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Empirical Economics

, Volume 56, Issue 5, pp 1515–1547 | Cite as

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

  • A. PhiriEmail author
Article

Abstract

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 primarily point to a weakly sustainable budget in which there exists bidirectional causality between revenues and expenditures, a result which offers support in favour of the fiscal synchronization hypothesis. Collectively, our empirical results have important implications for South African fiscal policymakers.

Keywords

Revenue Expenditure Fiscal budget sustainability Threshold cointegration MTAR Causality South Africa 

JEL Classification

C12 C13 C32 C51 H61 H62 

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© Springer-Verlag GmbH Germany, part of Springer Nature 2017

Authors and Affiliations

  1. 1.Department of Economics, Faculty of Business and Economic StudiesNelson Mandela UniversityPort ElizabethSouth Africa

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