The Causal Relationship Between Government Revenue and Expenditure in Namibia

Joel Eita () and Daisy Mbazima

MPRA Paper from University Library of Munich, Germany

Abstract: The relationship between government revenue and government expenditure is important, given its relevance for policy especially with respect to the budget deficit. The purpose of this paper is to investigate the relationship between government revenue and government expenditure in Namibia. It investigates the causal relationship between government revenue and government expenditure using Granger causality test through cointegrated vector autoregression (VAR) methods for the period the period 1977 to 2007. The paper tests whether government revenue causes government expenditure or whether the causality runs from government expenditure to government revenue, and if there is bi-directional causality. The results show that there is unidirectional causality from government revenue to government expenditure. This suggests unsustainable fiscal imbalances (deficit) can be mitigated by policies that stimulate government revenue.

Keywords: government expenditure; government revenue; causality; cointegration test; revenue-spend; spend-revenue; fiscal synchronisation; Namibia (search for similar items in EconPapers)
JEL-codes: C32 C5 C50 H0 H2 H5 (search for similar items in EconPapers)
Date: 2008-05-26
New Economics Papers: this item is included in nep-afr and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:9154

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