The tax-spending nexus: Evidence from a panel of US state–local governments

Westerlund, Joakim; Mahdavi, Saeid; Firoozi, Fathali

doi:10.1016/j.econmod.2010.10.016

Cited by 26 publications

(16 citation statements)

References 23 publications

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“…A number of empirical studies have evaluated the direction of causality between public revenues and expenditures. For example, Westerlund et al (2011) find evidence supporting the tax-and-spend hypothesis for 50 state-local government units in the US. This finding seems to be consistent with that of Narayan and Narayan (2006) who reported similar evidence for Chile, El Salvador, Haiti, Mauritius and Venezuela, and that by Eita and Mbazima (2008) for Namibia.…”

Section: Introductionmentioning

confidence: 82%

Public Revenue‐Expenditure Nexus in South Africa: Are there Asymmetries?

Baharumshah

Jibrilla²,

Sirag

et al. 2016

South African J Economics

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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.

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Section: Introductionmentioning

confidence: 82%

Public Revenue‐Expenditure Nexus in South Africa: Are there Asymmetries?

Baharumshah

Jibrilla²,

Sirag

et al. 2016

South African J Economics

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“…The study therefore, contrary to previous studies on the UK, support spend-tax hypothesis More also, Mahdavi and Westerlund [12] argued that most state and local governments in the U.S. operate under formal fiscal rules which limit their ability to run budget deficits and resort to debt financing, which support their evidence in favor of an intertemporally balanced budget, or fiscal sustainability, for the states, especially those characterized by a relatively high degree of fiscal stringency. In another related study, Westerlund, Mahdavi and Firoozi [13] re-examined tax-spending nexus using a panel of 50 US state and local government units and find that unlike tax revenues, expenditures adjust to revert back to a long-term equilibrium relationship. Their evidence on the short-term dynamics is also consistent with tax-and-spend hypothesis.…”

Section: Literature Reviewsmentioning

confidence: 99%

Fiscal Synchronisation or Institutional Separation: An Examination of Tax-Spend Hypothesis in Nigeria

Yinusa¹,

Adedokun²

2017

JFA

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This paper investigates the position of Nigeria within the various fiscal hypotheses (tax-spend, spend-tax, fiscal synchronization and fiscal neutrality hypotheses) using Granger Causality and Block Exogeneity Wald Test within the framework of Vector Error Correction (VEC) Model. The study established one-directional causality that runs from revenue to expenditure (Tax-Spend Hypothesis). This suggests that current government effort at increasing tax revenue is a positive development to reduce or revert the economy from fiscal deficit path. By implication the ongoing government policy towards increase tax revenue and her decision to halt fiscal leakages would sail the economy through the current fiscal crises that are motivated by global crash in the price of crude oil.

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“… 16. Economists tend to think such variables are nonstationary (e.g., Westerlund, Mahdavi, and Firoozi 2011). Beck and Katz (2011) point out that some political variables, for example, vote shares that lie between 0 and 1, cannot be nonstationary, although shocks decay slowly, causing them to fail unit root tests.…”

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confidence: 99%

The Electoral Determinants of State Welfare Effort in the U.S. South, 1960–2008

Terry

2016

State Politics Policy Q.

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This article examines the impact of electoral politics on state welfare policy in the post-civil rights era South. In contrast to an emerging consensus concluding that southern African Americans materially benefited from rejoining the electorate, this study suggests that higher black registration rates actually reduced states' poverty relief efforts. In the years immediately following the Voting Rights Act (VRA), when Democrats controlled state government, the significant negative relationship between the size of the black electorate and state welfare generosity was moderated to some extent by high levels of partisan competition. In such cases, Democrats ostensibly chose a "core" targeting strategy of pursuing lower-income votes and had the institutional wherewithal to purchase these votes with policy concessions. Overall, however, the liberal "Downsian" policy response to African American mobilization was dominated by an antiredistributive response. In the South, welfare policies were relatively conservative vis-à-vis the other states during Jim Crow and became more so in response to black voting.

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The tax-spending nexus: Evidence from a panel of US state–local governments

Cited by 26 publications

References 23 publications

Public Revenue‐Expenditure Nexus in South Africa: Are there Asymmetries?

Public Revenue‐Expenditure Nexus in South Africa: Are there Asymmetries?

Fiscal Synchronisation or Institutional Separation: An Examination of Tax-Spend Hypothesis in Nigeria

The Electoral Determinants of State Welfare Effort in the U.S. South, 1960–2008

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