The causal relationship between government revenue and expenditure in Namibia

The causal relationship between government revenue and expenditure in Namibia

Blog Article

The relationship between government revenue and government expenditure is important, given its relevance for policy especially with respect to the budget deficit.The purpose of this paper is to investigate the relationship between government revenue and government expenditure in Namibia.It investigates the causal relationship between government revenue and government expenditure using the Granger causality test through cointegrated sheepshead bay boats vector autoregression (VAR) methods for the period the color touch 7/97 period 1977 to 2007.

The paper tests whether government revenue causes government expenditure or whether the causality runs from government expenditure to government revenue, and if there is bi-directional causality.The results show that there is unidirectional causality from government revenue to government expenditure.This suggests that unsustainable fiscal imbalances can be mitigated by policies that stimulate government revenue.