An Investigation of The Relationship Between Government Expenditure and Revenue in A Multicurrency Economy

Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper ISSN 2222-2!"" (#nline

$ol%"& No%1'& 201'

An Investigation of the Relationship between Government
Expenditure and Revenue in a Multicurrency Economy:

1%Department of Economics& (idlands State )niversit*& P%+a, -0""& Sen,a& ./eru& 0imbab/e
2%Department of +an1in, and 2inance& (idlands State )niversit*& P%+a, -0""& Sen,a& ./eru& 0imbab/e
*
Email of t3e correspondin, aut3or4
The research was financed by the authors

Abstract
53is stud* investi,ated t3e nature of t3e relations3ip bet/een ,overnment e6penditure and revenue for
0imbab/e for t3e (ulticurrenc* period usin, mont3l* time series data coverin, t3e peri
/as anal*sed usin, .ran,er (1-7- causalit* tests and 8ointer,ration anal*sis%
t3at t3ere is independence bet/een ,overnment e6penditure and ,overnment revenue 3ence providin, evidence
in support of t3e Institutional Seperation 9*pot3esis propounded b* :ildas1* (1-!! and +a,3estani and
(acNo/n (1--'% 9ence policies to curb t3e bud,et deficit in 0imbab/e s3ould be directed to ot3er factors li1e
economic ,ro/t3 /3ic3 affect ,overnment e6penditure and re
Keywords: causalit*& ,overnment e6penditure& ,overnment revenue& .ran,er

! Introduction
;nal*sis of t3e causal relations3ip bet/een ,overnment e6penditure and revenue 3as received considerate
attention in recent *ears% 53is is probabl* due to eve
countries /3ere ,overnment e6penditure is t3e ma<or tool for spear3eadin, economic development% 53e
=e*nesians 3ave al/a*s subscribed to t3e use of ,overnment e6penditures in maintainin, macroecono
stabilit*% 9o/ever e6cessive ,overnment e6penditures in most developin, countries 3ave led to 3i,3&
unsustainable bud,et deficits% +ecause of t3is trend& studies 3ave been conducted to tr* and understand t3e
nature of t3e relations3ip bet/een ,overnmen
policies meant to reduce t3ese bud,et deficits%
2or 0imbab/e& ,overnment deficits ran,ed bet/een '-> and 70> of .DP for t3e period 200" to 2012% 53ese
fi,ures /ent as 3i,3 as !!> and -1> for 200
9o/ever& accordin, to 0I(S5;5S (2010
t3at amounted to appro6imatel* )S?@2-million& )S?2" million and )S?-!2 000 for t3e period
53ese fi,ures indicate a s3arpl* declinin, trend in surpluses for t3e countr* t3ou,3% 53is mi,3t be probabl* due
to t3at t3e ,overnment of 0imbab/e 3as been rel*in, on ta6 revenue to finance its e6penditures in li,3t of t3e
loss of borro/in, ri,3ts from (ultilateral #r,aniAations as /ell as t3e dr*in, up of forei,n aid% Evidence from
0I(S5;5S (200--2012 s3o/ed t3at domestic financin, /as t3e onl* contributor to total financin, /it3
not3in, comin, from forei,n financin,% In 200-& total reven
/3ic3 )S?!!2 million /as ta6 revenue (0I(S5;5S 200-% ; closer loo1 at 2i,ure 1 s3o/s t3at ta6 revenue
contributed -2> of total revenue for t3e period Januar* to June 200-%
"igure: #ercentage Revenue $ontri
Source: ZIMSTATS (2009)
2i,ure 1 s3o/s t3e percent contribution of t3e ma<or revenue 3eads for t3e first 3alf of 200-% $alue added ta6
2!"" (#nline
10'
A $ase of %imbabwe
$ictoria Stella (asere
1B
& Primrose =a<a
2
ment of Economics& (idlands State )niversit*& P%+a, -0""& Sen,a& ./eru& 0imbab/e
Department of +an1in, and 2inance& (idlands State )niversit*& P%+a, -0""& Sen,a& ./eru& 0imbab/e
Email of t3e correspondin, aut3or4 mo*ovsCmsu%ac%A/

