Fiscal Sustainability: Public Revenue-Expenditure Nexus in a Few Asymmetric Countries in the Globe

Abstract

This article examines the public revenue and expenditure patterns and its nexus of a few countries. This paper employs panel unit root, panel cointegration and Vector Error Correction Model to analyze the inter-temporal association among the variables of government revenues, expenditures and the growth of GDP through the panel data of ten divergent nations over the period 2001 to 2017. The study exercised three cointegration tests and these estimates find the evidence of long run association among articulated three variables. To know the cross-section status of different nations this paper diverted Phillips-Peron test with bandwidth statistics and it asserted that, all ten countries secured the long run association among the variables. The study uncovered that, growth of GDP has escalated in 0.78% by one percentage increase in revenue expenditure; meanwhile, 1.41% lessening in GDP growth by one percentage increase in revenue income. The specified model is supported by a few diagnostic tests.