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The Relationship Between Federal Government Revenue and Spending: Empirical Evidence from Asean-5 Countries

Economic Journal of Emerging Markets

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Title The Relationship Between Federal Government Revenue and Spending: Empirical Evidence from Asean-5 Countries
 
Creator Karim, Zulkefly Abdul
Asri, Norain Mod
Abdullah, Azrina Al-Hadi
Antoni, Antoni
Mohd.Yusoff, Zetty Zahureen
 
Description The main objectives of this paper is to examine the long run relationship between total expenditure, revenue (tax and nontax) and economic growth in ASEAN-5 countries namely by Malaysia, Indonesia, Thailand, Singapore and Philippines. According to the prior studies, there are several hypotheses to explain the relationship between revenue and spend-ing such as (1) spend-revenue hypotheses, (2) revenue-spend hypotheses and (3)bi-directional causality hypotheses. To test the validity of these hypotheses, this study will util-ize a cointegration and variance decomposition analysis. Based on empirical evidence, we can concluded that the existence of long run relationship between government spending, revenue (tax and non tax) and economic growth for all ASEAN-5 countries. The result of variance decomposition also shows that the strong influence on expenditure to revenue in countries namely Malaysia, Indonesia and Philippines, which support the ‘spend-revenue hypotheses. Meanwhile, for Thailand and Singapore the budget decision driven by revenue side which support the ‘revenue-spend hypotheses’. In addition, public expenditure plays no role to stimulate economic growth in Malaysia, Thailand, Singapore and Philippines, except for Indonesia. Key words: Fiscal economics; Wagner law; cointegration test; variance decomposition
 
Publisher Universitas Islam Indonesia
 
Contributor —
 
Date 2009-06-25
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://journal.uii.ac.id/index.php/JEP/article/view/528
 
Source Economic Journal of Emerging Markets; Volume 11 Issue 2, 2006
2502-180X
2086-3128
 
Language eng
 
Relation http://journal.uii.ac.id/index.php/JEP/article/view/528/440