scholarly journals Government revenue and expenditure nexus in South Africa

2013 ◽  
Vol 10 (2) ◽  
pp. 256-269 ◽  
Author(s):  
Esman Nyamongo ◽  
Niek Schoeman ◽  
Moses Sichei
Keyword(s):  
South Africa ◽  
Granger Causality ◽  
Government Expenditure ◽  
Unit Roots ◽  
Government Revenue ◽  
Test Results ◽  
Vector Autoregressive ◽  
Seasonal Unit Roots ◽  
Long Run ◽  
Short Run

This paper investigates the nexus between government expenditure and government revenue in South Africa within the framework of a vector autoregressive (VAR) approach. It uses the Hylleberg et al. (1990) method to test for seasonal unit roots and finds that government revenue and government expenditure have unit roots at all frequencies. The Johansen procedure test results reveal that these variables are cointegrated. It is further established that revenue and expenditure are linked bidirectionally by Granger causality in the long-run, while there is no evidence of Granger causalityin the short-run in South Africa.

scholarly journals The causal and cointegration relationship between government revenue and government expenditure

2017 ◽  
Vol 6 (3) ◽  
pp. 23-32
Author(s):  
Kebitsamang Anne Sere ◽  
Ireen Choga
Keyword(s):  
South Africa ◽  
Time Series Data ◽  
Government Expenditure ◽  
Series Data ◽  
Government Revenue ◽  
Causality Test ◽  
Vector Error Correction ◽  
Long Run ◽  
Reserve Bank ◽  
Short Run

This study determines the causal relationship that exists between government revenue and government expenditure in South Africa. The study employed annual time series data from the year 1980 to 2015 taken from the South African Reserve Bank. The Johansen multivariate method was employed to test for co-integration and for causality the Vector Error Correction/Granger causality test was employed. The empirical results suggest that there is a long-run relation-ship between government revenue and government expenditure. The causality result suggests that there is no causality between government revenue and government expenditure in South Africa. Thus, policy makers in the short run should determine government revenue and government expenditure of South Africa independently when reducing the budget deficit.

scholarly journals Tax-Spend, Spend-Tax or Fiscal Synchronization Hypothesis: Evidence from Iran

2014 ◽  
Vol 34 ◽  
pp. 1-20
Author(s):  
Abbas Ali Rezaei
Keyword(s):  
Structural Changes ◽  
Government Expenditure ◽  
Unit Roots ◽  
Point Of View ◽  
Government Revenue ◽  
Budget Deficits ◽  
Significance Level ◽  
Long Run ◽  
Augmented Dickey Fuller ◽  
Short Run

The relationship between revenue and government expenditure is an important subject in public economics especially for Iran country, which is suffering from persistent budget deficits. From point of view of theoretical studies, there are essentially four schools of thought on the direction of causation between government expenditure and revenue. The main purpose of this study is to investigate the Long and short Run relationship between government revenue and government expenditure in Iran Country covering data 1978- 2012 with using An Auto Regressive Distributive Lag (ARDL) Approach. The Iranian economy has been subject to a multitude of structural changes and regime shifts during the sample period. First, time series properties of the data are first analysed by Augmented Dickey-Fuller (ADF), Zivot-Andrews and Lee – Strazicich (2003, 2004) model. The results of the ADF and Lee – Strazicich models indicate that all series under investigation are non-stationary at level. However, it is evident from the results of Augmented Dickey-Fuller and Lee – Strazicich tests that revenue and government expenditure are stationary at first difference because null hypotheses of unit roots for all the variables are rejected at 1 percent significance level then, we investigated causality between revenue and government expenditure by using an application of Toda-Yamamoto approach. Their evidence generally found unidirectional causality running from government revenue to government expenditure. So, these results consistent with the revenue-spend hypothesis. In the three stage, Autoregressive Distributeded Lag (ARDL) technique is used to describe both long run relationships and short run dynamic adjustments between government revenue and expenditure variables. The results of this paper support the Freidman (1978) hypothesis that government revenues cause expenditure and revenues have a positive causal impact on government expenditure.

