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Category: State Government
This paper is concerned with the issue of the intertemporal relationship between revenues and expenditures and the way in which a State Government manages public deficits. In this study, different hypotheses are considered to examine such a problem. The socalled tax-spend hypothesis postulates that government raises tax revenues ahead of engaging in new expenditures. The spend-tax hypothesis, on the other hand, predicts that government first spends and then increases tax revenues to finance their expenditures. There is also the fiscal synchronization hypothesis which suggests that government takes  simultaneous decisions about revenues.

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