Economics at your fingertips  

Empirical Investigation on the Relationship among Kenyan Public Debt, Tax Revenue and Government Expenditure

Felix Kimtai Kiminyei ()

Academic Journal of Economic Studies, 2019, vol. 5, issue 1, 142-159

Abstract: Public debt and tax revenue are used in the financing of government expenditure programs with the ability of boosting social welfare. The contrast is that public debt is used to finance the budget deficit gap resulting from shortfall in tax revenue. This study sought to investigate the links between public debt, tax revenue and government expenditure over 1960 and 2011 using data obtained from economic surveys of the Kenya National Bureau of Statistics. A Vector error correction model, Cholesky forecast error variance decomposition, and dynamic forecasts are employed in the study. The results for the vector error correction model indicate that for the public debt and government expenditure equations, about 36 percent of deviations from the long run equilibrium is corrected in the next period compared to approximately eight per cent for the tax revenue equation. The short run model shows that the size of government expenditure has a debt increasing effect while the size of tax revenue has a debt decreasing effect. Using Cholesky forecast error variance decomposition, impulse response functions show that public debt responded positively to the innovations in both tax revenue and government expenditure in the long run. The forecasts pointed to continued growth in these variables.

Keywords: Public debt; tax revenue; government expenditure; budget deficit (search for similar items in EconPapers)
JEL-codes: H63 H68 H71 H76 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf) (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

More articles in Academic Journal of Economic Studies from Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest Contact information at EDIRC.
Bibliographic data for series maintained by Adi Sava ().

Page updated 2019-05-10
Handle: RePEc:khe:scajes:v:5:y:2019:i:1:p:142-159