Evaluation of Revenue and Expenditure Hypotheses: Evidence from Pakistan (1972-2015) Using EViews Software
Journal Title: Journal of Computing and Management Studies (JCMS) - Year 2018, Vol 2, Issue 1
Abstract
In the field of public finance economics, the potential links between government revenue and government expenditure is still an unsettled issue. Due to increased budget deficits and defaults in many developed and developing countries, it has intensely attracted the attention of policy analysts, theorists and politicians. On a theoretical front, four major hypotheses have resulted about the inter-temporal association between taxation (revenue) and spending. The first hypothesis proposed by Friedman (1978) and Buchanan and Wagner (1978) is the tax-spend hypothesis (where there is a unidirectional causality from tax to expenditure); the spend-tax hypothesis proposed by Peacock and Wiseman (1961), (where there is a unidirectional causality running from spend to tax); the fiscal synchronization hypothesis (where there is bidirectional causality and decisions are made concurrently)(Meltzer & Richard, 1981; Musgrave, 1966), and the institutional separation hypothesis or fiscal neutrality introduced by Beghestani and McNown (1994) relates that there is no connection between government revenue and expenditure such that no causal relation between revenue and spending is to be expected. This paper aims to investigate the causal relationship between government revenue and government expenditure of Pakistan, using time series data from 1972 to 2015. To forecast empirical and dynamic impact of random disturbances on the systems of variables, five steps VAR technique has been used. After testing empirical results shows no relationship between government revenue and expenditure, providing evidence of institutional separation in Pakistan. The study suggests that government should take expenditure and revenues decisions separately and target long run economic growth.
Authors and Affiliations
Muhammad Baqir Ali, Amjad Amin
Keywords
Related Articles
- EP ID EP279761
- DOI -
- Views 61
- Downloads 0
Presentation Practice Production Approach (PPP) for Teaching English as a Second Language
Intensive studies have been published and issued in the last decades that defined the teaching grammar techniques and methods. All the academic articles and books that titled grammar teaching approaches aimed to copious...
Management of Service Quality for the Consumer of Health Care Services
In this fast moving world particularly in business environment if the competitive advantages are to be obtained then the company or any organization need to have such technology so that the data on market demands and r...
Controllability of Buildings: Computing and Managing Energy in
Modern buildings utilise multiple systems for energy generation, supply and storage in order to maintain occupant comfort. Consequently, complex computer based energy management systems are utilised for design and operat...
An Analysis of Complexity Metrics for Website Yuhui, Ma
With increasing contents and features, it is clear that the growth of the World Wide Web has brought benefits for individuals and organisations. For website users, they would be benefited by the frequently updated inform...
A Wireless Platform for the Early Detection of Arthritis using Home and Body Sensor Network
Information and communications technology influences many of the activities we perform on any given day. Through the widespread availability and use of consumer electronics we have almost augmented ourselves to permanent...