The research was financed by the authors
0imbab/e for t3e (ulticurrenc* period usin, mont3l* time series data coverin, t3e peri
/as anal*sed usin, .ran,er (1-7- causalit* tests and 8ointer,ration anal*sis% 53e results from t3is stud* s3o/
e Institutional Seperation 9*pot3esis propounded b* :ildas1* (1-!! and +a,3estani and
economic ,ro/t3 /3ic3 affect ,overnment e6penditure and revenues%
causalit*& ,overnment e6penditure& ,overnment revenue& .ran,er
attention in recent *ears% 53is is probabl* due to ever occurrin, bud,et deficits especiall* for most developin,
=e*nesians 3ave al/a*s subscribed to t3e use of ,overnment e6penditures in maintainin, macroecono
nature of t3e relations3ip bet/een ,overnment e6penditures and its revenues so as to develop appropriate
policies meant to reduce t3ese bud,et deficits%
fi,ures /ent as 3i,3 as !!> and -1> for 200! and 200- respectivel* (:orld Economic #utloo1 #ctober 2012%
9o/ever& accordin, to 0I(S5;5S (2010-2012& t3e countr* 3as actuall* been e6periencin, bud,et surpluses
t3at amounted to appro6imatel* )S?@2-million& )S?2" million and )S?-!2 000 for t3e period
, ri,3ts from (ultilateral #r,aniAations as /ell as t3e dr*in, up of forei,n aid% Evidence from
2012 s3o/ed t3at domestic financin, /as t3e onl* contributor to total financin, /it3
not3in, comin, from forei,n financin,% In 200-& total revenue amounted to appro6imatel* )S?-@'million of
contributed -2> of total revenue for t3e period Januar* to June 200-%
"igure: #ercentage Revenue $ontribution for %imbabwe by &ead: 'an('une )**+
1 s3o/s t3e percent contribution of t3e ma<or revenue 3eads for t3e first 3alf of 200-% $alue added ta6
///%iiste%or,
ment of Economics& (idlands State )niversit*& P%+a, -0""& Sen,a& ./eru& 0imbab/e
Department of +an1in, and 2inance& (idlands State )niversit*& P%+a, -0""& Sen,a& ./eru& 0imbab/e
0imbab/e for t3e (ulticurrenc* period usin, mont3l* time series data coverin, t3e period 2010 to 2012% Data
53e results from t3is stud* s3o/
e Institutional Seperation 9*pot3esis propounded b* :ildas1* (1-!! and +a,3estani and
r occurrin, bud,et deficits especiall* for most developin,
=e*nesians 3ave al/a*s subscribed to t3e use of ,overnment e6penditures in maintainin, macroeconomic
t e6penditures and its revenues so as to develop appropriate
! and 200- respectivel* (:orld Economic #utloo1 #ctober 2012%
2012& t3e countr* 3as actuall* been e6periencin, bud,et surpluses
t3at amounted to appro6imatel* )S?@2-million& )S?2" million and )S?-!2 000 for t3e period 2010 to 2012%
, ri,3ts from (ultilateral #r,aniAations as /ell as t3e dr*in, up of forei,n aid% Evidence from
2012 s3o/ed t3at domestic financin, /as t3e onl* contributor to total financin, /it3
ue amounted to appro6imatel* )S?-@'million of

1 s3o/s t3e percent contribution of t3e ma<or revenue 3eads for t3e first 3alf of 200-% $alue added ta6
$ol%"& No%1'& 201'

/as t3e lar,est contributor& contributin, '0> to total revenue /3ile e6cise du
revenue& t3at is& @>%
"igure ): Monthly Revenue $ollections for %imbabwe: )*
Source: ZIMSTATS, 2011-12

2i,ure 2 s3o/s t3e mont3l* revenue contributions for 0imbab/e bet/een t3e *ears 2011 and 2011% Indications
are t3at mont3l* revenue collections /ere si,nificantl* 3i,3er in 2012 t3an in 2011 probabl* due to efficient
revenue measures implemented in t3e *ear 2012% 2i,ure 2 also s3o/s t3at revenue bet/een t3e *ears 2011 and
2012 /as increasin,% 53is /as lar,el*
1"0%-> in 2010 and 20%2> in 2011 (National +ud,et Statements 200-
performed robustl* and 3ence contributed to t3e increase in revenue for t3e t/o *ea
and customs duties% (oreover& for t3e period Januar* to June 2012& revenue from diamonds accounted for
)S?'1%7million of t3e total non-ta6 revenue of )S?--%- billion% 9o/ever& for t3e /3ole period Januar* to
September 2012& diamonds revenue accounted for -0> of total non
2!"" (#nline
10"
/as t3e lar,est contributor& contributin, '0> to total revenue /3ile e6cise duties contributed t3e least to total
"igure ): Monthly Revenue $ollections for %imbabwe: )*()*)
s3o/s t3e mont3l* revenue contributions for 0imbab/e bet/een t3e *ears 2011 and 2011% Indications
2012 /as increasin,% 53is /as lar,el* as a result of t3e ,ood performance of ta6 revenue /3ic3 increased b*
1"0%-> in 2010 and 20%2> in 2011 (National +ud,et Statements 200--2012% 53e ma<or revenue 3eads /3ic3
performed robustl* and 3ence contributed to t3e increase in revenue for t3e t/o *ears are $;5& income ta6es
ta6 revenue of )S?--%- billion% 9o/ever& for t3e /3ole period Januar* to
s revenue accounted for -0> of total non-ta6 revenue%
///%iiste%or,
ties contributed t3e least to total

s3o/s t3e mont3l* revenue contributions for 0imbab/e bet/een t3e *ears 2011 and 2011% Indications
as a result of t3e ,ood performance of ta6 revenue /3ic3 increased b*
2012% 53e ma<or revenue 3eads /3ic3
rs are $;5& income ta6es
ta6 revenue of )S?--%- billion% 9o/ever& for t3e /3ole period Januar* to
Journal of Economics and Sustainable Development ///%iiste%or,
$ol%"& No%1'& 201'

107

"igure ,: Government Expenditure- Revenue and the .udget #osition for %imbabwe for 'anuary )**(
/ecember )*)
Source: ZIMSTATS (2010-2012)

