Testing the Relationship Between Government Spending and Revenue: Evidence From GCC Countries

Qing Wang and Ugo Fasano-Filho

No 2002/201, IMF Working Papers from International Monetary Fund

Abstract: The paper examines the direction of causality between total government expenditure and revenue in oil-dependent GCC countries by utilizing a cointegration and error-correction modeling framework, and by calculating a variance decomposition analysis. In addition, it presents impulse responses to shed light on the dynamic relation of expenditure to a revenue shock. The results confirm expectations that government spending follows oil revenue, suggesting a pro-cyclical expenditure policy to variations in oil revenue. To make budget expenditure less driven by revenue availability, the authorities could resort to a medium-term expenditure framework, so that expenditures can be planned and insulated from volatile short-term revenue availability.

Keywords: WP; revenue; GCC country; government expenditure; fiscal policy; GCC countries; spent-revenue hypothesis; expenditure growth; oil revenue; revenue shock; expenditure decision; Fiscal stance; Oil prices; Oil; gas and mining taxes; Total expenditures; Global (search for similar items in EconPapers)
Pages: 27
Date: 2002-11-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=16169 (application/pdf)

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: https://EconPapers.repec.org/RePEc:imf:imfwpa:2002/201

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().