Testing the Causal Relationship between Public Spending and Public Revenue for Selected Countries for the Period 1990-2021

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Testing the Causal Relationship between Public Spending and Public Revenue for Selected Countries for the Period 1990-2021

Mustafa Fadhil Hammadi

ABSTRACT

   The study aims at testing the causal relationship between the public spending and the public revenues in two groups of developed countries: Spain, Denmark, United Kingdom and Japan, and developing countries: United Arab Emirates, Kuwait, Paraguay and India for the period 1990-2021, using the Granger test and Vector Error Correction Models (VECM) for time series data. Data were obtained from official publications of the International Monetary Fund and the International Bank for Reconstruction and Development. The study concluded that there is a difference in the direction of the causal relationship between developed and developing countries, whether one group with another or one country with another at the same group, and this results from the difference in the nature of countries among them and their economic conditions. As well as, there is a difference in the direction of these causal relationships between the short and long term.

Keywords: Public Spending, Public Revenues, Causal Relationship.

Volume 13, Issue 1, Pages 55-80

DOI: 10.52113/6/2023-13-1/55-80

Categories: Uncategorized