2i,ure @ s3o/s t3e trend in ,overnment revenue& e6penditure and t3e bud,et deficit for 0imbab/e from 2010 to
2012% 53e trend s3o/s t3at ,overnment e6penditure e6ceeded revenue for most of t3e mont3s in t3e *ears under
revie/ impl*in, t3at t3e countr* 3ad a bud,et deficit for most of t3ese mont3s% +ot3 ,overnment revenue and
e6penditure /ere fluctuatin, /it3 3o/ever& ,overnment e6penditure e6ceedin, ,overnment revenue resultin, in
bud,et deficits% 53is /as observed for t3e periods #ctober-December 2010 and Jul* to September of 2012%
Durin, t3e same period& ,overnment e6penditures 3ave been ,enerall* increasin, as s3o/n in 2i,ure 2% 53e
persistent bud,et deficits are evidence t3at ta6 revenue alone is not enou,3 to cover ,overnment e6penditures%
53e deat3 of t3e 0imbab/ean dollar and t3e introduction of t3e (ulticurrenc* S*stem in 200- furt3er /orsened
t3e financin, problems of t3e ,overnment since t3e* could no lon,er rel* on sei,nora,e to finance its
e6penditures% In t3e same *ear& t3e 2inance (inister introduced 8as3 +ud,etin, measures& t3at is& Deat /3at *ou
1illE& to tr* and control t3e deficit (+ud,et Statement 200-% 53e bud,et position ,reatl* improved t3ereafter
t3ereb* ,ivin, t3e indication t3at t3ere is bidirectional causalit* bet/een ,overnment e6penditure and revenue
for 0imbab/e for t3e multicurrenc* era% It is a,ainst t3is bac1,round t3at t3is stud* is conducted so as ,ive
polic* ma1ers t3e basis for formulatin, measures meant to reduce t3e deficit as /ell as to test /3et3er t3ere is
bidirectional causalit* as implied b* t3e policies bein, implemented currentl*%

)! Related 0iterature
Several t3eories 3ave been put fort3 to tr* and e6plain t3e nature of t3e relations3ip bet/een ,overnment
e6penditures and its revenues% 53ese are t3e Fevenue-Spend 9*pot3esis& Spend-Fevenue 9*pot3esis& 2iscal
S*nc3roniAation 9*pot3esis and 2iscal Neutralit* 9*pot3esis% 53e Fevenue-spend 3*pot3esis /as proposed b*
2riedman (1-7!& /3o subscribes to a positive relations3ip bet/een t3e t/o variables& and +uc3anan G :a,ner
(1-7! /3o posits t3at t3ere is an inverse relations3ip bet/een t3e same variables% ;ccordin, to t3is 3*pot3esis&
t3ere is a unidirectional causalit* bet/een ,overnment e6penditures and its revenues runnin, from revenues to
e6penditures& t3at is& ,overnment e6penditures are determined b* its revenues% 2riedman (1-7! subscribes to t3e
e6istence of a positive relations3ip bet/een ,overnment e6penditure and its revenue impl*in, t3at raisin,
revenue increases e6penditure% 9ence bud,et deficits can be cured b* a reduction in revenue% #n t3e ot3er 3and&
-@EH0!
-2EH0!
-1EH0!
0
100000000
200000000
@00000000
'00000000
"00000000
700000000
0 " 10 1" 20 2" @0 @" '0
Months
Government Expenditure1GE2-
Government Revenue and .udget
#osition 1./2 for %imbabwe 1'an )**(
/ec )*)2
.F
.E
+D
$ol%"& No%1'& 201'

