Testing Budget Sustainability in Brazil, Russia, India, China and South Africa (BRICS) Countries

Siti Khadijah, Inhadel (2021) Testing Budget Sustainability in Brazil, Russia, India, China and South Africa (BRICS) Countries. Masters thesis, Universiti Malaysia Sarawak.

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Abstract

There is always a question of sustainability of budget for both developed and developing countries. This study considered the case of Brazil, Russia, India, China, and South Africa (BRICS) countries and tested the sustainability of budget of each country over the period of 2000Q1 to 2018Q4. From the autoregressive distributed lag (ARDL) estimation, it showed that the entire model for each BRICS country is sustainable in the long run, which indicated sustainable budget. Brazil’s empirical finding denoted that both government expenditure (LGEXPEN) and real gross domestic product (LRGDP) impacts government revenue (LGREV) positively and significantly in the long run equilibrium. Additionally, empirical finding in Russia signified that LGEXPEN and LRGDP impacts LGREV positively and significantly in the long run equilibrium. In the case of India and China, the finding also signified that LGEXPEN and LRGDP impacted LGREV positively and significantly in the long run equilibrium. However, South Africa’s empirical findings suggested that only LGEXPEN influenced LGREV positively and significantly. On the other hand, LRGDP influenced LGREV negatively and insignificantly in the long run equilibrium. Besides that, ARDL bound test result indicated that Brazil and South Africa do not have a long-run relationship between variables. Meanwhile, Russia, India and China ARDL bound test showed that government revenue, government expenditure and real GDP have a long-run relationship.

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