Government Current Expenditure Research Articles

A new simple test to evaluate the efficiency of government spending

The main purpose of this study is to determine the conditions that enable optimal distribution of the government revenues between capital and current expenditures, one that would maximize the firms’ and households’ utility and provide the maximum impact of the government expenditures on economic growth rate. Research indicates that for such optimal distribution of the budget to be defined, the derivatives of output functions with respect to the government capital expenditure and the government current expenditure must be equal. The obtained theoretical results serve as a basis for a test that analyzes the efficiency of the allocation of government revenues between current and capital expenditure items. The test is based on intervals established at significance levels of 0.01-0.99. If the difference between the marginal value of the production function with respect to the government's current and capital expenditure falls into any of these established intervals, the distribution of government expenses in these two directions can be considered effective at the level of significance corresponding to that interval. Research results found that governments usually cannot efficiently allocate their revenues between capital and current expenditures.

Testing the Classical Inflation Theory in Pakistan

The study is about the examination of the classical theory of inflation in Pakistan. The data covered, the time period from 1972 to 2020. Time series data is used and collected from World Bank. The ARDL model estimation technique is used to analyze the data. The study shows a research gap based on testing the classical inflation theory in Pakistan which is different from previous related studies. The novelty of this research is to test the positive and direct linkage of doubling the money supply will double the price level in the case of Pakistan believing the classical model of inflation. The stationarity of data is checked through the unit root test. The results show that there is a positive relationship between nominal money supply and inflation in Pakistan, as classical believe that doubling the money supply will double the price level and the value of money becomes half. The findings of the study support that classical inflation theory is valid in the case of Pakistan. Inflation is taken as a dependent variable as a proxy of GDP deflator and a list of independent variables are such as per capita income, nominal money supply, interest rate, taxes, and government current expenditures. The empirical, theoretical, and historical facts are supporting this study. The study has explored the existence of inflation in Pakistan. It is observed that inflation is a monetary phenomenon and it is connected with the money supply which leads to an increase in the general price level. In order to curtail inflation government should control the money supply which will help to reduce prices.

The impact of fiscal policy on non-oil GDP in Saudi Arabia

ABSTRACT This paper examined the impact of fiscal policy on non-oil GDP in Saudi Arabia, the world’s largest oil exporter, over the annual period 1989–2018. We employed various cointegration methods within the framework of the augmented production function and estimated that government current and capital expenditure, in addition to non-oil labour and capital, have statistically significant positive effects on non-oil GDP. We tested whether the recent oil price decline and the implemented economic reforms caused a break in the relationship that non-oil GDP establishes with the mentioned variables and found that there was no break in either the long-run or the short-run relationship. The study concluded with some policy insights that could be useful for fiscal authorities to promote non-oil economic development.

Does the COVID19 pandemic change the relationship between government expenditures and economic growth in Azerbaijan?

This paper investigates the impact of the Government's capital and current expenditures on economic growth in Azerbaijan. The estimation strategy of the research consists of two directions. First, all estimation approaches were used for the period of 2005Q1-2019Q4. The estimated model for this period is called Model 1. Second, the model which is called Model 2 was estimated for whole period of 2005Q12021Q1. This approach allows comparing the role of the Government expenditures on non-oil economic activity in normal times and during the COVID-19 pandemic in Azerbaijan. Estimations show that coefficients characterizing the impact of Government current expenditures and capital expenditures on non-oil economic growth are almost the same for both periods. Therefore, we can state that COVID-19 pandemic did not affect the structure of the relationship between Government expenditures and non-oil economic growth. Results show that 1 percent increase in capital and current expenditures of state budget increases the real non-oil GDP by 0.10 and 0.40 percentage points, respectively. Accordingly, both capital and current expenditures of the state budget have positive impact on the real non-oil GDP growth for the both periods. This is in contrast to findings in the literature, which argue that increasing current expenditures financed by tax hikes lead to a lagged decrease in private investment, having an overall negative impact on economic growth. We attribute this opposing finding to the Azerbaijani state budget revenue system, which is financed by transfers from the State Oil Fund (Stabilization Fund). Thus, large government investment and social projects mostly rely on non-tax sources. Therefore, we argue that positive impact of capital and current expenditures of government budget on non-oil GDP seems plausible for Azerbaijan. Another result of our estimation is that expansion of economic openness accompanied by non-oil economic growth plunge in Azerbaijan. We interpret this phenomenon with very low share of non-oil export, where openness is mostly caused by increase in import volume.

