EVIDENCE FROM DYNAMIC SYMMETRIC AND ASYMMETRIC CAUSALITY TESTS ON THE RELATIONSHIP BETWEEN TAX REVENUES AND PUBLIC EXPENDITURES IN G7 COUNTRIES

In this study, it is aimed to determine the symmetric and asymmetric causal relations between tax revenues and public expenditures in G7 countries. Annual data for the years 1990 through 2021 were used to determine the relationships between the variables. The Hacker and Hatemi-J (2012) bootstrap symmetric causality test, the Hatemi-J (2012) bootstrap asymmetric causality test, and the Hatemi-J (2021) dynamic bootstrap symmetric and asymmetric causality tests were used. The symmetric and asymmetric causality tests revealed few causal linkages between the variables, however the dynamic symmetric and asymmetric causality tests revealed more causal relationships. According to our research, it is essential to use dynamic analysis methods that can generate unique outcomes for sub-periods rather than analysis methods that generate a single result for the entire period in dynamic domains like public expenditure and national tax policies. In reality, it has been noted that throughout the Quantitative Easing period introduced following the 2008 Global Financial Crisis in the USA and during the COVID 19 process, public spending have expanded independently of budget revenues. Similar circumstances occurred in France during the EU debt crisis (2013– 2017), in Italy during the Great Recession of 2007–2009, and during COVID 19. When the global economic environment was favorable between 2017 and 2019, Germany, United Kingdom, and Italy organized their public expenditures in accordance with tax revenues, functioning within the framework of the Tax-Spend Hypothesis. As a result, for the effectiveness of fiscal policy, nations may use various fiscal policy techniques during various economic conjuncture times. © 2022, Symmetrion. All rights reserved.

The flypaper effect phenomenon of intergovernmental transfers during the Covid-19: Evidence from Indonesia

This study aims to confirm the flypaper effect phenomenon and the impact of the Covid-19 pandemic on local own-source revenue (LOR), general allocation fund (GAF), and local government financing on local government expenditure in Indonesia. The research used a quantitative method, while the sample was data on regional government budget (RGB) realization in 335 local governments in 2019 – 2020. The data were analyzed using Moderating Regression Analysis. The study found that there was a flypaper effect phenomenon that encouraged the local governments to use GAF, instead of LOR for their local expenditure. The GAF and local government expenditures were higher during the Covid-19 period. To overcome the flypaper effect phenomenon, the central government is advised to improve the GAF policy by setting priorities for its use. Local governments must encourage micro, small, and medium enterprises to help support LOR. This study proves there exists the phenomenon of the flypaper effect in developing countries that implement the presidential system (republic) and provide substantial empirical evidence on government spending policies during crisis and non-crisis (Covid-19). © 2022, University of Rijeka. All rights reserved.

Open Government Data as a panacea against corruption and Mismanagement: An analysis of Open Public Data on COVID-19-related procurement at the sub-national level

The COVID-19 pandemic has had a huge impact on public purchasing. As a response to the necessity to react quickly and procure goods that were urgently needed, governments set new rules allowing for quicker procurement processes. Those processes often seemed opaque and incomprehensible, creating a space for corruption and inefficiency. Publishing information as open data helps shine a light on procurement data. This paper aims to assess how transparency policies and open data strategies can allow civil society to monitor government expenditures, particularly expenditures made in moments of crisis. The authors looked deeper into procurement data at the regional level, exemplified by the German state of North Rhine-Westphalia (NRW). In an analysis which includes the compliance with international standards such as the Open Contracting Standard and the level of completeness of the data published, the authors found an incomplete data landscape with little information available. Major concerns for the data quality are poorly written documentation, lack of data standardization and law enforcement, and missing information on key variables. © 2022 Owner/Author.

European Union Cohesion Policy: Socio-Economic Vulnerability of the Regions and the COVID-19 Shock.

The European Union Cohesion Policy for the period 2021-2027 focuses on five goals to make the European Union smarter, greener, more connected, more social and closer to citizens. However, a macroeconomic index is proposed as the predominant criterion for allocating the Structural Funds among regions. In this paper, we hypothesise that it is possible to take into account new, complementary criteria that better reflect citizens' quality of life. To that end, we build a composite index of socio-economic vulnerability for the 233 regions. The results show that following our multidimensional approach for allocating the Structural Funds, there are remarkable differences in the maps of priority regions. In addition, the COVID-19 pandemic represents a threat to well-being. Are all regions equally exposed to COVID-19 in terms of their socio-economic vulnerability? To address this issue, we estimate multilevel models which indicate that country characteristics interact with regions' characteristics to alter patterns of vulnerability. More specifically, increases in government expenditures in education and an improvement in political stability would reduce the regional vulnerability or foster the capacity for resilience, whereas increases in poverty would be associated with greater vulnerability. Likewise, more vulnerable regions would be the most exposed to the negative socio-economic effects of COVID-19. However, it is remarkable that several regions of Sweden and Finland would be among the group of regions whose socio-economic vulnerability would be the most negatively affected.

