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Volume 59, Issue 2


Revisiting the Government Revenue-Expenditure Nexus: Evidence from 15 OECD Countries Based on the Panel Data Approach

Chang, Tsangyao; Chiang, Gengnan

Year: 2009   Volume: 59   Issue: 2   Pages: 165-172

Abstract: This paper utilizes panel unit root, panel cointegration, and panel Granger causality test techniques to examine the inter-temporal relationship between government revenues and government expenditures in a panel of 15 OECD countries over the period 1992–2006. We find evidence of bidirectional causality between government revenues and government expenditures, supporting the fiscal synchronization hypothesis. The findings of this paper have important implications for fiscal policy decision-making in these 15 OECD countries after the signing of the EU Treaty in Maastricht on February 7, 1992.

JEL classification: C23, F36, H5, H6

Keywords: government revenues; expenditures; panel unit root; panel cointegration; panel Granger causality; tax-and-spend hypothesis; spend-and-tax hypothesis; fiscal synchronization hypothesis; institutional separation hypothesis


RePEc: http://ideas.repec.org/a/fau/fauart/v59y2009i2p165-172.html

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