Asymmetries in the revenue–expenditure nexus: new evidence from South Africa

Andrew Phiri

Empirical Economics, 2019, vol. 56, issue 5, No 4, 1515-1547

Abstract: Abstract In this study, we relax the conventional assumption of a linear cointegration relationship in the revenue–expenditure nexus by examining asymmetric equilibrium effects in the South African fiscal budget using quarterly data collected between 1960:Q1 and 2016:Q2. Our mode of empirical investigation is the MTAR model supplemented with a TEC component. Our estimation results primarily point to a weakly sustainable budget in which there exists bidirectional causality between revenues and expenditures, a result which offers support in favour of the fiscal synchronization hypothesis. Collectively, our empirical results have important implications for South African fiscal policymakers.

Keywords: Revenue; Expenditure; Fiscal budget sustainability; Threshold cointegration; MTAR; Causality; South Africa (search for similar items in EconPapers)
JEL-codes: C12 C13 C32 C51 H61 H62 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (9)

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Working Paper: Asymmetries in the revenue-expenditure nexus: New evidence from South Africa (2016)
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DOI: 10.1007/s00181-017-1397-0

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