The Asymmetric Causality between Public Expenditure and Tax Revenue: The Case of Turkey

The relationship between public spending and tax revenues plays a key role in countries with budgetary problems. It is important to test the causality between spending and tax revenue to cope with this problem altogether. In this study, the relationship between public spending and tax revenues is investigated with asymmetric causality test using Turkey’s monthly data set. The results indicate that there is an asymmetric causality between public spending and tax revenue in Turkey. Taking account of this asymmetric relationship in reducing the budget deficit is important for policy success