The Investigation of The Relationship Between Government Revenue and Government Spending: OPEC Members Countries And Non OPEC Ones (A Causality Approach)

Governments can increase revenue or decrease spending or use both of these ways to control budget deficit. Sometimes it has been seen that revenue increas(or spending cuts)has affected the other variable and nullified the policy chosen for controlling the budget deficit. Therefore the causal relationship between revenues and spending should be measured before any budget policy-making and then according to causality direction the appropriate policy should be chosen. In this research we investigate Granger causal relationship between government spending and government revenue in 77 developing Countries which are divided in two groups: OPEC Members and Non OPEC Ones. Co-integratin approach and error correction model (ECM) has been used for determining the causality direction between these two variables in developing Countries. The results of Granger causality test show that in Non OPEC Members Countries there is uni directional relationship between these two variables and government spending affects the government revenue.
نشریه نظریه های نوین اقتصادی, Volume:1 Issue: 1, 2014
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