Empirica

, Volume 41, Issue 2, pp 365–376 | Cite as

Government spending and revenues in the Greek economy: evidence from nonlinear cointegration

  • Athanasios Athanasenas
  • Constantinos Katrakilidis
  • Emmanouil Trachanas
Original Paper

Abstract

This paper attempts to re-evaluate the long-run macroeconomic relationship between government revenues and expenditures of the Greek economy over the period 1999–2010. The empirical analysis applies the newly developed asymmetric ARDL cointegration methodology of Shin et al. (2011) which permits more flexibility in the dynamic adjustment process towards equilibrium, than in the classical case of a linear model. Our findings point towards the fiscal synchronization hypothesis, supporting evidence of asymmetric interactions between the two fiscal components in both the long- and the short-run time horizon. More particularly, in the long-run, the negative changes of expenditures dominate the response of revenues, while the opposite applies in the response of expenditures.

Keywords

Budget deficit Fiscal policy NARDL cointegration Greek economy 

JEL Classification

C13 C22 E62 

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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  • Athanasios Athanasenas
    • 1
  • Constantinos Katrakilidis
    • 2
  • Emmanouil Trachanas
    • 2
  1. 1.Department of Business AdministrationTechnological Educational Institute of SerresSerresGreece
  2. 2.Department of EconomicsAristotle University of ThessalonikiThessaloníkiGreece

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