107
+uc3anan G :a,ner (1-7! states t3at t3ere is a ne,ative relations3ip bet/een ,overnment e6penditure and
revenue in t3e sense t3at an* decrease in ,overnment revenue mi,3t be accompanied b* an increase in t3e
demand for public ,oods because it creates t3e perception t3at t3e cost of ,overnment pro,rams 3as ,one do/n
(Dada 201@% 53is 3*pot3esis implies t3at raisin, revenue leads to more e6penditure (;l-Iudair 2007J #bioma
G #Aun,3alu 2010K% 9ence to solve bud,et deficits& t3e ,overnment s3ould increase its revenues%
53e second 3*pot3esis /as advocated b* Peacoc1 G :isemen (1-7- and +arro (1-7- and su,,ests t3at
c3an,es in ,overnment e6penditure causes c3an,es in ,overnment revenue% 53is 3*pot3esis su,,ests t3at
,overnment /ill determine its e6penditure before its revenue% In periods of /ars& natural disasters e.t.c t3e
,overnment increases its e6penditures /3ic3 t3en necessitate an increase in ta6es to finance t3is e6penditure%
9ence& accordin, to t3is 3*pot3esis& t3ere is unidirectional causalit* runnin, from ,overnment e6penditure to
revenue impl*in, t3at to solve bud,et deficits& t3e ,overnment s3ould reduce its spendin,%
2iscal s*nc3roniAation 3*pot3esis states t3at t3ere is bidirectional causalit* bet/een ,overnment revenue and its
e6penditure& t3at is& causalit* runs in bot3 directions% 53is 3*pot3esis /as advocated b* (eltAer G Fic3ard
(1-!1 and (us,rave (1-77% ;ccordin, to t3is 3*pot3esis& ,overnment revenue decisions are not made in
isolation from ,overnment e6penditure decisions but t3e decisions are made concurrentl*% 5o reduce bud,et
deficits& t3e ,overnment s3ould t3erefore reduce bot3 ,overnment e6penditure and revenue at t3e same time%
Lastl*& t3e Institutional Separation 9*pot3esis (2iscal Neutralit* states t3at& decisions on ta6ation are ta1en
independentl* from t3e allocation of ,overnment e6penditures because t3ere is no causal relations3ip bet/een
t3e t/o variables% 53is 3*pot3esis /as propounded b* :ildas1* (1-!! and +a,3estani G (cNo/n (1--' and
implies t3at& bot3 ,overnment e6penditure and revenue are eac3 determined b* t3e lon, run economic ,ro/t3%
Empirical evidence also e6ist /3ic3 support t3ese various 3*pot3eses% #/o*e (1--" found a bi-directional
causalit* in all -7 countries e6cept Japan and Ital* /3ic3 supported causalit* runnin, from ,overnment ta6es to
e6penditures% Studies in support of t3e 2iscal S*nc3ronisation 3*pot3esis include studies b*& ;re,be*en G
Ibra3im (2012 for Ni,eria and El*asi G Famimi (2012 for Iran& 9*e G Jalil (2010 in t3eir stud* of Fomania&
N*amon,o& Sic3ei G Sc3oeman (2007 for Sout3 ;frica and ;l-Iudair (200" for Saudi ;rabia% 2urt3er
evidence in support of t3e fiscal s*nc3ronisation /as provided b* ;lfonso and Fault (200! /3o used +ootstrap
panel .ran,er causalit* tests and ;lade<are and ;ni (2012 /3o used .ran,er causalit* tests t3rou,3 $;F
met3ods for Ni,eria% 53ese all found evidence of bidirectional causalit* bet/een ,overnment e6penditure and
revenue%
Do,an (201@ in a stud* of 5ur1e*& (e3rara& (usai G =arsalari (2012 in a stud* of oil e6portin, countries&
Petanlar G Sade,3i (2012 also in a stud* of oil e6portin, countries& #bioma G #Au,3alu (2010 in Ni,eria and
:an, et al (200" for (ala*sia provide evidence in support of t3e Fevenue-Spend 3*pot3esis% 9asan& ImtiaA
and #sman (2011 also supported t3e presence of t3e revenue-spend 3*pot3esis for Pa1istan usin, .ran,er
causalit* tests /3ile Par1 (1--! also found a similar result for =orea usin, bot3 Parametric and non-Parametric
tests% Studies in .reece b* 9ondro*iannis G Papapetrou (1--7& .88 countries b* 2asano G :an, (2002 and
Pa1istan b* 9ussain (200' support t3e presence of t3e E6penditure-Fevenue 3*pot3esis% ;fonso and Fault
(200! used +ootstrap Panel .ran,er causalit* tests for E) countries and found evidence in support of t3e
E6penditure-Fevenue 3*pot3esis for Ital*& 2rance & Spain & .reece and Portu,al /3ile t3e Fevenue-E6penditure
3*pot3esis /as present for .erman*& +el,ium& ;ustria& 2inland and t3e )= in t3eir stud* of E) countries%
Dada (201@ in a stud* for Ni,eria and ;li and S3a (2012 for Pa1istan found evidence in support of t3e 2iscal
neutralit*% (ost of t3ese studies utiliAed 8ointer,ration approac3es and .ran,er causalit* tests (9ondro*iamis G
Papapetrou 1--7J ;li G S3a 2012 /it3 a fe/ inter,ratin, Error 8orrection (odellin, (E8( into t3e traditional
.ran,er causalit* tests (;l-Iudair 200"J #bioma G #Aun,alu 2010% 53e fact t3at t3ese empirical studies 3ave
provided different vie/s concernin, t3e nature of t3e relations3ip bet/een ,overnment e6penditure and revenue
3as motivated t3e aut3or to e6amine t3is relations3ip for 0imbab/e for t3e (ulticurrenc* era% (oreover& most
of t3ese studies e6cept t3at of N*amon,o& Sic3ei G Sc3oeman (2007 used annual data but t3is stud* /ill utiliAe
mont3l* data%

,! Methodology
53is stud* uses mont3l* time series data for 0imbab/e for t3e period 201041 to 2012412 so as to capture t3e
multicurrenc* era% 53e multicurrenc* s*stem /as officiall* adopted in 0imbab/e in 2ebruar* 200- M+ud,et
Statement 200-K and data for t3at same *ear on ,overnment e6penditure /as not readil* available at t3e time t3is
stud* /as conducted 3ence t3e use of 2010 to 2012 period% Data for bot3 ,overnment revenue and ,overnment
e6penditure are in )nited States dollars and /as collected from 0I(S5;5S%
3.1 Mode !eri"ation and S#ecification
:ooldrid,e M200'K points out t3at in evaluatin, public polic*& t3e economistNs ,oal is to infer t3at one variable
3as a causal effect on anot3er variable% Simpl* findin, an association bet/een t/o or more variables mi,3t be
su,,estive& but unless causalit* can be establis3ed& it is rarel* compellin,% Since t3e ob<ective of t3e stud* is to
see t3e nature of t3e relations3ip t3at e6ists bet/een ,overnment e6penditure and revenue and not to build a
$ol%"& No%1'& 201'

10!
model of ,overnment e6penditure or revenue be3aviour& t3e aut3or /ill conduct .ran,er 8ausalit* tests as
developed b* .ran,er (1-7-% ;s postulated b* ;l-Iudair (200"& p%@@& D.ran,er causalit* is concerned /it3 t3e
relevance of past information of a variable in predictin, t3e value of t3e ot3er%E 9ence& t3e stud* /ill use
unrestricted eOuations /3ic3 include la,,ed values of ,overnment e6penditure over and above t3e la,,ed values
of ,overnment revenue%
53e test /ill involve estimatin, t3e follo/in, pair of re,ressions4
1 %%%%%%( %%%%%%%%%% %%%%%%%%%%
1
1 1
t
n
$
$ t $
i t
n
i
i t
% & % + + =

