Government Revenue and Government Spending Nexus: A Testing Hypothesis for Indonesia

Akhmad Solikin and Muhammad Nizar

MPRA Paper from University Library of Munich, Germany

Abstract: There are still differences of opinion about the connection between government expenditure and revenues. This study aims to test hypotheses related to the direction of the relationship between Indonesian government revenues and expenses. By utilizing quarterly time-series data in the period 1969:q2 –2020:q4, the test was implemented using the Vector Autoregressive (VAR) model. The test results show that an increase in total government revenue and tax revenue causes anincrease in government spending during the study period. The results of this study provide supporting evidence for the revenue-and-expenditure or tax-and-spending hypothesis for the Indonesian government budget. The implication is that the government budget is always in deficit, and the need for financing (i.e. loans) is unavoidable.

Keywords: Budget Deficit; Fiscal Policy; Government Revenue/Spending; Vector Autoregressive (search for similar items in EconPapers)
JEL-codes: C22 E62 H20 H30 H41 H50 H61 H70 (search for similar items in EconPapers)
Date: 2022-06
New Economics Papers: this item is included in nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Jurnal Borneo Administrator 19.1(2023): pp. 103-116

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/118556/1/tax-spend%20nexus.pdf original version (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:pra:mprapa:118556

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().