On the Causal Relationship between Government Expenditure and Tax Revenue in Pakistan

doi: https://doi.org/10.35536/lje.2004.v9.2.a6

M. Haider Hussain



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Abstract

This paper applies the technique of Granger Causality to determine the relationship between total government expenditures and total tax revenue using annual revised estimates. The analysis discovers a firm unidirectional effect from expenditure to revenue suggesting the preference of controlling the spending decisions to reduce the tax revenue-expenditure deficit.

Keywords

Pakistan, Granger Causality, estimates,  tax revenue-expenditure deficit