An Examination of the Causal Relationship between Government Spending and Revenue: A Cointegration Analysis

This paper tests the validity of the proposition that there is a causal relationship between government expenditure and government revenue for Greece over the period 19571993. The empirical analysis employs tests of cointegration as pre-tests for Granger tests of causality. The empirical evidence su...

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Bibliographic Details
Published in:Public choice 1996-12, Vol.89 (3/4), p.363-374
Main Authors: Hondroyiannis, George, Papapetrou, Evangelia
Format: Article
Language:English
Subjects:
Budget deficits
Causality
Cointegration analysis
Economic development
Economic stabilization
ECONOMIC VALUE
EMPIRICAL ANALYSIS
Equilibrium
Expenditure
Expenditures
Federal budget deficit
FOR ANCIENT GREECE SEE GREECE/ANC
GDP
Government
Government budgets
Government expenditures
Government revenue
Government spending
Gross Domestic Product
Hypotheses
Market disequilibrium
MODERN GREECE
NATIONAL GOVERNMENT
Public expenditure
Public revenue
Ratios
Revenue
Statistical data
Taxation
Taxes
Time series
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Summary:This paper tests the validity of the proposition that there is a causal relationship between government expenditure and government revenue for Greece over the period 19571993. The empirical analysis employs tests of cointegration as pre-tests for Granger tests of causality. The empirical evidence suggests that there is a long-run relationship between government spending and government revenue and expenditures cause revenues.
ISSN:0048-5829
1573-7101
DOI:10.1007/BF00159364