The revenues-spending nexus in Romania: a TAR and MTAR approach

Aviral Tiwari and Mihai Mutascu

Economic Research-Ekonomska Istraživanja, 2016, vol. 29, issue 1, 735-745

Abstract: This study is an attempt to test the relationship between revenues and government spending, in the case of Romania, over the 1999Q1–2012Q1 period. For this purpose, we have chosen the Threshold Autoregressive (TAR) and Momentum-TAR (MTAR) approaches. The main results obtained through the TAR and MTAR models offer support for the spend-tax hypothesis, with long-run asymmetric adjustment for Romania. Considering this case, whenever dealing with budgetary disequilibrium, it is recommended the Romanian government prioritises the spending component of fiscal policy, with adjustments in the level and structure of public expenditures.

Date: 2016
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DOI: 10.1080/1331677X.2016.1197549

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