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 679
- Downloads 34
EXCHANGE MARKET PRESSURE IN INDONESIA: A UNIVARIATE MARKOV SWITCHING ANALYSIS
The aim of this paper is to analyze the nature of exchange market pressure in the case of the Indonesian economy. More specifically, this paper aims to answer whether there is non-linearity or multiple equilibria in the...
FINANCIAL CHALLENGES FACED BY RETAIL SMES OPERATING IN A MULTI- CURRENCY ENVIRONMENT. A CASE OF GWERU URBAN, ZIMBABWE
The study sought to find out financial challenges encountered by retail SMEs operating in a multi-currency environment with particular reference to Gweru Urban in Zimbabwe. The replacement of the Zimbabwean dollar by for...
CAN EMERGING MARKET PROTECTIONISM BE BENEFICIAL?
This paper employs a sequential trade competition model to analyze differential trade effects on an emerging market. We find that free trade is not able to alter the ex post dominance of the foreign incumbents and, conve...
GOVERNANCE, OWNERSHIP STRUCTURE AND REPORTING FEATURES: THE CASE STUDY OF AN ITALIAN SOCIAL COOPERATIVE NETWORK
The diffusion and the consolidation of the experiences and the realities of the third sector were determined during the ?80s and ?90s, in concomitance with the reflection and the reorganization of the social politics, or...
ENHANCING EMPLOYEE PERFORMANCE IN NIGERIA THROUGH EFFICIENT TIME MANAGEMENT FRAMEWORKS
In developing countries like Nigeria, the need for time management in organizations cannot be over emphasized. Time management helps in achieving individual and organizational goals in view of the limited amount of time...