=
=

2 %%%%%%%( %%%%%%%%%% %%%%%%%%%% %%%%%%%%%%
2
1 1
i
n
$
$ t
n
i
i t i t
% & & + + =

=

:3ere it is assumed t3e disturbances
t t 2 1
&
are uncorrelated& . and F are .overnment E6penditure and F is
t3e .overnment revenue%
EOuation (1 postulates t3at .overnment e6penditure is related to past values of itself as /ell as t3ose of
.overnment revenue (F and (2 postulates a similar be3aviour of ,overnment revenue% ;s su,,ested b*
N*amon,o et al (2007& t3e aut3or /ill test for cointer,ration to determine if t3ere is a cointer,ratin,
relations3ip bet/een t3e variables as it is important for t3e correct specification of a model /3en testin, for
.ran,er causalit*% 8ointer,ration /as tested usin, t3e En,el and .ran,er (1-!7 2 step procedure as also used
b* ;l-Iudair (200"& /3ic3 involves estimatin, t3e follo/in, set of eOuations first b* #LS4
t
t
%' %&
%& %'

+ + =
+ + =
1 0
1 0

53e residuals from t3e re,ression are t3en tested for stationarit* usin, bot3 t3e ;D2 test and t3e PP unit root test
as su,,ested b* Dada (201@ and 8arneiro et al (200'% If t3e tests indicate t3at t3e residuals are stationar*& t3at
is& I(0& t3en t3ere is cointer,ration% ;ccordin, to PasOuale (2007& testin, for co-inter,ration involves t/o ma<or
steps& first /3ic3 is t3e unit root test and second is t3e cointer,ration test emplo*ed to determine if t3e variables
in t3e s*stem 3ave a lon, run relations3ip% 9ence& unit root tests on .E and .F /ould be carried out first before
conductin, tests for cointer,ration% 53e aut3or /ill onl* test for cointer,ration if t3e variables are not stationar*
at level but 3ave to be differenced of t3e same order to be stationar*% If t3e variables are stationar*& t3ere is no
need for cointer,ration test (.u<arati 200'%

3! Results and /iscussion
(.1 )nit &oot Tests &esuts
4able : 5nit Root 4est Results
*ariabe A!+ Test Statistic ,, Test Statistic 1- .ritica *aue /rder of Inter0ration
%& -1.0(1122 -(.334412 -(.2(12 I506
%' --(.7(2210 -(.421301 -(.2(12 I506
Source: +i0ures ado#ted fro8 A!+ and ,, tests 0enerated fro8 '-*iews (.0

5able 1 presents t3e unit root test results /3ic3 s3o/s evidence t3at ,overnment revenue and e6penditure are
stationar* at level and 3ence are cointer,rated% Fesults from bot3 t3e ;D2 and PP tests (5able 1 s3o/ t3at bot3
.F and .E are stationar* at level& t3at is I(0& impl*in, t3e absence of a unit root% 9ence t3e aut3or did not
re<ect t3e null 3*pot3esis of no unit root and concluded t3at a lon, run relations3ip e6ist bet/een .F and .E%
(.2 %ran0er .ausaity &esuts
Since t3e variables /ere stationar* at level& t3e aut3or proceeded to test for causalit* usin, t3e simplest version
of .ran,er test% 53is /as also used b* ;li G S3a (2012& :and et al (200" and 9ondro*iaamis G Papapetrou
(1--7% 9o/ever& .u<arati (200' advises first identif*in, t3e appropriate la, len,t3 usin, t3e ;l1ai1e
Information 8riteria (;I8 as t3e first step to .ran,er causalit* tests% 53e procedure involves conductin, #LS
re,ressions on t3e variables in t3eir levels and in different la,s% 53e appropriate la, len,t3 is t3e one
correspondin, to t3e lo/est ;I8% ; summar* of t3e la, len,t3s and t3eir ;I8s are ,iven in 5able 2 belo/%
4able ): Alchai6e Information $riterion for /ifferent 0ag 0engths
No% #f La,s 0 1 2 @ ' "
;I8 @!%!1@!2 @-%!@"01 @!%!"7'! @!%!1-'@ @!%"'"7! @!%""077
Source: .o8#utations based on data anay9ed in '-*iews (.0

5able 2 s3o/s t3e alc3ai1e information criterion for different la, len,t3s /3ic3 is used to determine t3e
appropriate la, len,t3 to use for t3e model /3en carr*in, out re,ressions% Fesults from 5able 2 s3o/ t3at t3e
$ol%"& No%1'& 201'

10-
appropriate la, len,t3 for t3e model is ' /3ic3 is t3e one /3ic3 corresponds to t3e lo/est ;I8% .ran,er
causalit* tests are t3erefore based on t3is la, len,t3%
4able ,: Granger $ausality 4est Results
&ypothesis "(prob /ecision
.F does not ,ran,er cause .E 0%7-0!" Do not re<ect
.E does not ,ran,er cause .E 0%71071 Do not re<ect
Source: .o8#utations based on data anay9ed in '-*iews (.0

