Figure 1
Line trends of tax revenue – government expenditure – and GDP per capita for the whole sample in 2000-2015
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Focusing on investigation of " long-term " relationship between tax revenue, expenditure, and economic growth, this paper employs Granger causality test and finds that the linkage between tax revenue and spending is a bi-directional causal correlation. Furthermore, applying Persyn & Westerlund's (2008) co-integration test allows for corroboration o...
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... 15 to investigate the effect of tax revenue on public expenditure in Ghana. The study used VAR analysis method. The study found that there exist both short run and long run relationship between capital budget expenditure and tax revenue. Tax revenue was examined in the reviewed study while the current study will capture tax revenue and oil revenue.Lien and Thanh (2017) investigated and opined that the relationship between tax revenue and government spending are substantial and ambiguous depending on different groups of the economies. The granger causality tests finds that the linkage between tax revenue and spending is bidirectional causal correlation. The study applies Granger pairwise causality test ...
The poor capital expenditure implementation caused by scarce resources, risks related to multilateral loans and Euro-dollar deficit financing of federal government of Nigeria (FGN) amidst tightened global financial conditions motivated this study. The study examined the effect of revenue and budget risk factors on capital expenditure of federal government of Nigeria for the period 1993-2022. Specifically, it investigated the effect of oil revenue on the capital expenditure of FGN; examined the relationship between non-oil revenue and capital expenditure of FGN; evaluated the effect of oil price volatility on capital expenditure of FGN; and assessed the influence of external debt transaction risks on capital expenditure of FGN. The study employed an ex-post facto research design with bounds test and autoregressive distributed lag regression test to produce results on secondary data. The results indicated significant effect of oil revenue from upstream activities on federal government’s capital expenditure (FGCE), while oil revenue from downstream activities proxied with petroleum profit tax had a positive and insignificant effect on FGCE. The non-oil revenue explained a large proportion of the determining factor of FGCE in the long run; company income tax and custom duty collections had positive and significant effects on FGCE, but the effect of value added tax was insignificant on FGCE. More so, the long run estimate of the model reported that Brent UK crude oil price volatility, OPEC spot rate crude oil volatility and West Texas Intermediate crude oil price volatility failed to report significant effect on the federal government capital expenditure in Nigeria. This showed that the oil price volatility is a short run phenomenon that would fade out in short period; hence, the reason for high speed of adjustment of the error correction term. As regards the effect of external debt transaction risks on FGCE, external debt interest servicing cost had a positive effect on FGCE and was statistically significant at 5% level. Global interest rate volatility and the exchange rate risk had positive but statistically insignificant effects on FGCE. The study concluded that revenue and budget risk factors affected the capital expenditure of federal government of Nigeria. The study recommends that government should be tactful in its efforts at fiscal policy synchronisation in line with the suggestions of fiscal synchronisation theory. There is also need to monitor federal government’s capital expenditure pattern and revenues in critical revenue generating agencies with a commitment to sustaining fiscal adjustments, ensuring sustainable debt servicing levels, creating fiscal space for capital and infrastructural development.
... On the one hand, direct tax refers to tax according to properties, incomes and corporate profits etc., while value added tax, sales tax, import duty, etc. are considered indirect tax. In the valuable role of tax, there are numerous studies investigating the relation between economic growth with tax (Ibanichuka et al., 2016;Lien & Thanh, 2017;Stoilova, 2017). McKinnon (1991) and Morrissey, Von Haldenwang, Von Schiller, Ivanyna, Bordon (2016) meanwhile these existing attempts emerge GDP, FDI while there is a little few attempts aim to demonstrate the relation between diseases, influence of consumer behaviours and forest land. ...
The aim of this paper is analyzing the level ratio of tax revenue and GDP depending on different consumer behaviors between two groups of countries: ASEAN-7 plus China (called the Eastern) and eight European countries (called the Western). The study applied the Feasible Generalized Least Square model to confirm the robustness of the Panel Corrected Standard Errors model, and the results indicate that all countries have a positive association between tax revenue with the human capital and FDI variables. In addition, in the Eastern, forest area and broad money has a statistically significantly positive impact on tax revenue while gross savings has a negative one. Further, the Western witnessed the positive impact with gross savings while broad money variables lead to a decrease in tax revenue. The major results indicate that in the East, the Governments should focus on how to improve their taxation by promoting the broad money - M2 and expanding the forest area as well as support their consumers spending more instead of saving. In contrast, European countries try to reduce the M2, encouraging their consumers to save more. The Eastern and Western governments may control natural and demographic determinants aimed to support taxation and sustainable economic growth.
... Some authors even identified the signs of these relationships, positive or negative, or the directional causality. Tax revenue and economic growth have a positive relationship (Olatunji, T.M. & Sunday, 2012), (Lien N.P., 2017). The same situation is between the total tax revenue growth rate and GDP growth rate (Surugiu, M.R.;Surugiu, C. & Nica, 2012). ...
