Use the latest browser recommended by Microsoft
Get speed, security and privacy with Microsoft Edge
This paper tests Barbadian data on government revenues and expenditures for Granger causality. The methodology employed is to test for cointegration before formulating the error correction models (augmented vector auto regression) used to test for causality. The results show that revenue and expenditure are cointegrated and that unidirectional causality exists from revenue to expenditure. A trivariate model that included inflation, found evidence of bi-directional causal relationship.