Is the Thai Government Revenue-Spending Nexus Asymmetric?

Abstract

This paper examines the relationship between government revenue and spending in Thailand using a nonlinear framework. Both TAR and MTAR models are estimated. The empirical results from the estimate of the TAR model show the presence of asymmetry in the long-run relationship between revenue and spending. The results of short-run dynamics indicate that both revenue and spending respond to budgetary disequilibrium when there is improving government budget. Furthermore, bidirectional causality is found. The evidence appears to support the fiscal synchronization hypothesis with asymmetric adjustment towards the longrun equilibrium. This finding implies that policymakers should cut deficits when they exceed the threshold level.

Is the Fiscal Deficit of ASEAN Alarming? Evidence from Fiscal Deficit Consequences and Contribution towards Sustainable Economic Growth

“…Similarly, Jiranyakul [19] has found that the spend-tax hypothesis is valid in the case of Thailand. Narayan [20] estimated the fiscal causality in Southeast Asian countries, i.e., Indonesia and Singapore, using the ARDL technique.…”

Public Revenue-Expenditure Nexus: A Test of Fiscal Synchronization Hypothesis in Nigeria

“…Furthermore, Omoshoro-Jones (2020) examines government revenue-expenditure nexus for the Free State Province and the study found a bidirectional causality subsists between government revenues and expenditures in the Province. Moreover, Jiranyakul (2017) confirms a bidirectional causality between government revenue and expenditure in Thailand. Similarly, Hye and Jalil (2010)'study indicates a bidirectional causality between Romanian government expenditure and revenue.…”

“…This suggests that that the two variables of study are cointegrated which implies that there is a long-run relationship between government revenue and expenditure of the States government and Federal Capital Territory of Nigeria. Jiranyakul (2017) in Thailand; Hye and Jalil (2010) in Romania; Soomro (2020) in Pakistan; Phiri (2016); Takumah (2014) in Ghana. In the Nigerian context, some studies have also confirmed the validity of the fiscal synchronization hypothesis at the federal government level (Saka et al (2015), Aminu and Raifu (2018), Ibrahim (2018), Eniekezimene, et al (2019), Aladejare and Ani (2012)).…”

“…This notwithstanding, empirically, most of the past studies that had tested the fiscal synchronization hypothesis have focused on the central/federal government. Although, some studies have provided evidence in support of the fiscal synchronization hypothesis (Irandoust (2018) in Swedish economy; Marimuthu et al (2021) in ASEAN region; Mehrara et al (2011) in Asian countries; Kaya and Arslan (2020) in Turkey; Al-Zeaud (2015) in Jordan; Jiranyakul (2017) in Thailand; Hye and Jalil (2010) in Romania; Soomro (2020) in Pakistan; Phiri (2016); Takumah (2014) in Ghana; Saka et al (2015) and, Aminu and Raifu (2018), Ibrahim (2018), Eniekezimene, et al (2019) and Aladejare and Ani (2012) all in Nigeria). Most of these past research works mostly focused squarely on the central/federal government with little or no concern about how the state/local government behavior in terms of the connection between their revenue and expenditure most especially in developing countries such as Nigeria which is found in a situation of wide fiscal deficit net.…”