ATTAINMENT OF HIGHER ENROLLMENT RATES IN PAKISTAN: A MACROECONOMIC AND ECONOMETRIC STUDY

2012 ◽  
Vol 01 (07) ◽  
pp. 17-29
Author(s):  
Furrukh Bashir ◽  
Shahbaz Nawaz ◽  
Rahat Ullah ◽  
Muhammad Ramzan Arshad ◽  
Munwar Bagum ◽  
...  
Keyword(s):  
Labor Force ◽  
Health Expenditure ◽  
Price Index ◽  
Consumer Price Index ◽  
Government Expenditure ◽  
Government Revenue ◽  
Long Run ◽  
University Enrollment ◽  
Enrollment Rates ◽  
Short Run

Education is always considered as the major determinant for the development of any economy. Enrollment at various levels also shows that how much education is common within the citizens of the country. Considering the importance of enrollment, the current study examines the influence of some macroeconomic variables on various levels i.e. primary, secondary, higher, college, professional and university enrollment in Pakistan. Time series data has been gathered on consumer price index, government revenue, employed labor force, government expenditure, and health expenditure for the period from 1972 to 2010. For long run estimates, Johansen Co integration test is used and short run estimates are taken through error correction model. The results of the study exhibit positive association of employed labor force, government expenditure and health expenditure with primary, secondary, higher, college, professional and university enrollment in Pakistan. On the other side, consumer price index and government revenue have been found to be inversely influencing enrollment at various levels. Short run results are also much favorable for the economy and reveals convergence towards long run equilibrium due to any disturbances in the short run period. At the end study gives some policy implications that government should decrease consumer price index and tax rate and to increase government expenditure in terms of education and health for higher enrollment rates in Pakistan.

scholarly journals Government Size and Economic Growth in Vietnam: A Panel Analysis

2014 ◽  
Vol 222 ◽  
pp. 17-39
Author(s):  
THÀNH SỬ ĐÌNH
Keyword(s):  
Economic Growth ◽  
Generalized Method Of Moments ◽  
Government Expenditure ◽  
Provincial Government ◽  
Government Size ◽  
Government Revenue ◽  
Long Run ◽  
Short Run ◽  
Per Capita ◽  
A Share

The effect of government relative size on economic growth is a contentious issue. This paper is undertaken to test the relationship between government size and economic growth in Vietnam. The study is a panel data investigation, involving 60 provinces over the period 1997–2012. Various measures of government size are defined: provincial government expenditure as a share of gross provincial product (GPP), provincial government revenue as a share of GPP, real provincial government expenditure per capita, and real provincial government revenue per capita. Empirical estimates are employed by conducting Difference Generalized Method of Moments method proposed by Arellano and Bond (1991) and Pooled Mean-Group method by Pesaran, et al. (1999). These tests reveal: (i) provincial government expenditure (revenue) as a share of GPP has a significantly negative effect on economic growth; and (ii) the real government expenditure (revenue) per capita has a significantly positive effect on economic growth. It is also found that the long-run and short-run coefficients of government expenditure size are significant and negative, that the correction mechanism from the short run disequilibrium to the long run equilibrium is not convergent, and that government employment has a negative correlation with economic growth.

scholarly journals Determinants of fiscal policy behavior in Nigeria

2019 ◽  
Vol 16 (2) ◽  
pp. 1-13 ◽  
Author(s):  
Patrick Ologbenla
Keyword(s):  
Fiscal Policy ◽  
Government Expenditure ◽  
Commodity Price ◽  
Oil Price ◽  
Annual Data ◽  
Government Revenue ◽  
Long Run ◽  
Short Run ◽  
Fiscal Behavior ◽  
Policy Behavior

