International Journal of Business and Economics Volume 2, No. 2 August, 2003

Tax or Spend, What causes What? Reconsidering Taiwans Experience

Scott M. Fuess, Jr.

Department of Economics, University of Nebraska-Lincoln, U.S.A and IZA.

Jack W. Hou

Department of Economics, California State University-Long Beach, U.S.A.

Meghan Millea

Department of Finance and Economics, Mississippi State University, U.S.A.

Abstract

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.

Keywords：budget deficits, time-series methods.

JEL Classifications：H62, H60, C32.

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