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The existing empirical literature on the US federal revenue-expenditure nexus has had mixed findings. Amongst those papers presenting evidence in favor of causation running from taxes to expenditures, support for the conventional, Friedman-type tax-spend hypothesis is nearly ubiquitous. Evidence...
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stationarity in the total government deficit series or testing for linear cointegration between total government spending and total … linear cointegration relationship between the government spending to output ratio and the total tax revenues to output ratio …. Estimation results show that government authorities react only to large (in absolute value) changes in the government spending to …
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