5able @ presents results from t3e .ran,er 8ausalit* test /3ic3 forms t3e basis for anal*Ain, data for t3is stud*%
Fesults from .ran,er causalit* tests (refer to 5able @ s3o/ t3at ,overnment revenue does not .ran,er cause
,overnment e6penditure evident from an 2-prob of more t3at 0%0"% (oreover& t3ere is also evidence t3at
,overnment e6penditure does not .ran,er cause ,overnment revenue since t3e 2-prob is 3i,3l* insi,nificant%
53is implies t3at t3ere is independence bet/een ,overnment revenue and e6penditure in 0imbab/e for t3e
period 2010 to 2012%
(.3 !iscussion of &esuts
53e results from t3is stud* s3o/ t3at t3ere is independence bet/een ,overnment e6penditure and ,overnment
revenue 3ence providin, evidence in support of t3e Institutional Seperation 9*pot3esis propounded b* :ildas1*
(1-!! and +a,3estani G (acNo/n (1--'% 53is means t3at for t3e period under revie/& t3ere /as
independence bet/een ,overnment e6penditure and revenue for 0imbab/e impl*in, t3at c3an,es in ,overnment
e6penditure did not e6plain c3an,es in ,overnment revenue /3ile t3e opposite is also true% ;li G S3a (2012 and
Dada (201@ also 3ad similar findin,s% 53e implications of t3ese findin,s for 0imbab/e& for t3e period under
stud*& are t3at decisions on ta6ation /ere ta1en independentl* from allocation of ,overnment e6penditure%
9o/ever& indications from t3e /a* t3e bud,et /as conducted implied t3e presence of unidirectional relations3ip
bet/een t3e t/o variables runnin, from revenue to e6penditure% 53is is evident from t3e balanced bud,et
approac3 or DEat /3at *ou 1illE approac3 adopted b* t3e ,overnment for t3e period 200- to 2012% Durin, t3is
period& ,overnment e6penditure /as supposed to matc3 e6pected ,overnment revenue /it3 overspendin, ,reatl*
condoned% (oreover& durin, t3e same period& t3e countr* actuall* e6perienced bud,et surpluses t3ou,3 t3e trend
/as a declinin, one% 9o/ever& t3e findin,s from t3is stud* su,,est t3at t3e bud,et position and 3ence
,overnment revenue and e6penditure are e6plained b* ot3er factors li1e economic ,ro/t3 as propounded b*
:ildavs1* (1-!! and +a,3estani G (cNo/n (1--'% 53e polic* implications of t3ese findin,s are t3at for t3e
countr* to continue e6periencin, a favourable bud,et position& t3e ,overnment s3ould tar,et variables li1e
economic ,ro/t3% ;fter t3e introduction of t3e (ulticurrenc* s*stem& t3e econom* of 0imbab/e e6perienced its
first& in decades& positive economic ,ro/t3 rates /3ic3 mi,3t 3ave lar,el* contributed to positive bud,et
position% 9ence it mi,3t be necessar* for t3e ,overnment to continue enforcin, measures meant to boost t3e
countr*Ns economic ,ro/t3 for as lon, as t3e econom* is usin, t3e multicurrenc* s*stem%

7! $onclusion
53e purpose of t3is stud* /as to investi,ate t3e nature of t3e relations3ip bet/een ,overnment revenue and
e6penditure for 0imbab/e for t3e (ulticurrenc* era% Pat3olo,ical tests s3o/ed t3at bot3 ,overnment
e6penditure and ,overnment revenue /ere stationer* at level impl*in, t3at a lon, run relations3ip e6ists
bet/een t3e t/o variables% as a result& t3e relations3ip bet/een t3e t/o variables /as tested usin, t3e simple
.ran,er causalit* tests developed b* .ran,er (1-7-% 5ests /ere done on unrestricted eOuations as used in ;l-
Iudair (200"% Fesults from t3e test provided evidence in support of 2iscal Separation (Neutralit* 9*pot3esis
impl*in, independence bet/een ,overnment revenue and e6penditure for 0imbab/e bet/een t3e *ears 2010 and
2012% 53is means t3at for t3e multicurrenc* s*stem period& ,overnment e6penditure does not e6plain
,overnment revenue in 0imbab/e and vice versa% 53e implication is t3at t3e bud,et deficit for 0imbab/e can be
cured b* independentl* addressin, ,overnment e6penditure and ,overnment revenue% 9ence& t3e ,overnment
s3ould ma1e e6penditure and revenue decisions separatel* and policies meant to improve t3e ,overnment bud,et
position s3ould 3ence tar,et ot3er factors li1e economic ,ro/t3%

References
;fonso& ;% G Fault& 8% (200!% +ootstrap Panel .ran,er-8ausalit* bet/een .overnment Spendin, and Fevenue%
Technica )ni"ersity of :isbon Schoo of 'cono8ics and Mana0e8ent% :P@-P200!PDEP)E8E
;lade<are& S% ;% G ;ni& E% (2012% Fevisitin, t3e .overnment Fevenue- E6penditure Ne6us4 Evidence from
Ni,eria +ased on t3e $;F .ran,er 8ausalit* ;pproac3% SSFN& 3ttp4PPd6%doi%or,P10%21@-Pssrn%21!7-'7
;li& F& G S3a3& (% (2012% 53e 8ausal Felations3ip bet/een .overnment E6penditure and Fevenue in Pa1istan%
Interdisci#inary ;ourna of .onte8#orary &esearch in <usiness& @(12& @2@-@2-
;l-Iudair& =% ;% (200"% 53e Felations3ip bet/een .overnment E6penditure and Fevenues in t3e =in,dom of
Saudi ;rabia4 5estin, for 8ointer,ration and 8ausalit*% 'cono8ic and Ad8inistration& 1-(1& @1-'@
$ol%"& No%1'& 201'

