Tax-and-spend, spend-and-tax or fiscal synchronization ? Evidence from Burundi, pp. 170-195
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Date
2011-01
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UB, Cahiers du CURDES
Abstract
This paper applies Granger Causality Tests based on Toda-Yamamoto procedure and VECM framework, to detemune the relationship between Government Spending and Gov,ernment Taxes in Burundi using recent monthly data during the period 1996:1-2009:3. The empirical analysis discovered a firm positive
unidirectional causality from Government Tax to Gov,ernment spending, supporting hence the Friedtnan's (1978) version of Tax- and-Spend Hypothesis for Burundi. The empirical findings suggest therefore that, in Burundi, unsustainable budget deficits can be mitigated by policies that cut government taxes.
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NDORICIMPA Arcade, Tax-and-spend, spend-and-tax or fiscal synchronization ? Evidence from Burundi, pp. 170-195, Cahiers du CURDES n° 12, Janvier 2011.