OIL PRICES SHOCKS AND GOVERNMENT EXPENDITURE

This study employs the vector autoregressive model (VAR), impulse response function and variance decomposition to study the impact of oil price shocks on components of government spending on both oil-exporting and oil importing countries over the period from 1980 to 2018. While the vast majority of previous studies focused on the impact of oil price shocks on government spending, this study emphasized the impact of these shocks on the current and capital government expenditure. It was found that oil price shocks affect government current expenditure positively in the two groups of countries. While it affects government capital expenditure positively in oil-exporting countries and negatively in oil-importing countries.Keywords: Oil-exporting countries, Oil-importing countries, Oil price, VAR model, government expenditures.JEL Classifications: H5, O13, Q43DOI: https://doi.org/10.32479/ijeep.11172

Decreasing Trends in Antibiotic Consumption in Public Hospitals from 2014 to 2017 Following the Decentralization of Drug Procurement in Myanmar.

(1) Background: In 2014, drug procurement for public hospitals in Myanmar was decentralized to a pull system. This might lead to increasing trends in the consumption of broad-spectrum and last-resort antibiotics. For fiscal years 2014-2017, we assessed annual antibiotic consumption trends and patterns in total defined daily doses (DDDs). (2) Methods: We followed World Health Organization (WHO) methodology for surveillance of antimicrobial consumption based on hospital antibiotic procurement records (as a proxy). (3) Results: In 32% of all public hospitals where data were retrieved, total antibiotic consumption reduced by 19% between 2014 (7,122,852 DDD) and 2017 (5,794,904 DDD). Consumption per 1000 inhabitants per day (<200 bed hospitals) also reduced from 0.6 to 0.3. Over 60% of procurement was for beta-lactam antibiotics and quinolones; quinolones decreased over time. Consumption of first-line antibiotics increased (42% in 2014 to 54% in 2017), whereas broad-spectrum antibiotics decreased (46% in 2014 to 38% in 2017). Linezolid was the only last-resort antibiotic procured. There was a progressive reduction in per capita government current health expenditure from approximately 9.2 US$ in 2014 to 8.3 US$ in 2017. (4) Conclusions: Antibiotic consumption decreased over time in public hospitals. This first study provides a baseline for developing an antibiotic consumption surveillance system in Myanmar.

The guaranteed minimum income in Portugal: A universal safety net under political and financial pressure

AbstractThe Guaranteed Minimum Income (GMI) was created in Portugal by a centre‐left Socialist Party government in 1996, as the most important constitutive part of a ‘new generation of active social policies,’ which completed the existence in Portugal of a universal system of guaranteed income. Its transformation into a Social Integration Income (SII) in 2003 and its retrenchment in the period of the Great Recession and troika austerity (2011–2015) has reduced the scope of this policy measure as a universal safety net policy. This article examines the context and the major drivers for the creation and for the policy changes that occurred in the GMI/SII. Looking at the political debates and the changes in this policy measure along this period, we argue that the major reforms introduced since its creation reflect ideological cleavages within the political arena. Considering the very low share in total government current expenditure of GMI/SII, this can explain the social policy selective retreat associated to the changes introduced in this policy measure by the centre‐right coalition in government, in the latest period of cost containment of social policy in Portugal, leading to a great decrease in the number of beneficiaries and to an increase of its inadequacy.

