Explaining Fiscal Balances with a Simultaneous Equation Model of Revenue and Expenditure : A Case Study of Swiss Cantons Using Panel Data

Détails

ID Serval
serval:BIB_3DDF3333EF5F
Type
Article: article d'un périodique ou d'un magazine.
Collection
Publications
Institution
Titre
Explaining Fiscal Balances with a Simultaneous Equation Model of Revenue and Expenditure : A Case Study of Swiss Cantons Using Panel Data
Périodique
Public Budgeting and Finance
Auteur(s)
Krishnakumar J., Martin M.-J., Soguel N.
ISSN
0275-1100
Statut éditorial
Publié
Date de publication
2010
Peer-reviewed
Oui
Volume
30
Numéro
2
Pages
69-94
Langue
anglais
Résumé
Empirical literature on the analysis of the efficiency of measures for reducing persistent government deficits has mainly focused on the direct explanation of deficit. By contrast, this paper aims at modeling government revenue and expenditure within a simultaneous framework and deriving the fiscal balance (surplus or deficit) equation as the difference between the two variables. This setting enables one to not only judge how relevant the explanatory variables are in explaining the fiscal balance but also understand their impact on revenue and/or expenditure. Our empirical results, obtained by using a panel data set on Swiss Cantons for the period 1980-2002, confirm the relevance of the approach followed here, by providing unambiguous evidence of a simultaneous relationship between revenue and expenditure. They also reveal strong dynamic components in revenue, expenditure, and fiscal balance. Among the significant determinants of public fiscal balance we not only find the usual business cycle elements, but also and more importantly institutional factors such as the number of administrative units, and the ease with which people can resort to political (direct democracy) instruments, such as public initiatives and referendum.
Création de la notice
17/07/2014 15:36
Dernière modification de la notice
20/08/2019 14:34
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