110
;re,be*en& #% #%& G Ibra3im 5% (% (2012% 53e 8ausal Felations3ip bet/een .overnment Spendin, and
Fevenue in an #il-dependent Econom*4 53e case of Ni,eria% The I), ;ourna of ,ubic +inance& Q(1& 7-21
+a,3estani& 9%& G (cNo/n F% (1--'% Do revenues or E6penditures Fespond to +ud,etar* DiseOuilibriaR
Southern 'cono8ic ;ourna, 70& @11-@20
+aro& F% J% (1-7-% #n t3e Determination of Public Debt% ;ourna of ,oitica 'cono8y, !1& -'0--71
+uc3anan& J% (%& G :a,ner F% :% (1-7!% Dialo,ues 8oncernin, 2iscal Feli,ion% ;ourna of Monetary
'cono8ics& '& 727-7@7
8arneiro& 2%& 2ana J% F%& G +arr* +% S% (200'% .overnment Fevenue and E6penditure in .uinea- +issau4
8ausalit* and 8ointer,ration% African &e0ion =, Series& 7"& 1---
Dada& (% ;% (201@% Empirical Investi,ation of .overnment E6penditure and Fevenue Ne6us4 Implications for
2iscal Sustainabilit* in Ni,eria% ;ourna of 'cono8ics and Sustainabe !e"eo#8ent& '(-& 1@"-1''
Do,an& E% (201@% Does Fevenue-led-Spendin, or Spendin,-led-Fevenue 9*pot3esis e6ist in 5ur1e*R <ritish
;ourna of 'cono8ics, +inance and Mana0e8ent Sciences& !(2% 72-7"
El*asi& S%& and Famini (% (2012% 8ausalit* bet/een .overnment E6penditure and .overnment Fevenue in
bot3 t3e Lon, Fun and S3ort Fun% Internationa ;ourna of 'cono8ic Sciences and A##ied &esearch& "(1& 12--
1'"
En,le& F% 2%& G .ran,er 8% :% (1-!7% 8ointe,ration and Error 8orrection Fepresentation4 Estimation and
5estin,% 'cono8etrica& ""(2& 2"1T277
2asano& )%& and :an, I% (2002% 5estin, t3e Felations3ip bet/een .overnment Spendin, and Fevenue4
Evidence from .88 8ountries% =ashin0ton: ,oicy and !e"eo#8ent &e"iew !e#art8ent& I(2 :or1in, Paper
:PP02P201
2riedman& (% (1-7!% 53e Limitations of 5a6 Limitation% ,oicy &e"iew& 7-1'%
.ran,er& 8live :% J% 1-7-% DInvesti,atin, 8ausal Felations b* Econometric (odels and 8ross Spectral
(et3ods%E 'cono8etrica& Jul*4 '2'T@!%
.u<arati& D% N% (200'% <asic 'cono8etrics& 't3 Edition& 53e (c.ra/-9ill 8ompanies
9asan& S% ;%& ImtiaA& S% (% G #sman& (% ;% (2011% ;n Investi,ation of .ran,er 8ausalit* +et/een 5a6
Fevenues and .overnment E6penditures% 'uro#ean ;ourna of Scientific &esearch& (PF; paper @"7!7
9ondro*iannis& .%& G Papapetrou E% (1--7% ;n E6amination of t3e 8ausal Felations3ip bet/een .overnment
Spendin, and Fevenue4 ; 8ointe,ratration ;nal*sis% ,ubic .hoice, !-(@P'& @7@-@7'
9ussain& 9% (% (200'% #n t3e 8ausal Felations3ip bet/een .overnment E6penditure and 5a6 Fevenue in
Pa1istan% The :ahore ;ourna of 'cono8ics, -(2& 10"-11!
9*e& I% (%& G Jalil ;% (% (2010% Fevenue and E6penditure Ne6us4 ; 8ase Stud* of Fomania% &o8anian
;ourna of +isca ,oicy, 1(1& 22-2!
(eltAer& ;% 9%& G Fic3ard S% 2% (1-!1% ; Fational 53eor* of t3e SiAe of t3e .overnment% The ;ourna of
,oitica 'cono8y& !-("& -1'--27
(us,rave& F% ;% (1-77% Principles of +ud,et Determination% In ;% 9% 8ameron and :% 9enderson (Eds%&
,ubic +inance: Seected &eadin0s4 1"-27% Ne/ Sor14 Fandom 9ouse
N*amon,o& (% E%& Sic3ei (% (%& G Sc3oeman N% J% (2007% .overnment Fevenue and E6penditure Ne6us in
Sout3 ;frica% SA;'MS >S, 10(2007& 2"7-27!
#bioma E% 8%& G #Au,3alu )% (% (2010% ;n E6amination of t3e Felations3ip bet/een .overnment Fevenue
and .overnment E6penditure in Ni,eria4 8ointer,ration and 8ausalit* ;proac3% 'cono8ic and +inancia
&e"iew& '!(2& @"-'7
#/o*e& #% (1--"% 53e 8ausal Felations3ip bet/een 5a6es and E6penditure in -7 8ountries4 8ointer,ration and
Error 8orrection (odels% A##ied 'cono8ic :etters& 2& 1--22
Par1& :% =% (1--!% .ran,er 8ausalit* bet/een .overnment Fevenue and E6penditure in =orea% ;ourna of
'cono8ic !e"eo#8ent, 2@(141'"-1""
Peacoc1& ;% 5%& G :iseman J% (1-7-% ;pproac3es to t3e ;nal*sis of .overnment E6penditures .ro/t3% ,ubic
+inance ?uartery, 7(@& @-2@
Petanlar& S% =%& G Sade,3i S% (2012% Felations3ip bet/een .overnment Spendin, and Fevenue4 Evidence from
#il E6portin, 8ountries% Internationa ;ourna of 'cono8ic and Mana0e8ent 'n0ineerin0 5I;'M'6& 2(2& @@-@"
:an,& 9% 5%& G Pin, =% (200"% 53e Felations3ip bet/een .overnment Fevenue and E6penditure in (ala*sia%
Internationa ;ourna of Mana0e8ent Studies% 12(2& "@-72
:ildas1*& ;%& G 8aiden N% (1-!!% The >ew ,oitics of the <ud0etary ,rocess. 't3 Ed& ;ddison $estle* Sc3ool%
:ooldrid,e& J% (% (200'% Introductory 'cono8ics: ; (odern ;pproac3& @rd Edition%
:orld Economic #utloo1& #ctober 2012
0imbab/e National +ud,et Statements% 200--201@
0I(S5;5S% 200--2012
The IISTE is a pioneer in the Open-Access hosting service and academic event
management. The aim of the firm is Accelerating Global Knowledge Sharing.