Growth accounting and regressions: New approach and results

We seek for determinants of the sources of growth. Using a growth accounting method that accounts for time variations in factor shares, we run growth regressions for a panel of 101 countries between 1950 and 2015. Our methodology takes into account the specific features of the data (namely outliers, heterogeneity, and cross panel correlations) and overcomes most criticisms previously raised on growth regressions. The most important evidence reveals that government current expenditure decreases the factor shares and has no effect on total factor productivity (TFP). Trade affects the TFP and the Biased Technical Change (BTC) components, decreasing the factor shares. Moreover, human capital decreases TFP and increases the BTC contribution to growth. This unveils the channels through which determinants of growth act in influencing economic growth.

The Impact of Government Expenditure on GDP in the State of Qatar: A Nonlinear ARDL Approach

This study investigates the long run relationship between government expenditure and the GDP in the State of Qatar with a focus on the non-mining and quarrying GDP during the period 1980-2017 using the nonlinear autoregressive distributed lag (NARDL) model. The NARDL model results show an asymmetric impact of government expenditure fluctuations as the increase in both government current and capital expenditures leads to a positive and significant effect on the Qatari's non-mining GDP, whereas the decrease in both types of government expenditure does not significantly affect the non-mining and quarrying GDP. This leads us to conclude that the non-mining and quarrying GDP is unresponsive to government budget cuts. The previous result should encourage policymakers to make bold budget cut decisions, when needed, without being afraid of the potential negative effects on non-mining and quarrying GDP.

How Do Human Capital and Trade Liberalization affect the Labor Supply in Pakistan? A Time Series Analysis

Human capital and Trade liberalization are very important for smooth economic growth which gives birth to new employment opportunities that increase labor force participation in all sectors. Both have positive impact on labor supply and overall economy of Pakistan. Human capital has shown positive relation to trained and efficient labor force of the country and trade liberalization strategy. Transformation of labor supply is possible with the help of trade liberalization and technically educated, skilled and well experienced labor. If a country needs to enhance exports and international trade to improve its financial health, it needs technically educated and specialized labor force participation. The key objective of this paper is to analyze the impact of trade openness and human capital on labor supply in Pakistan. The improved labor market and increase in trade liberalization increases government current expenditures and the GDP of Pakistan. The study is based on time series analysis which has shown positive results on Human Capital and trade openness, in both formal and informal sectors. Skills exchange among countries lead to transformation of ideas and helps overall economy.

Testing Relationship between Government Current Expenditures and Economic Growth in Nigeria

This study investigates the relationship between government recurrent expenditures and economic growth in Nigeria for 18 years: 1999-2016. In doing this, the paper disaggregated government current expenditures into five categories used as explanatory variables. The estimated result showed that influence of government expenditures on national assembly, pensions and gratuities had insignificant effect on economic growth. However, total government expenditures on administration and public debt servicing had a positive and significant effect on economic growth. Also the study revealed that total government expenditures on transfers had insignificant effect on economic growth. Study therefore recommends that annual government recurrent expenditures on administration and public debt servicing should be sustained as they led to economic growth, but that all leakages arising from such spending should be blocked in order to achieve an enhanced growth.

Case Study of Central and Local Government Finance in Japan

This paper aims to provide an overview of the basics of Japan’s local public administration and finance system and to analyze how Japan’s municipalities restore their fiscal balance after a fiscal shock. In Japan, local governments play a major role in redistribution. Combined with regional disparities in tax capacities and an inflexible local tax system, there is a large vertical fiscal gap in Japan between the central and local governments — a gap that necessitates the transfer of funds from central to local governments. Under this system, the fiscal adjustments in Japan’s municipalities occur mainly via changes in government investment, and they account for 63%–95% of adjustments in permanent unit innovations in grants and own-source revenue. In contrast to the role of expenditure, the municipalities’ own-source revenue plays a limited role in balancing the local budget. The results of this study also reveal that 40% of the increase in own-source revenue is offset by a reduction in grants. Furthermore, municipalities can induce grants by expanding government current expenditure. Finally, this study offers and discusses some policy implications.

