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The Causal Relationship Between Government Spending
and Revenue in an Oil-Dependent Economy:
The Case of Nigeria
-- Omo Aregbeyen and Taofik Mohammed Ibrahim
This paper applies the technique of Granger causality to determine the relationship between total government expenditure and revenue in Nigeria for the period 1970-2006. The findings of the study generally support the existence of bidirectional causality between government spending and tax revenue, suggesting that the fiscal synchronization hypothesis is confirmed for Nigeria.
© 2011 IUP. All Rights Reserved.
An Analysis of Pattern and Determinants
of Public Expenditure on Health in Andhra Pradesh, India
-- T Subba Lakshmi, Prasant Kumar Panda and Himanshu Sekhar Rout
The paper seeks to analyze the pattern and determinants of public expenditure on health in Andhra Pradesh, India, considering a dataset for the period 1985-2005. Simple ratios, percentage methods and multiple regression technique are adopted in the study. It is found that the health expenditure in absolute terms increased remarkably during the study period in Andhra Pradesh, but as a ratio of total government expenditure and social service expenditure in the state, it showed a decreasing trend. The share of capital expenditure is found to be low. The determinant analysis suggests that the increase in health expenditure has been determined by factors like per capita income, literacy rate and population rather than fiscal deficit and infant mortality rate. The percentage GDP spending on health in the state is around 1, which is low and can be increased by following a suitable mechanism in increasing resource efficiency. This would also help to increase capital investments in health sector in terms of opening up additional hospitals in the backlog areas.
© 2011 IUP. All Rights Reserved.
Automatic Stabilizers in Israel: The Tax Burden
-- Yaron Zelekha
When forces act on an economy, either to increase its activity or to cause a retreat, it activates a series of automatic self-stabilizers for the purpose of returning it to its original level of activity. This study examines the effects of one of the most important stabilizers, the tax-burden stabilizer. The paper makes two important contributions to the research of the tax-burden stabilizer. First, it adds to the very limited literature an empirical evidence for the strengths of the tax-burden stabilizer in the short term relative to the long term and its ability to neutralize economic policy aiming to revive an economy. Second, it presents empirical evidence that an economic policy which takes into account the magnitude of the tax-burden stabilizer can neutralize most of its effects.
© 2011 IUP. All Rights Reserved.
Central Government Revenue and Expenditure Relationship
in Indian Economy: An Alternative Approach Based
on Beveridge-Nelson Decomposition
-- Suman Sikdar and C K Mukhopadhyay
This paper examines the Granger causal relation between government revenue and expenditure over the period 1971-2010. The study emphasizes on the idea that the relationship can truly be captured when the relation between anticipated parts and that between unanticipated parts of the variable are studied separately. In-sample one-step ahead ARIMA(3, 1, 1) forecasts for expenditure and ARIMA(2, 1, 0) forecasts for revenue constitute the anticipated parts for expenditure and revenue ( and ) respectively. The respective forecast errors constitute the unanticipated parts of the variables. and , both I(1) variables, are found to be cointegrated. VAR(2, 3) model for these variables testifies to the unidirectional Granger causality from expenditure to revenue. Variance decomposition analysis based on this VAR(2, 3) model supports this finding. White noise unanticipated parts in the VAR(2, 1) model further testify to unidirectional causality from expenditure to revenue. This finding draws large support from the variance decomposition analysis for and . The findings negate the ‘hypothesis of independence’ given forth by the study with observed series on xt and Rt.
© 2011 IUP. All Rights Reserved.
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