Government spending and revenues in Sweden 1722–2011: evidence from hidden cointegration

Irandoust, Manuchehr

doi:10.1007/s10663-017-9375-5

Cited by 20 publications

(25 citation statements)

References 34 publications

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“…8 8 For some other applications of hidden cointegration and likelihood‐based panel cointegration see Irandoust and Ericsson (2005) and Irandoust (2017), respectively. …”

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confidence: 99%

The effectiveness of monetary policy and output fluctuations: An asymmetric analysis

Irandoust

2020

Australian Economic Papers

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“…8 8 For some other applications of hidden cointegration and likelihood‐based panel cointegration see Irandoust and Ericsson (2005) and Irandoust (2017), respectively. …”

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confidence: 99%

The effectiveness of monetary policy and output fluctuations: An asymmetric analysis

Irandoust

2020

Australian Economic Papers

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“…This approach posits a twoway relationship between government spending and revenue. Miller and Russek (1990) for the US, Chang and Chiang (2009) for OECD countries, Aslan and Tasdemir (2009) and Turan and Karakas (2018) for Turkey, Vamvoukas (2012) for the European Monetary Union, Paleologou (2013) for Germany and Sweden and Irandoust (2017) for Sweden support the fiscal synchronization hypothesis.…”

Section: Literature Reviewmentioning

confidence: 91%

The Government Spending-Revenue Nexus in CEE Countries: Some Evidence for Asymmetric Effects

Karakaş¹,

Turan²

2019

Prague Economic Papers

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This paper investigates the government spending-revenue nexus for Croatia, Czechia, Hungary, Poland, Romania and Slovenia by using quarterly data and a nonlinear autoregressive distributed lag (NARDL) approach to cointegration. Our empirical findings support the fiscal synchronization for Slovenia, spend-tax for Czechia, tax-spend for Croatia and Hungary, and institutional separation or fiscal neutrality for Romania and Poland in the long run. Moreover, we find an asymmetric effect for Croatia, Czechia, Hungary and Poland in the long run and for all the countries in the short run. Therefore, our results clearly highlight the importance of asymmetric effects in government spending-revenue nexus. Our findings have some policy implications for these countries, such as providing a better coordination of government spending and revenue decisions and paying attention to the asymmetries.

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“…The fiscal policy landscape of Sweden has evolved over time. According to Irandoust (2018), before the modern tax system which came into the picture in 1903, Sweden had a state income tax system based on “appropriations”. Some lumpsum taxes such as armament fees and personal protection fees were also levied.…”

Section: Introductionmentioning

confidence: 99%

“…With the modern tax system, a number of tax reforms were undertaken, and the function of the tax system has changed over time. Irandoust (2018) gives an overview of how the Swedish tax system has evolved with regard to its functions. Before the modern tax system, tax system in Sweden had a pure fiscal function.…”

Section: Introductionmentioning

confidence: 99%

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The sustainability of Swedish fiscal policy: a re-examination

Ndoricimpa

2020

JED

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PurposeThis study reexamines the sustainability of fiscal policy in Sweden.Design/methodology/approachTo test the sustainability of fiscal policy, two approaches are used; the methodology of Kejriwal and Perron (2010), testing for multiple structural changes in a cointegrated regression model and time-varying cointegration test of Bierens and Martins (2010), and Martins (2015).FindingsUsing the first approach of testing for multiple structural changes in a cointegrated regression model, the results indicate that government spending and revenue are cointegrated with two breaks. An estimation of a two-break long-run model shows that the slope coefficient increases from 0.678 to 0.892 from the first to the second regime, implying that fiscal deficits were weakly sustainable in the first two regimes, from 1800 to 1943, and from 1944 to 1974. Further, results from time-varying cointegration test indicate that cointegration between spending and revenue in Sweden is time-varying. Fiscal deficits were found to be unsustainable for the periods 1801–1811, 1831–1838, 1853–1860 , 1872–1882, 1897–1902, 1929–1940 and 1976–1982 and weakly sustainable over the rest of the study period.Research limitations/implicationsA number of implications arise from this study: (1) Accounting for breaks in cointegration analysis and in the estimation of the level relationship between spending and revenue is very important because ignoring breaks may lead to an overestimated slope coefficient and hence a bias on the magnitude of fiscal deficit sustainability. (2) In testing for cointegration between spending and revenue, assuming a constant cointegrating slope when it is actually time-varying can also be misleading because deficits can be sustainable for a period of time and unsustainable over another period.Originality/valueThe contribution of this study is three-fold; first, the study uses a long series of annual data spanning over a period of two centuries, from 1800 to 2011. Second, because of the importance of structural change in economics, to examine the existence of a level relationship between spending and revenue, the study uses the methodology of Kejriwal and Perron (2010) to test for multiple structural changes in a cointegrated regression model, as well as time-varying cointegration of Bierens and Martins (2010) and Martins (2015).

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Government spending and revenues in Sweden 1722–2011: evidence from hidden cointegration

Cited by 20 publications

References 34 publications

The effectiveness of monetary policy and output fluctuations: An asymmetric analysis

The effectiveness of monetary policy and output fluctuations: An asymmetric analysis

The Government Spending-Revenue Nexus in CEE Countries: Some Evidence for Asymmetric Effects

The sustainability of Swedish fiscal policy: a re-examination

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