The study investigated the factors that determine fiscal behavior in Nigeria. The vulnerability of fiscal policy framework in Nigeria to different shocks and the attendant effects on the behavior of fiscal policy are parts of the reasons that prompted this research work. Annual data between 1980 and 2015 on core fiscal variables such as government revenue, government expenditure, fiscal balance, public debt, as well as other variables such as oil price, exchange rate, and inflation rate commodity price among others, are used. The Auto-Regressive Distributed Lag ARDL estimating technique is used to analyze both the long-run and short-run effects of these variables on fiscal behavior in Nigeria. Findings from the study show that fiscal policy in Nigeria is highly vulnerable to shocks from these variables mostly in the short run. Notwithstanding, variables like government revenue, government expenditure, regime of administration, oil price and commodity price volatilities all have sustained effects till the long-run periods. It was discovered that oil price movements is not the only external factor that has pronounced effects on fiscal behavior, but commodity prices volatility generally constitutes an important influential factor in determination of fiscal policy behavior in Nigeria.

scholarly journals THE LONG-RUN RELATIONSHIP BETWEEN INFLATION AND REAL STOCK PRICES: EMPIRICAL EVIDENCE FROM SOUTH AFRICA

2012 ◽  
Vol 13 (4) ◽  
pp. 600-613 ◽  
Author(s):  
Riona Arjoon ◽  
Mariëtte Botes ◽  
Laban K. Chesang ◽  
Rangan Gupta
Keyword(s):  
South Africa ◽  
South African ◽  
Stock Prices ◽  
Stock Price ◽  
Positive Real ◽  
Vector Autoregressive ◽  
Price Response ◽  
Long Run ◽  
Short Run ◽  
Real Value

The existing literature on the theoretical relationship between the rate of inflation and real stock prices in an economy has shown varied predictions about the long run effects of inflation on real stock prices. In this paper, we present some time series evidence on this issue using South African data, by applying the structural bivariate vector autoregressive (VAR) methodology proposed by King and Watson (1997). Our empirical results provide considerable support of the view that, in the long run real stock prices are invariant to permanent changes in the rate of inflation. The impulse responses reveal a positive real stock price response to a permanent inflation shock in the long run, indicating that any deviations in short run real stock prices will be corrected towards the long run value. It is therefore concluded that inflation does not lower the real value of stocks in South Africa, at least in the long run.

scholarly journals The Effect of Financial Development on Productivity, Corporate Tax, Foreign Reserve & Export Vector Autoregressive (Var) Model Approach Case Study on Ireland

2021 ◽  
Author(s):  
Abraham Zewdu Ararso
Keyword(s):  
Granger Causality ◽  
Financial Development ◽  
Export Performance ◽  
Var Model ◽  
Corporate Tax ◽  
Causality Test ◽  
Vector Autoregressive ◽  
Foreign Reserve ◽  
Long Run ◽  
Short Run

Abstract The development financial sector plays indispensable role in accelerating economic growth and improving countries welfare system. Robust financial sector can keep the momentum of economic growth with providing substantial financial support and preserving macroeconomic balance. Given the importance of this sector, this research tried to evaluate the role of Irish financial development on productivity, corporate tax, foreign reserve and export. The research comprises a time period between 1980 until 2016 and used Vector autoregressive (VAR) model. Financial development consists of advancement both in financial institutions as well as in financial markets structure of Ireland. The estimation consists of granger causality test, impulse response estimation and variance decomposition along with VAR estimation result. VAR estimation revealed that financial development caused significant positive effect on Ireland export performance in the short run. Conversely, financial development doesn’t have significant effect on Ireland productivity level, foreign reserve, and corporate tax in the short run. The Granger causality test for the study variables indicates that corporate tax rate in Ireland can cause financial development in the short run, while the remaining variables can’t cause effect on financial development in the short run. The granger causality Wald tests also demonstrates that Irish financial development and productivity can unilaterally cause change in the level of Ireland export performance in the short run. The variance decomposition estimation revealed that financial development is strongly exogenous both in the short run and long run. This indicates that financial development is weak in predicting the fluctuation of productivity, foreign reserve, and corporate tax. Nevertheless, financial development is endogenous both in the short and long run in predicting the fluctuation of Ireland export.

