proceedings of the Joint International Conference, Portorož, Slovenia, 28–30 May 2015,, University of Primorska, Faculty of Management Koper.
    12. Ullah, Nazim, 2016. "The Relationship of Government Revenue and Government Expenditure: A case study of Malaysia," MPRA Paper 69123, University Library of Munich, Germany.
    13. Omoshoro-Jones, Oyeyinka Sunday, 2020. "Investigating the Government Revenue–Expenditure Nexus: Empirical Evidence for the Free State Province in a Multivariate Model," MPRA Paper 101349, University Library of Munich, Germany.
    14. Takumah, Wisdom, 2014. "The Dynamic Causal Relationship between Government Revenue and Government Expenditure Nexus in Ghana," MPRA Paper 58579, University Library of Munich, Germany.
    15. Hambeleleni Iiyambo & Teresia Kaulihowa, 2020. "An assessment of the relationship between public debt, government expenditure and revenue in Namibia," Public Sector Economics, Institute of Public Finance, vol. 44(3), pages 331-353.
    16. Felix Kimtai Kiminyei, 2019. "Empirical Investigation on the Relationship among Kenyan Public Debt, Tax Revenue and Government Expenditure," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 5(1), pages 142-159, March.
    17. Obeng, Samuel, 2015. "A Causality Test of the Revenue-Expenditure Nexus in Ghana," MPRA Paper 63735, University Library of Munich, Germany, revised 25 Feb 2015.

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    More about this item

    Keywords

    government expenditure; government revenue; causality; cointegration test; revenue-spend; spend-revenue; fiscal synchronisation; Namibia;
    All these keywords.

    JEL classification:

    • 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
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • H0 - Public Economics - - General
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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