Government spending and revenues in the Greek economy: evidence from nonlinear cointegration

Athanasios Athanasenas (), Constantinos Katrakilidis and Emmanouil Trachanas

Empirica, 2014, vol. 41, issue 2, 365-376

Abstract: This paper attempts to re-evaluate the long-run macroeconomic relationship between government revenues and expenditures of the Greek economy over the period 1999–2010. The empirical analysis applies the newly developed asymmetric ARDL cointegration methodology of Shin et al. ( 2011 ) which permits more flexibility in the dynamic adjustment process towards equilibrium, than in the classical case of a linear model. Our findings point towards the fiscal synchronization hypothesis, supporting evidence of asymmetric interactions between the two fiscal components in both the long- and the short-run time horizon. More particularly, in the long-run, the negative changes of expenditures dominate the response of revenues, while the opposite applies in the response of expenditures. Copyright Springer Science+Business Media New York 2014

Keywords: Budget deficit; Fiscal policy; NARDL cointegration; Greek economy; C13; C22; E62 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (19)

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DOI: 10.1007/s10663-013-9221-3

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