Government Revenues and Expenditures in Guinea-Bissau: Causality and Cointegration
The World Bank
João Ricardo Faria
University of Texas at Dallas - Department of Economics & Finance
Boubacar Sid Barry
World Bank - AFTP4
African Region Working Paper No. 65
The paper establishes empirically the temporal causality and long run relationship between government expenditures and government revenues for the case of Guinea-Bissau - a low income country under stress (LICUS) in Africa. A simple macroeconomic model is developed to lay out the hypothesis of a spend-tax behavior in the country's public finances management system. Empirical validation is carried out by means of a traditional Granger-causality test and the estimation of a simple error correction model between expenditures and revenues.
Number of Pages in PDF File: 19
Keywords: Public finances, causality tests, cointegration analysis
JEL Classification: H6, C5
Date posted: August 10, 2004
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