Government revenues and expenditures in the EU ex-communist countries: a bootstrap panel Granger causality approach

The aim of this paper is to investigate the causality between government revenues and government spending in the case of 10 EU ex-communist countries, for the period 1995-2012, by following the bootstrap panel Granger causality approach proposed by Kónya (2006). The main results show that unidirectional causality from public expenditure to revenues is registered only in the case of Bulgaria, while for Czech Republic, Hungary and Slovenia the government revenues Granger cause expenditures. A two-way causality is observed only for Slovak Republic. No Granger causality is found for the rest of the sample (i.e. Estonia, Latvia, Lithuania, Poland and Romania)