Governance
REVENUE-EXPENDITURE NEXUS FOR SOUTHERN STATES: SOME POLICY ORIENTED ECONOMETRIC OBSERVATIONS
January 1, 2009
Kausik Chaudhuri
Bodhisattva Sengupta
MSE
Abstract
The paper examines the temporal relationship between revenues and expenditures for the four southern states during 1980 to 2005. Using an error-correction model and Granger causality test, it finds that the taxspend hypothesis is supported by the analsysis. The spend-tax hypothesis is valid for Karnataka; fiscal synchronization hypothesis is supported for Andhra Pradesh and Kerala, while the data for Tamil Nadu failed to show any causality.
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