Government Revenues and Expenditures in Guinea-Bissau: Causality and Cointegration
African Region Working Paper No. 65
19 Pages Posted: 10 Aug 2004
Date Written: January 2004
Abstract
The paper establishes empirically the temporal causality and long run relationship between government expenditures and government revenues for the case of Guinea-Bissau - a low income country under stress (LICUS) in Africa. A simple macroeconomic model is developed to lay out the hypothesis of a spend-tax behavior in the country's public finances management system. Empirical validation is carried out by means of a traditional Granger-causality test and the estimation of a simple error correction model between expenditures and revenues.
Keywords: Public finances, causality tests, cointegration analysis
JEL Classification: H6, C5
Suggested Citation: Suggested Citation
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