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Volume2, No.
2,
August 2003
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Tax or Spend, What causes What?
Reconsidering Taiwans Experience
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Scott M. Fuess, Jr.
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Department of Economics, University of
Nebraska-Lincoln, U.S.A and IZA.
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Jack W. Hou*
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Department
of Economics, California State University-Long Beach,
U.S.A.
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Meghan Millea
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Department of Finance and Economics, Mississippi State
University, U.S.A.
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Abstract
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Earlier research suggests that there
has been one-way causality from government revenues
to expenditures in Taiwan. This study measures
linear feedback to (1) decompose the relationship
between Taiwans government spending and receipts and
(2) account for contemporaneous association. Despite
substantial fiscal synchronization, we still find
one-way causality from government receipts to
expenditures.
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Key words
: budget deficits; time-series methods
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JEL classification
: H62; H60; C32
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