Causal Link Between Government Revenues and Expenditures

Abstract

The countries facing fiscal deficit in budget since their origin must have information about reasons for their fiscal deficit. The Information about government expenses and taxes needed especially for fiscal policy makers. The main purpose of this this is to analyze the relationship between government spending and government revenue to determine the reasons and suggest ways to overcome the budget deficit. The sample time period id from 1979 to 2015. By using the state bank of Pakistan as data source through granger causality it was found that the economy of Pakistan also follows budget synchronization.

Keywords: Budget deficit, Fiscal Deficit, Granger Causality, Synchronization

JEL Classification: C01, E00, E60, E62,