The Nexus between Federal Revenue and Spending in Canada: A Time-Frequency Perspective

Yu Wang*, William X. Wei

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review


The theoretical literature on the revenue-spending nexus suggests four possible relationships. They are tax-and-spend, negative tax-and-spend, spend-and-tax, and fiscal synchronization. Despite their homogenous research design, the empirical studies of Canada have provided mixed and inconclusive results. This study re-examines the topic from a time-frequency perspective. Specifically, it applies continuous wavelet analysis to the period 1867-2017 to delineate a complete picture of the revenue-spending nexus in Canada. Although results show the existence of all relationships suggested by theory at different time-frequency combinations, the spend-and-tax pattern is the most striking one and dominates the nexus in the long run. Theoretical, methodological, and policy-wise implications of this study are discussed at the end.

Original languageEnglish
Pages (from-to)113-123
Number of pages11
JournalStatistics, Politics and Policy
Issue number1
Publication statusPublished - 1 Mar 2023


  • Canada
  • continuous wavelet analysis
  • federal government
  • revenue-spending nexus
  • time series


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