Studying the Effect of Value Added Tax on the Size of Current Government and Construction Government

Abstract The present research studies the effect of value added tax on the size of current government and construction government. Research hypotheses tested by studying the relationship between value added tax and the size of current government (in the form of current cost to gross domestic product (GDP)) and the size of construction government (in the form of construction cost to GDP). In this regard, seasonal time-series statistic within the period of 2008-2014 applied through using ARDL model. Research results show that there is a positive, significant relationship between value added tax and the size of current and construction governments. This tax more influences the size of construction government than the size of current one. Indeed, contrary to developed countries, collecting value added tax mostly influences the ratio of construction expenditures to GDP rather than influencing reduced poverty through increasing welfare expenditure, which increase government current expenditures.

Windfall of Low Interest Payments and Fiscal Sustainability in the Euro Area: Analysis through Panel Fiscal Reaction Functions

SummaryWe estimate various panel fiscal reaction functions, including those of the main categories of general government revenue and expenditure for 12 Euro area member states over the 1970‐2013 period. We find that in the peripheral countries where sovereign bond yields decreased sharply in the years 1996‐2007, fiscal stance ceased to respond to sovereign debt accumulation. This was due to lack of sufficient adjustment in government current expenditure and direct taxes. In contrast, in the core member states, which did not benefit from yields’ convergence related to the Euro area establishment, responsiveness of fiscal stance to inherited sovereign debt increased during 1996‐2007. This was achieved mainly through pronounced adjustments in government current expenditure. The findings are robust to various changes in modelling approach.

Real-time forecasting of the US federal government budget: A simple mixed frequency data regression approach

This paper proposes a real-time forecasting procedure involving a combination of MIDAS-type regression models constructed with predictors of different sampling frequencies for predicting the annual U.S. federal government current expenditures and receipts. The evidence shows that forecast combinations of MIDAS regression models provide forecast gains over traditional models, which suggests the use of mixed frequency data consisting of fiscal series and macroeconomic indicators for forecasting the annual federal budget. It is also shown that, although this was not statistically significant, MIDAS regressions with quarterly leads that are employed to include real-time forecast updates of the current year federal expenditures and receipts are found to have improved forecast performances compared to MIDAS regressions without leads.

أثر الإنفاق الحكومي على النمو الاقتصادي في الأراضي الفلسطينية : دراسة قياسية تطبيقية خلال الفترة ( 1995 - 2013 م )

الإنفاق الحكومي | النمو الاقتصادي | النفقات الحكومية الجارية | النفقات الحكومية التطويرية | Government Expenditure | Economic Growth | Government Current Expenditure | Government Developmental Expenditure

Fiscal adjustment in Japanese municipalities

This study examines how Japanese municipalities restore their fiscal balance after a budget shock. The results show that these fiscal adjustments occur mainly via changes in government investment, accounting for 63–95% of adjustments in permanent unit innovations in grants and own-revenue. In contrast to the role of expenditure, the municipalities’ own-source revenue plays a limited role in balancing the local budget. The results also reveal that 40% of the increase in own-source revenue is offset by a reduction in grants. This suggests that the current grants system discourages municipalities from increasing their own-source revenue. Furthermore, municipalities can induce grants by expanding government current expenditure. Here, a 1yen increase in current expenditure is followed by an increase in grants of 0.65yen in subsequent years. Finally, we conduct an additional analysis based on population size to study how the adjustment process varies among municipalities of different sizes.

