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Government Revenues and Expenditures in Guinea-Bissau: Causality and Cointegration

African Region Working Paper No. 65

19 Pages Posted: 10 Aug 2004  

Francisco Carneiro

The World Bank

João Ricardo Faria

University of Texas at Dallas - Department of Economics & Finance

Boubacar Sid Barry

World Bank - AFTP4

Date Written: January 2004

Abstract

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.

Keywords: Public finances, causality tests, cointegration analysis

JEL Classification: H6, C5

Suggested Citation

Carneiro, Francisco and Faria, João Ricardo and Barry, Boubacar Sid, Government Revenues and Expenditures in Guinea-Bissau: Causality and Cointegration (January 2004). African Region Working Paper No. 65. Available at SSRN: https://ssrn.com/abstract=574143 or http://dx.doi.org/10.2139/ssrn.574143

Francisco Galrao Carneiro (Contact Author)

The World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

João Ricardo Faria

University of Texas at Dallas - Department of Economics & Finance ( email )

P.O. Box 830688, GR31
Richardson, TX 75083
United States
972-883-6402 (Phone)
972-883-6297 (Fax)

HOME PAGE: http://www.geocities.com/fariajocka/Index.html

Boubacar Sid Barry

World Bank - AFTP4 ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

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