Defence Spending and Economic Growth in South Africa: Evidence from Cointegration and Co-Feature Analysis

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Charles Shaaba Saba
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Granger Causality ◽  
Growth Series ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Defence Spending ◽  
Short Run ◽  
The Business Cycle

Abstract The paper revisits the causality relationship between defence spending and economic growth for South Africa during the period 1960–2018. The results of our estimation show that defence spending and economic growth are cointegrated and that there is bidirectional Granger causality running between defence spending and economic growth in the long run. We then applied a Hodrick-Prescott filter to decompose the trend and the fluctuation components of the defence spending and economic growth series. The findings from the autoregressive distributed lag bounds test estimations show that in the long- and short-run, the trends and cyclicality of defence spending retard economic growth. The estimation results show that there is cointegration between the trends and the cyclical components of the two series, which suggests that the Granger causality possibly relates to the business cycle. This study suggests that investing more and reducing inefficiency spending in the defence sector during fluctuations can further stimulate economic growth in South Africa.

scholarly journals Life insurance, financial development and economic growth in South Africa: An application of the autoregressive distributed lag model

2014 ◽  
Vol 4 (4) ◽  
pp. 81-90 ◽  
Author(s):  
Athenia Bongani Sibindi
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Granger Causality ◽  
Financial Development ◽  
Life Insurance ◽  
Insurance Sector ◽  
Long Run ◽  
Short Run ◽  
Per Capita ◽  
Insurance Development

The life insurance sector may contribute to economic growth by its very mechanism of savings mobilisation and thereby performing an intermediation role in the economy. This ensures that capital is provided to deficient units who are in need of capital to finance their working capital requirements and invest in technology thereby resulting in an increase in output. In this way, it could be argued that life insurance development spurs financial development. In this article we investigate the causal relationship between the life insurance sector, financial development and economic growth in South Africa for the period 1990 to 2012 by applying the ARDL bounds testing procedure. We make use of life insurance density as the proxy for life insurance development, real per capita growth domestic product as the proxy for economic growth and real broad money per capita as the proxy for financial development. We test for cointegration amongst the variables by applying the bounds test and then proceed to test for Granger causality based on the error correction model. Our results confirm that the variables are cointegrated and move in tandem to each other in the long-run. The results also indicate that the direction of causality runs from the economy to the life insurance sector in the short-run which is consistent with the “demand-following” insurance-growth hypothesis. There is also evidence of bidirectional Granger causality running from the economy to financial development and vice versa, both in the long-run and short-run. The results also reveal that life insurance complements financial development in bringing about economic growth further lending credence to the “complementarity” hypothesis.

scholarly journals Government Expenditure and Tax Revenue, Causality and Cointegration: The Experience of Pakistan (1972-2007).

2009 ◽  
Vol 48 (4II) ◽  
pp. 951-959 ◽  
Author(s):  
Zinaz Aisha ◽  
Samina Khatoon
Keyword(s):  
Fiscal Policy ◽  
Granger Causality ◽  
Government Expenditure ◽  
Economic Consequences ◽  
Government Expenditures ◽  
Tax Revenue ◽  
Causality Test ◽  
Long Run ◽  
Short Run ◽  
Tax Hypothesis

This paper establishes empirically the causal relationship and long run relationship between government expenditures and government revenues for the case of Pakistan from 1972 to 2007. Fiscal policy, a short run issue, but that can have testing macro economic consequences. Fiscal policy is viewed as an instrument to mitigate short run fluctuations. In this paper we examine tax/spend or spend/tax hypothesis. For this purpose, bi-directional Granger causality will be applied for instance flow from government expenditure to revenue or revenue to government expenditure. This issue has been concerned with intretemporal relationship between revenue and expenditure, so to check long run relationship Engel Granger cointegration will be used. For checking data stationary, non stationary unit root, and ADF/DF approaches give the proof for this hypothesis. The results show the presence of co-integration between government expenditure and tax revenue variables implying evidence of a stable long-run relationship between them. The Granger Causality test suggest the unidirectional causality flow from government expenditure to tax revenue. Keywords: Government Expenditures, Government Revenues, Granger Causality, Stationary, Co-integration

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