Uncertainty of government's current expenditures and development expenditures and private investment: evidence from Iran

This study investigates the effect of uncertainty of government’s current expenditures and development expenditures on private sector investment in Iran during 1959 to 2010. Inflation rate and GDP are considered as explanatory variables in this study. Co-integration and vector error-correction models are used to obtain the estimates of the co-integrating relations and the long-run dynamics, respectively. The uncertainty measure generated from generalised autoregressive conditional heteroscedastic [EGARCH (0, 1)’ process. The results show that both uncertainty of government’s current expenditures and development expenditures have significant negative effect on private investment in the long run while in the short run, uncertainty of current government expenditures has no significant effect on private sector investment but uncertainty of development government expenditures causes private investment to increase. The effect of inflation and GDP are negative and positive respectively both in the long run and in the short run.

The Relationship between the Government Expenditures and Revenues in the Long Run a Case Study of Iran

This study focuses the relationship between the government revenues and current expenditures in long run in Iran Country covering data 1986 2110. The research uses the annual time series data which is obtained from the website of Central Bank. The OLS method is used to estimate the liner regression to show the relationship between these variables. EVIEWS 8 and SPSS software is applied to do this survey. This paper explains the relationship between government current expenditures and revenues of taxes and oil in the long run. The results of the research state in the long run during the years of the study the coefficients of the oil revenue and the tax revenue are 0.025 and -2.32 respectively. Hence the oil revenue in the long run is one of the main factors to make a decision by the government who determine its current expenditure level. The decision makers in Iran can use the results of this study to make better decisions for its budget planning. I. Introduction To take a good decision and to improve their societies, the governments need to design the budget. To do its functions a government uses budget as a planning and financial tool. There is a budget deficit while the government revenues are less than the government expenditures. Vice versa, when the government expenditures less than its revenues it is said that the government has budget surplus. There are always the budget deficit all of years during all of years of this study. In other words, the budget deficit is a characteristic of Iran economics. The budget deficit is determined by calculation of the difference between government expenditures and revenues. Some time the governments to reduce the unemployment rate at their societies use the budget deficit policy but having the budget deficit in the long period not only is a policy but also is a problem for society that it needs to solve. To solve this problem the government should reduce its expenditures or it should increase its revenues resources. The budget revenue resources should be stationary and they must have the lowest fluctuations. Strongly dependent budget with the production of a goods shows the government have to change its expenditures or revenues. To achieve these aims the government should know the relationship between government revenues and expenditures. It has been observed that in some cases revenue increase or expenditures reduction affect on its corresponding variable and makes the adopted policy ineffective. So before to make a decision about reducing of the expenditure or increasing revenues it is important to know the amount of dependences of those variables that affect on the government expenditures. One of the most important topics which have not been done enough research is the relationship between the government revenues and the expenditures especially in the long run. To obtain the appropriate financial policy to reduce or remove budget deficit it is necessary to find the relationship between government revenues and expenditures. In fact it is very important that the government informs the budget how much is affected from each of the revenues and which one of the revenues is the most effective. Before any decision on how to reduce or remove the budget deficit the relationship between revenues and expenditure should be estimate. The government expenditures even have increased in some the years its revenues have declined in Iran you can see the following graph:

Inflation, Economic Growth and Government Expenditure of Pakistan: 1980-2010

This study is going to explore the relationship among the rate of inflation, economic growth and government expenditure in case of Pakistan. In this study, the government expenditure has been disaggregated in to the government current expenditure and the government development expenditure. This investigation is made by using the time series data during the period 1980-2010. The econometrics tools like Augmented Dickey Fuller (ADF) unit root test, ARDL, Johansen cointegration and Granger-causality test are used to investigate such relationship. The results derived by applying these econometrics tools show that there is a long term relationship between rate of inflation, economic growth and government expenditure, it means the government expenditures yield positive externalities and linkages. In the short run, the rate of inflation does not affect the economic growth but government expenditures do so. The causality test results show that there is unidirectional causality between rate of inflation and economic growth and; economic growth and government expenditure.