Abstract:

This paper investigates the existence of a causal relationship between public spending and national income, based on empirical evidence from Brazil, between 1997 and 2019. For this purpose, data on GDP and federal public expenditures were used. Initially, the ADF, Ng Perron and Perrontests were applied to measure the occurrence of unit roots, in I(0), no unitary roots were found, being stationary series. The Causality Test of Granger was thencarried out to examine the occurrence of a causal relationship between expenditure and GDP, establishing the temporal precedence between the variables. It was concluded that there is a causal relationship between federal public expenditures and GDP. Thus, depending on the meaning, positive or negative, of this causal link, the approaches that deal with the dynamics of public spending and its causal link with income can be proven by Wagner's Law, Keynesian hypotheses and non-Keynesian hypotheses.

Keywords:

Public Spending, GDP, National Income, Causal relationship.

JEL Codes:

H60, H62, H10, H20.

How to Cite:

Anderson Aorivan da Cunha Possa, Adolfo Sachsida, Mathias Schneid Tessmann and Sérgio Ricardo de Brito Gadelha. The Relationship Between Public Spending and National Income: Empirical Evidence from Brazil from 1997 to 2019. [ref]: vol.20.2022. available at: https://refpress.org/ref-vol20-a53/