The Impact of Fiscal Policy Instruments on Economic Wellness: Evidence From Malaysian Per Capita Income

This study examines the strength of the impact of fiscal policy tools on economic wellbeing as measured by per capita income in Malaysia from 1996 to 2020. The impact of fiscal policy instruments on economic wellness, represented by real income per capita, is measured using the autoregressive distributed lags model. The speed of adjustment from short-run disequilibrium to long-run equilibrium is also measured to assess the strength of the fiscal instruments' impact on per capita income. Empirical results exhibit the existence of co-integration relationships between per capita income, tax revenue, and government spending. The findings provide strong support for the presence of a long-run positive impact on government spending and a long-run negative impact of tax revenue on per capita income. The coefficient of ECTt-1 indicates that deviations from a short-run disequilibrium to a long-run equilibrium from the current to the future period are corrected with a speed of 76% (equivalent to a duration of 1.5-2 years to return to equilibrium). The practical and policy implication of the results is fiscal instruments play a significant role, mainly in alleviating the economic impact of the COVID-19 pandemic in the long run.

Assessing the nexus between fiscal policy, COVID-19, and economic growth.

The COVID-19 issue deteriorated South Africa's already dire economic situation, exacerbated by years of considerable debt increase. The COVID-19 pandemic has disrupted trade to such an extent that some enterprises are barely working at a quarter of their potential. Furthermore, economic agents delay economic decisions while waiting to see how the crisis develops. According to some economists, increased government expenditure will raise GDP enough to keep the country's debt-to-GDP ratio steady and restore fiscal sustainability. We use a panel data model to estimate a fiscal reaction function, which we then apply to historical data to assess the government's prior efforts to maintain or restore budgetary sustainability. We calculate the impact fiscal balance, government expenditure, interest rate, and revenue changes that the government will have to make to restore the country's fiscal stability due to the financial impact of the COVID-19 issue.The findings show that fiscal balance and tax revinue have a significant impact on the economics growth, while government expenditure and corruption reduce the growth of the country.

Implications of WHO COVID-19 interim guideline 2020.5 on the comprehensive care for infected persons in Africa Before, during and after clinical management of cases.

The novel coronavirus disease 2019 (COVID-19) is one of the biggest public health crises globally. Although Africa did not display the worst-case scenario compared to other continents, fears were still at its peak since Africa was already suffering from a heavy load of other life-threatening infectious diseases such as HIV/AIDS and malaria. Other factors that were anticipated to complicate Africa's outcomes include the lack of resources for diagnosis and contact tracing along with the low capacity of specialized management facilities per capita. The current review aims at assessing and generating discussions on the realities, and pros and cons of the WHO COVID-19 interim guidance 2020.5 considering the known peculiarities of the African continent. A comprehensive evaluation was done for COVID-19-related data published across PubMed and Google Scholar (date of the last search: August 17, 2020) with emphasis on clinical management and psychosocial aspects. Predefined filters were then applied in data screening as detailed in the methods. Specifically, we interrogated the WHO 2020.5 guideline viz-a-viz health priority and health financing in Africa, COVID-19 case contact tracing and risk assessment, clinical management of COVID-19 cases as well as strategies for tackling stigmatization and psychosocial challenges encountered by COVID-19 survivors. The outcomes of this work provide links between these vital sub-themes which may impact the containment and management of COVID-19 cases in Africa in the long-term. The chief recommendation of the current study is the necessity of prudent filtration of the global findings along with regional modelling of the global care guidelines for acting properly in response to this health threat on the regional level without exposing our populations to further unnecessary adversities.

The determinants and cyclicality of fiscal policy: Empirical evidence from East Africa

As part of the regional integration process, East African Community (EAC) member countries agreed upon macroeconomic convergence criteria that include, among others, harmonizing and restricting the level of fiscal deficits. However, achieving these targets has been faced with heightened vulnerabilities, including those related to the global financial crisis, the COVID-19 pandemic, and domestic policy slippages. Consequently, high fiscal deficits are fast leading to accumulation of debt. This paper investigates the macroeconomic determinants and cyclicality of fiscal policy in a panel of five EAC countries for the period 1980–2020. Using a combination of linear and nonlinear panel ARDL methods, long-run results show that the fiscal deficit is positively associated with current account balance, real per capita GDP, and interest rate;and negatively associated with the GDP deflator, grants, and debt service. Disaggregating fiscal balances into their revenue and expenditure components shows that government spending is procyclical, while tax effort is countercyclical. Specifically, both government expenditures and tax-to-GDP ratios are positively associated with real per capita GDP regardless of whether this relationship is observed during growth accelerations or decelerations. The size and statistical significance of short-run asymmetric effects of real per capita GDP on fiscal policy vary between countries.