Fiscal Synchronization Hypothesis in Andhra Pradesh: An Empirical Testing

: Using the annual data for the period from 1980-81 to 2005-06, this paper attempts to test the nexus between total government expenditure and total government revenue in the case of Andhra Pradesh, within the empirical framework of causality and cointegration. The paper establishes the long-run equilibrium relationship between budget expenditure and revenue. Furthermore, it also finds evidence of unidirectional causality running from expenditure to revenue, thereby invalidating the fiscal synchronization hypothesis in Andhra Pradesh during the study period.