The Causal Link between Government Expenditure and Government Revenue in Ghana
Journal Title: Asian Economic and Financial Review - Year 2012, Vol 2, Issue 2
Abstract
The study aimed at determining the causal link between government expenditure and government revenue of Ghana over the period 1960 to 2007. Four hypotheses were tested namely: tax-spend hypothesis, spend-tax hypothesis, fiscal synchronization hypothesis and institutional separation hypothesis. The data was obtained from World Bank development indicators’ and the state of the Ghanaian economy. The study employed Granger causality test, augmented Dickey and Fuller (ADF) and Phillip-Perron (PP) tests to examine the causal link between government expenditure and revenue of Ghana. The result shows that there is bi-directional causality such that both government expenditure and government revenue of Ghana have temporal precedence over each other. This means that changes in government revenue precede changes in government expenditure. In order to ensure that expenditure do not move too far away from revenue, the tax net of Ghana should be expanded to capture all “taxable” individuals and firms to increase government revenue.
Authors and Affiliations
Richard Doh-Nani| Department of Economics, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana, Dadson Awunyo-Vitor| Department of Agricultural Economics and Agribusiness, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana
Keywords
Related Articles
- EP ID EP1781
- DOI -
- Views 525
- Downloads 34
AN EXAMINATION OF THE FACTORS THAT DETERMINE THE PROFITABILITY OF THE NIGERIAN BEER BREWERY FIRMS
This paper examines the internal factors that determine the profitability of the beer brewery firms in Nigeria. An OLS in the form of multiple regressions were applied to annual data generated from the annual statements...
ECONOMETRICS ANALYSIS OF IMPACT OF CAPITAL MARKET ON ECONOMIC GROWTH IN NIGERIA (1971-2010)
The stock market is a common feature of a modern economy and it is reputed to perform some necessary functions, which promote the growth and development of the economy. This study examines whether or not stock market pro...
Market Liquidity Behaviour in Futures Markets: Empirical Evidence
In this study, we examine the relations between the three keys variables of liquidity such as trading volume, bid-ask spread, and intraday price volatility. Hausman’s (1978) tests of specification confirmed that trading...
WILLINGNESS TO PAY FOR THE TREATMENT OF ENVIRONMENTAL HAZARDS: A CASE STUDY OF PESHAWAR
Safe and human friendly environment is one of the most important issues in world today. This paper has addressed one of such important issue, the treatment of environmental hazard in form of solid waste in Peshawar Distr...
SV MIXTURE, CLASSIFICATION USING EM ALGORITHM
The present paper presents a theoretical extension of our earlier work entitled“A comparative study of two models SV with MCMC algorithm” cited, Rev Quant Finan Acc (2012) 38:479-493 DOI 10.1007/s11156-011-0236-1 where w...