Two Centuries of Taxes and Spending: A Causal Investigation of the Federal Budget Process

UC Davis Working Paper #97-30

Posted: 24 Jan 1998

See all articles by Kevin D. Hoover

Kevin D. Hoover

Duke University - Departments of Economics and Philosophy

Mark V. Siegler

California State University, Sacramento - Department of Economics

Date Written: October, 1997

Abstract

Causal relations between U.S. federal taxation and expenditure are analyzed using an approach based on the invariance of econometric relationships in the face of structural inverventions. Institutional evidence for interventions or changes of regime and econometric tests for structural breaks are used to investigate the relative stability of conditional and marginal probability distributions for each variable. The patterns of stability are the products of the underlying causal order. In keeping with earlier work on the post-World War II period, we find that causal order is not constant in the nineteenth century, but the dominant direction is from taxes to spending.

JEL Classification: E62. N11. N41.

Suggested Citation

Hoover, Kevin D. and Siegler, Mark V., Two Centuries of Taxes and Spending: A Causal Investigation of the Federal Budget Process (October, 1997). UC Davis Working Paper #97-30, Available at SSRN: https://ssrn.com/abstract=55152

Kevin D. Hoover (Contact Author)

Duke University - Departments of Economics and Philosophy ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States

Mark V. Siegler

California State University, Sacramento - Department of Economics ( email )

6000 J Street
Sacramento, CA 95819-6082
United States
916-278-7079 (Phone)

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