Asymmetric Causality Relationship Between Public Expenditures and Tax Revenues: Transition Economies Case

Emre Bulut and Dilek Çi̇l

Sosyoekonomi Journal, 2024, issue 32(60)

Abstract: The study aims to investigate the causality relationship between public expenditures and tax revenues with Dumitrescu & Hurlin's (2012) panel asymmetric causality analysis for 12 transition economies. Dumitrescu & Hurlin's (2012) asymmetric causality analysis findings determined an asymmetric causality relationship between public expenditures and tax revenues. Accordingly, it was determined that there is a bidirectional causality relationship between the positive components and a unidirectional causality relationship between the negative components from public expenditures to tax revenues. The significance of the findings is that the results for positive and negative shocks differ for transition economies, and it has been determined that the result for positive shocks supports fiscal synchronisation. In contrast, the result for negative shocks supports the expenditure-tax hypothesis.

Keywords: Public Expenditures; Tax Revenues; Panel Asymmetric Causality; Transition Economies. (search for similar items in EconPapers)
JEL-codes: H20 H50 P20 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:sos:sosjrn:240215

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