Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/269953 
Year of Publication: 
2020
Citation: 
[Journal:] Cogent Economics & Finance [ISSN:] 2332-2039 [Volume:] 8 [Issue:] 1 [Article No.:] 1803523 [Year:] 2020 [Pages:] 1-21
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
The study explores the nonlinear linkage between government expenditure and government revenue using quarterly data from the first quarter of 1965 to the second quarter of 2019. Linear models are first deployed to determine the order of integration of the variables, cointegration, granger causality and variance decomposition within the SVAR model. Nonlinear techniques are employed to spot the asymmetric relation of the univariate and the expenditure and revenue linkage. Asymmetric adjustments are carried out to unknot the dynamic mechanism based on the threshold vector autoregressive model (TVAR) and threshold vector error-correction model (TVECM). Finally, the Markov Switching model is employed to determine the tendency of the variables to remain in a particular region and their transition probabilities. The empirical findings suggest the presence of nonlinear but one-way causal relation between government expenditure and revenue. The results show that adjustment mechanism of government expenditure towards the equilibrium is more persistent than government revenue when the threshold level is attained.
Subjects: 
expenditure
nonlinearity
revenue
JEL: 
E60
E62
Q02
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.