Public expenditures, public revenues and GDP relations

In this study, the causality relationship between public expenditures, public revenues and Gross Domestic Product is analyzed. In the analysis, Vector Error Correction Model, Johansen cointegration test and Granger causality tests were used for the period 1994: Q1 - 2019: Q4. Empirical results show that there is a bidirectional causality relationship between public expenditures and public revenues, supporting the fiscal synchronization hypothesis. There is a one-way and strong causal relationship from GDP to public expenditures, but there is no relationship from public expenditures to GDP in the short term.