Government revenue and expenditure nexus in South Africa

Nyamongo, Morekwa Esman; Sichei, Moses Muse; Schoeman, N.J.

doi:10.4102/sajems.v10i2.586

Cited by 32 publications

(30 citation statements)

References 27 publications

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“…Besides, the findings tended to be consistent with that of Kollias and Makrydakis (2000) for Greece and Ireland, Li (2001) for China, Nyamongo et al (2007) for South Africa, and Aregbeyen and Ibrahim (2012) for Nigeria, among others, and provided evidence against Obioma and Ozughalu (2010) for the case of Nigeria. A likely justification is that this study does not only allow for structural breaks in the cointegration and causality tests; it also deals effectively with diagnostic problems and therefore leads to more efficient and reliable estimates.…”

supporting

confidence: 67%

“…Kollias and Makrydakis (2000) find evidence for the fiscal synchronization hypothesis using data from Greece and Ireland, Li (2001) offered similar evidence for China, Nyamongo, Sichei, and Schoeman (2007) for South Africa, and Paleologou (2013) for Sweden and Germany, among others. Lastly, empirical evidence for the institutional separation hypothesis, which asserts an independent relationship between government revenues and spending, is provided by Hoover and Sheffrin (1992) for the US after accounting for breaks in the data-set; similar evidence for the US was also found by Baghestani and McNown (1994), and Narayan and Narayan (2006) for the countries which include Ecuador, Guatemala, and Uruguay, among others.…”

Section: Literature Reviewmentioning

confidence: 87%

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Fiscal sustainability in the presence of structural breaks: Does overconfidence on resource exports hurt government’s ability to finance debt? Evidence from Nigeria

Aliyu

2016

Cogent Economics & Finance

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Abstract:The sustainability of the Nigerian fiscal deficit along with the role of the dynamics of government revenues and spending in adjusting the size of the deficit is examined using annual data from 1961 to 2014. After allowing for structural breaks, the study finds evidence of a cointegration relation between the government revenues and spending. The results did not indicate the presence of asymmetries in either the threshold autoregression or momentum threshold autoregression specifications of the country's budgetary adjustment process. Interestingly, the size of the long run slope parameter appears to be significantly less than one, thus offering support for the soft budget strategy, which also suggests that the government might face difficulties in financing its debts in the long run. Lastly, the short run and long run Granger causality results, while providing evidence in support of the fiscal synchronization hypothesis, also raise some important issues, particularly on the strength of budget deficit sustainability in the country.

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supporting

confidence: 67%

Section: Literature Reviewmentioning

confidence: 87%

Fiscal sustainability in the presence of structural breaks: Does overconfidence on resource exports hurt government’s ability to finance debt? Evidence from Nigeria

Aliyu

2016

Cogent Economics & Finance

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“…Government revenue was found to Granger cause expenditure in Malaysia. Nyamongo et al (2007) in a study of the government revenue and expenditure nexus in South Africa found different results. A monthly data was used, and modified unit root test and Vector Error Correction Model (VECM) were applied on data.…”

Section: Literature Reviewmentioning

confidence: 96%

The Relationship between Government Revenue and Expenditure in Qatar: A Cointegration and Causality Investigation

Al-Khulaifi¹

2012

IJEF

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The main purpose of this paper is to examine the relationship between government revenue and expenditure in Qatar. Annual data for the period from 1980-2011 were used and a time series analysis of unit root tests, Engle-Granger's cointegration and Granger causality were applied. The paper found that variables were integrated of order one when Augmented Dickey-Fuller and Phillip-Perron unit root tests were employed. The variables were found to be cointegrated. Empirical results found unidirectional causality that runs from government revenue to expenditure in support of revenue-spend hypothesis.

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“…It is thus important for South African fiscal authorities to know the nature and dynamic relationship between government expenditure and revenue. Notably, the relationship between government expenditure and revenue in South Africa has not gone un-investigated as the issue has been addressed in the previous empirical studies of Narayan and Narayan (2006), Nyamongo et. al.…”

Section: Introductionmentioning

confidence: 93%

Asymmetries in the revenue–expenditure nexus: new evidence from South Africa

Phiri

2017

Empir Econ

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In this study, we relax the conventional assumption of a linear cointegration relationship in the revenue-expenditure nexus by examining asymmetric equilibrium effects in the South African fiscal budget using quarterly data collected between 1960:Q1 and 2016:Q2.Our mode of empirical investigation is the MTAR model supplemented with a TEC component. Our estimation results can be summarized into three main empirical findings.Firstly, we find that the long-run elasticity between revenue and expenditure is less-than-unity which implies that the fiscal budget is weakly unsustainable. Secondly we find that positive 'shocks' to the fiscal budget are eradicated fairly quickly which means that fiscal authorities must implement their policies in a continuous, on-going fashion over the long run. Lastly, we observe bi-directional causality between revenues and expenditures which offers support in favour of the fiscal synchronization hypothesis. This last result implies that fiscal authorities should amend fiscal imbalances through increased consolidation between revenue collection and expenditure allocation.

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Government revenue and expenditure nexus in South Africa

Cited by 32 publications

References 27 publications

Fiscal sustainability in the presence of structural breaks: Does overconfidence on resource exports hurt government’s ability to finance debt? Evidence from Nigeria

Fiscal sustainability in the presence of structural breaks: Does overconfidence on resource exports hurt government’s ability to finance debt? Evidence from Nigeria

The Relationship between Government Revenue and Expenditure in Qatar: A Cointegration and Causality Investigation

Asymmetries in the revenue–expenditure nexus: new evidence from South Africa

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