Assessment of Budget Sustainability in Sarawak
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Keywords

Fiscal sustainability, Cointegration, Revenue, Expenditure, GDP and Sarawak.

How to Cite

Puah, C.-H. ., Lau, E. ., & Teo, H.-F. . (2012). Assessment of Budget Sustainability in Sarawak. Asian Economic and Financial Review, 2(8), 952–965. Retrieved from https://archive.aessweb.com/index.php/5002/article/view/942

Abstract

This study reexamines the sustainability of budget stance of Sarawak state, 1970-2008. Using the intertemporal borrowing constraint as a framework, the study tests the long-run relationship between government revenue and expenditure. Empirical results demonstrate a long-run equilibrium relationship among the variables. The cointegration test result suggests that Sarawak state’s fiscal stance satisfies the weak sustainability condition. In addition, the Granger causality test result reveals a bi-directional relationship between government revenue and expenditure. This means that fiscal authorities made simultaneous decisions on expenditure and revenue. Government revenue and expenditure will mutually reinforce each other.

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