Tax Revenue and Government Expenditure in Sri Lanka: An Econometric AEG Testing Approach
[2023-08-01 09:05:45]
In global economic management, taxation is recognized as the driving force of government expenditure, but the relationship between them has not been investigated by econometrics, it causes a research gap to taste the relationship between them It was. The purpose of this research was to study the integrated relationship between taxation of Sri Lanka and government expenditure. In this research we will consider two time series variables such as taxes and government spending. Taxation is considered an independent variable and government expenditure is considered a dependent variable. The sample period for this study was from 1950 to 2013. Integration techniques are used to test long-term relationships and error correction mechanisms are used to study the short-term behavior of tax revenues on government spending. Based on the experimental results, the R-square of the estimation model is 0.99. At the same time, Durbin Watson's statistics is 0.828. However, since the residuals of the model are static, there is no false problem in the model. Taxes have a positive relationship with government expenditure. The tax fraction coefficient and its probability value in the estimation model are 0.695 (0.000) in the short term and 031 (0.000) in the long term. Therefore taxation and government expenditure are made at the I (0) level and maintain a long - term relationship between them.
The situation sets up a research gap to taste the relationship between them. The purpose of this research is
It is an essential element for the fiscal policy of any country. It is considered a useful tool
[1, 10]. There are two kinds of tax: direct tax and indirect tax. Direct tax can be divided into 5
Tax liability [1, 6, 11]. Indirect taxes are classified into three categories, such as VAT.
Section: Final introduction, research purpose, research method, results and discussion
Attribute of continuity in pre - demand analysis. There are several ways to confirm.
Even if ρ is very different, it is not much different from zero.
This section contains the following items. Descriptive statistics of variables, unit root test, long run
Therefore, the description position of the variable is necessary for statistical analysis. of
The tables (Tables 2 and 3) show the fundamental test results of the ADF and Philips Perron units.
According to the result of the level variable and the first order differential form single root test, both are taxed
The problem is that this research is to examine the stability of the residuals of the estimation model. The table below
It is 90% and the significance level is 5%. Therefore, this ADF test statistic is greater than the critical value of the value.
The probability value is less than 1% (0.000). Therefore, the adjusted error correction coefficient
The expenditure is 0.69, the probability value is 0.000, which is less than 1% of the significance level.
Keho (2010) studied the data from 1660 to 2005, analyzed the causal relationship between government expenditure and taxation, investigated that spending and income projects played a role in reducing the budget deficit, and GDP It had a big impact on government expenditure. In addition, the results of the Granger causality test are described in Keho et al. Based on the results of the government, it shows a one-way causal relationship from government income to expenditure. It is concluded that elimination of the budget deficit should not be achieved simply by increasing income. Therefore, if you do not reduce expenses, the results are not beneficial. In other words, the tax system should adopt an appropriate expenditure management system.
In global economic management, taxation is recognized as the driving force of government expenditure, but the relationship between them has not been investigated by econometrics, it causes a research gap to taste the relationship between them It was. The purpose of this research was to study the integrated