... Public spending has a positive effect on growth, with a long-run equilibrium (Gangal, V.L.N. & Gupta, 2013). Expenditure and economic growth have a long-run relationship (Lien N.P., 2017). The reallocation of public spending implies an increase in education expenditure, with an important positive effect on growth, associated with a reduction in spending on social protection (Acosta-Ormaechea, S. & Morozumi, 2013). ...
The investigation starts with the computation of the Socio-Economic Development Index (SEDI index) with data for Romania. Based on the index values, the long-run relationship between taxes and expenditure is assessed, for Romanian NUTS2 regions from 2000 to 2016. According to the results, there is a Granger causality relationship from budget revenue and expenditure to SEDI. The results emphasize the significant impact of taxes and expenditure on socio-economic development. The paper underlines the need for effective public strategies to be implemented by the authorities at the regional level, which may propel socio-economic development. The results support the fiscal synchronization hypothesis.
... It also assumes that the periods are fixed, which is similar to the Levin-Lin-Chu test [32]. However, the IPS test does not necessitate balanced data, but requires that T must be at least 5 if the dataset is strongly balanced for the asymptotic normal distribution of Z -t-tilde-bar to hold (see the results in Lien and Thanh, 2017) [33]. ...
Aiming to investigate the role of governance in modifying the relationship between public finance and economic growth, this study applied a seemingly unrelated regression model for the panel data of 38 developed and 44 developing countries from 1996 to 2016. It is easy to see that this research measures public finance by two parts of the subcomponents: total tax revenue and general government expenditure. We also call governance the "control of corruption indicator". The finding indicates that governance always positively affects the economy. However, when it interacts with public finance, this interaction has a diverse effect on economic growth in developed countries, depending on tax revenue or government expenditure. Nevertheless, in developing countries, this interaction has a beneficial impact on the growth of an economy.
The present paper is an attempt to derive the relationship between the fiscal policy variables, like government revenues and government expenditures with the economic growth. The selected time frame of the paper is long enough for measuring the association between the variables in long run as well as short run. Over the selected period of study, we found from data analysis that the finances of J&K have altered from revenue account deficit to surplus and from high fiscal deficit to very low fiscal deficit. The growth rate of the revenues has been greater than that of government expenditures. In the short run, we have found that the government has a comparative advantage in making expenditures which Granger Cause the revenue generation. In the second section of this paper, the test statistics have supported the expansionary fiscal policy, which signifies that increasing the public expenditure is cause the budget deficit to increase in the short run. However, this will help in the long run as the increasing government spending is proving to be the speed boosters for the economic growth in Jammu and Kashmir in the long run which is in line with Keynes idea of expenditure led growth. This further strengthens the case of more focus on expenditure oriented growth of
This study aims to analyze the causality between tax revenue, state expenditure, inflation and economic growth in Indonesia during the 1973-2019 period to provide policy advice to the Indonesian government. This country was selected as an object with consideration that its economy has grown impressively and has been able to rise from the Asian economic crisis. A brief overview of the policies developed during the research period is presented to provide insight into the policies taken by the government. The use of quantitative methods through the Vector Error Correction Model and Granger causality test was carried out to provide an in-depth analysis. The result showed a positive long-term two-way causality relationship between tax revenues and state expenditures as well as tax revenues and economic growth. This indicates that the government's efforts to implement state expenditure have succeeded in increasing tax revenues. Conversely, an increase in tax revenue allows the government to make state expenditures, both in development and other activities, to improve people’s economy, leading to increased economic growth. The government must maintain an economic policy strategy during the COVID-19 pandemic to restore the national economy by considering potential sectors that are suitable for the climate, such as the agriculture or livestock sector. The result of tests on inflation show that this variable is caused by economic growth and does not apply the other way around, but this variable is has a negative effect on tax revenue, state expenditure and economic growth so its needs to be suppressed to ensure the stable economic growth.
Data containing spatial effects should be analyzed using a spatial model. One of the spatial models is Spatial Durbin Error Model (SDEM). In the SDEM model, the independent variable and error both contain spatial effects. Along with the implementation of regional autonomy, each region is given the freedom to regulate financing. Each area tries to explore their respective potential to get a large Regional Original Income. Taxes are an essential source of the regional revenue so that local governments try to optimize tax revenue. This paper empirically examines the factors that can maximize tax revenue in East Java and maps the potential areas to generate high taxes. Some of the factors considered include Gross Regional Domestic Product (GRDP), population, per capita income, number of industries. By using the SDEM model, it can be seen that there is a spatial relationship, where the amount of tax revenue in each region is different and is influenced by other areas.