More information about the firm can be found on the homepage:
http://www.iiste.org

CALL FOR JOURNAL PAPERS
There are more than 30 peer-reviewed academic journals hosted under the hosting
platform.
Prospective authors of journals can find the submission instruction on the
following page: http://www.iiste.org/journals/ All the journals articles are available
online to the readers all over the world without financial, legal, or technical barriers
other than those inseparable from gaining access to the internet itself. Paper version
of the journals is also available upon request of readers and authors.

MORE RESOURCES
Book publication information: http://www.iiste.org/book/

IISTE Knowledge Sharing Partners
EBSCO, Index Copernicus, Ulrich's Periodicals Directory, JournalTOCS, PKP Open
Archives Harvester, Bielefeld Academic Search Engine, Elektronische
Zeitschriftenbibliothek EZB, Open J-Gate, OCLC WorldCat, Universe Digtial
Library , NewJour, Google Scholar

Business, Economics, Finance and Management Journals PAPER SUBMISSION EMAIL
European Journal of Business and Management EJBM@iiste.org
Research Journal of Finance and Accounting RJFA@iiste.org
Journal of Economics and Sustainable Development JESD@iiste.org
Information and Knowledge Management IKM@iiste.org
Journal of Developing Country Studies DCS@iiste.org
Industrial Engineering Letters IEL@iiste.org
Physical Sciences, Mathematics and Chemistry Journals PAPER SUBMISSION EMAIL
Journal of Natural Sciences Research JNSR@iiste.org
Journal of Chemistry and Materials Research CMR@iiste.org
Journal of Mathematical Theory and Modeling MTM@iiste.org
Advances in Physics Theories and Applications APTA@iiste.org
Chemical and Process Engineering Research CPER@iiste.org
Engineering, Technology and Systems Journals PAPER SUBMISSION EMAIL
Computer Engineering and Intelligent Systems CEIS@iiste.org
Innovative Systems Design and Engineering ISDE@iiste.org
Journal of Energy Technologies and Policy JETP@iiste.org
Information and Knowledge Management IKM@iiste.org
Journal of Control Theory and Informatics CTI@iiste.org
Journal of Information Engineering and Applications JIEA@iiste.org
Industrial Engineering Letters IEL@iiste.org
Journal of Network and Complex Systems NCS@iiste.org
Environment, Civil, Materials Sciences Journals PAPER SUBMISSION EMAIL
Journal of Environment and Earth Science JEES@iiste.org
Journal of Civil and Environmental Research CER@iiste.org
Life Science, Food and Medical Sciences PAPER SUBMISSION EMAIL
Advances in Life Science and Technology ALST@iiste.org
Journal of Biology, Agriculture and Healthcare JBAH@iiste.org
Journal of Food Science and Quality Management FSQM@iiste.org
Journal of Chemistry and Materials Research CMR@iiste.org
Education, and other Social Sciences PAPER SUBMISSION EMAIL
Journal of Education and Practice JEP@iiste.org
Journal of Law, Policy and Globalization JLPG@iiste.org
Journal of New Media and Mass Communication NMMC@iiste.org
Journal of Energy Technologies and Policy JETP@iiste.org
Historical Research Letter HRL@iiste.org
Public Policy and Administration Research PPAR@iiste.org
International Affairs and Global Strategy IAGS@iiste.org
Research on Humanities and Social Sciences RHSS@iiste.org
Journal of Developing Country Studies DCS@iiste.org
Journal of Arts and Design Studies ADS@iiste.org

An Investigation of The Relationship Between Government Expenditure and Revenue in A Multicurrency Economy

Transféré par

Informations du document

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

An Investigation of The Relationship Between Government Expenditure and Revenue in A Multicurrency Economy

Transféré par

Droits d'auteur :

Formats disponibles

Journal of Economics and Sustainable Development

ISSN 2222-1700 (Paper ISSN 2222-2!"" (#nline

Vous aimerez peut-être aussi