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On the Causal Relationship between Government Expenditure and Tax Revenue in Pakistan

Author

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  • M. Haider Hussain

    (Social Policy & Development Center)

Abstract

This paper applies the technique of Granger Causality to determine the relationship between total government expenditures and total tax revenue using annual revised estimates. The analysis discovers a firm unidirectional effect from expenditure to revenue suggesting the preference of controlling the spending decisions to reduce the tax revenue-expenditure deficit.

Suggested Citation

  • M. Haider Hussain, 2005. "On the Causal Relationship between Government Expenditure and Tax Revenue in Pakistan," Macroeconomics 0509014, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpma:0509014
    Note: Type of Document - pdf; pages: 12
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/0509/0509014.pdf
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    References listed on IDEAS

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    2. 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.
    3. Michael Marlow & Neela Manage, 1987. "Expenditures and receipts: Testing for causality in state and local government finances," Public Choice, Springer, vol. 53(3), pages 243-255, January.
    4. Benjamin Cheng, 1999. "Causality between taxes and expenditures: Evidence from Latin American countries," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 23(2), pages 184-192, June.
    5. Joulfaian, David & Mookerjee, Rajen, 1990. "The Intertemporal Relationship between State and Local Government Revenues and Expenditures: Evidence from OECD Countries," Public Finance = Finances publiques, , vol. 45(1), pages 109-117.
    6. von Furstenberg, George M & Green, R Jeffrey & Jeong, Jin-Ho, 1986. "Tax and Spend, or Spend and Tax?," The Review of Economics and Statistics, MIT Press, vol. 68(2), pages 179-188, May.
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    Cited by:

    1. Silas Muyela Nganyi & Ambrose Jagongo & Gerald Kalenywa Atheru, 2019. "Determinants of Government Expenditure on Public Flagship Projects in Kenya," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(6), pages 133-133, June.
    2. 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.
    3. Tahir Sadiq, 2010. "The Causality between Revenues and Expenditure of the Federal and Provincial Governments of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(4), pages 651-662.

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    More about this item

    Keywords

    Expenditure; Tax Revenue; Causality;
    All these keywords.

    JEL classification:

    • E - Macroeconomics and Monetary Economics

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