African Region Working Paper No. 65
19 Pages Posted: 10 Aug 2004
Date Written: January 2004
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: 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