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Public Revenue‐Expenditure Nexus in South Africa: Are there Asymmetries?
Author(s) -
Baharumshah Ahmad Zubaidi,
Jibrilla Aliyu Alhaji,
Sirag Abdalla,
Ali Hamisu Sadi,
Muhammad Ibrahim Muye
Publication year - 2016
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12130
Subject(s) - cointegration , economics , nexus (standard) , revenue , vector autoregression , granger causality , error correction model , unit root , government revenue , macroeconomics , government (linguistics) , government spending , fiscal policy , public expenditure , autoregressive model , momentum (technical analysis) , short run , causality (physics) , threshold model , structural break , econometrics , public finance , finance , market economy , linguistics , philosophy , computer science , welfare , embedded system , physics , quantum mechanics
This paper re‐examines the government revenue and expenditure relationship in South Africa using Enders and Siklos' Threshold adjustment and Granger causality tests. The paper allows for structural breaks in the unit root and cointegration tests. The results indicate the absence of any asymmetries in both the threshold autoregression and momentum threshold autoregression specifications of adjustments in the South African's budgeting process. The estimated symmetric error‐correction models provide support for the fiscal synchronization hypothesis of government revenues and expenditures for long‐run and short‐run dynamic equilibrium. These findings indicate that the South African fiscal authorities should try to maintain or even improve the control of their fiscal policy instruments to sustain the prudent budgetary process.