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Volume
1, No. 2,
August 2002
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Tax or Spend, What
Causes What: Taiwan's Experience
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Tsangyao Chang*
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Department of Economics, Feng Chia
University, Taiwan
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Yuan-Hong Ho
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Department of Public Finance, Feng
Chia University, Taiwan
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Abstract
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In this paper we tested the hypothesis
of tax-and-spend, spend-and-tax, or fiscal
synchronization for Taiwan using annual data covering
the 1967 to 1999 period. Granger causality test
results based on the corresponding vector
error-correction models (ECM) suggest unidirectional
causality running from government revenues to
government expenditures, thus supporting the
tax-and-spend hypothesis for Taiwan.
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Key words
:
tax-and-spend; spend-and-tax;
fiscal synchronization; Taiwan
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JEL
classification
:
C32; H62
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