Original Research

Government revenue and expenditure nexus in South Africa

Esman Nyamongo, Niek Schoeman, Moses Sichei
South African Journal of Economic and Management Sciences | Vol 10, No 2 | a586 | DOI: https://doi.org/10.4102/sajems.v10i2.586 | © 2013 Esman Nyamongo, Niek Schoeman, Moses Sichei | This work is licensed under CC Attribution 4.0
Submitted: 04 April 2013 | Published: 09 April 2013

About the author(s)

Esman Nyamongo, Central Bank of Kenya, Kenya
Niek Schoeman, University of Pretoria
Moses Sichei, Commission on Revenue Allocation, Kenya

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Abstract

This paper investigates the nexus between government expenditure and government revenue in South Africa within the framework of a vector autoregressive (VAR) approach. It uses the Hylleberg et al. (1990) method to test for seasonal unit roots and finds that government revenue and government expenditure have unit roots at all frequencies. The Johansen procedure test results reveal that these variables are cointegrated. It is further established that revenue and expenditure are linked bidirectionally by Granger causality in the long-run, while there is no evidence of Granger causality
in the short-run in South Africa.


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