ASSESSMENT OF BUDGET SUSTAINABILITY IN SARAWAK
Journal Title: Asian Economic and Financial Review - Year 2018, Vol 2, Issue 8
Abstract
This study reexamines the sustainability of budget stance of Sarawak state, 1970-2008. Using the intertemporal borrowing constraint as a framework, the study tests the long-run relationship between government revenue and expenditure. Empirical results demonstrate a long-run equilibrium relationship among the variables. The cointegration test result suggests that Sarawak state’s fiscal stance satisfies the weak sustainability condition. In addition, the Granger causality test result reveals a bi-directional relationship between government revenue and expenditure. This means that fiscal authorities made simultaneous decisions on expenditure and revenue. Government revenue and expenditure will mutually reinforce each other.
Authors and Affiliations
Chin-Hong Puah| Faculty of Economics and Business, Universiti Malaysia Sarawak, Evan Lau| Faculty of Economics and Business, Universiti Malaysia Sarawak, Hui-Fern Teo| Faculty of Economics and Business, Universiti Malaysia Sarawak
Keywords
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- EP ID EP1842
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