Government Expenditure Policies Research Articles

Inclusive economic growth and fiscal intervention: could it reduce poverty, inequality, and unemployment in East Java?

Before the COVID-19 pandemic, East Java Province (then abbreviated to East Java) made remarkable achievements in economic growth accompanied by a continuing downward trend in poverty. Then, after the COVID-19 pandemic broke out in 2020, it had a detrimental impact in terms of health, economics and social aspects. Specifically for East Java, the outbreak caused a severe contraction in the economy and significantly increased the number of local unemployed. However, long before COVID-19, East Java was facing wide inequality. Based on these problems, this study evaluates whether inclusive growth and local government fiscal intervention are solutions. These two factors have been recommended by economist as an effective strategies for reducing the triple problem in East Java. Fiscal intervention is interpreted as expenditure policies in economic, education, and health functions. Using panel data regression during 2015-2021, the study documents that economic growth in East Java still needs to be fully inclusive. This is based on the finding that inclusive economic growth does not simultaneously reduce triple problems (poverty, inequality and unemployment). Inclusive growth reduces poverty in East Java, but it has the opposite effect on unemployment and inequality. On the one hand, positive findings are documented in which fiscal intervention in education spending plays a significant role in reducing poverty. Unfortunately, this study failed to find the determining factors that provide a solution to inequality and unemployment in East Java. These evidences certainly have implications for reviewing the quality of inclusive growth and local government expenditure policies.

Government Expenditure and Economic Growth: A Comparative Analysis of Japan

Purpose: The aim of the study was to investigate the government expenditure and economic growth: a comparative analysis of Japan
 Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
 Findings: The comparative analysis of government expenditure and economic growth in Japan revealed a positive correlation between increased public spending and economic expansion. Strategic allocations towards sectors like education and healthcare were found to significantly contribute to long-term growth. Recommendations stressed the importance of transparent and accountable spending practices for sustained economic development, emphasizing prudent fiscal management and efficient resource utilization.
 Unique Contribution to Theory, Practice and Policy: Keynesian economics, wagner's law & endogenous growth theory may be used to anchor future studies on the government expenditure and economic growth: a comparative analysis of Japan. Develop a comprehensive framework for evaluating the effectiveness of government expenditure policies in Japan. Fiscal Sustainability Strategies: Develop strategies for ensuring the long-term sustainability of government finances in Japan, given the challenges posed by an aging population and rising healthcare costs.

IMPACT OF GOVERNMENT EXPENDITURES ON INDUSTRIAL OUTPUT IN NIGERIA

The major goal for government expenditure policies according to Keynes is to improve the effective demand which is aimed at increasing industrial output in developing countries like Nigeria. Therefore, this paper is an attempt to examine the impact of government expenditures on industrial output in Nigeria. Thus, the methodology of this paper is the time series data method which were sourced from the Central Bank of Nigeria statistical bulletin 2021 and the study also employed the Fully Modified Ordinary Least Squares (FMOLS) because the data were co-integrated at order 1(1) and the Johansen co-integration test result revealed that there are two (2) co-integrating equations. The R-Square of 98 percent suggests that government expenditures have a positive relationship with industrial output in Nigeria. Specifically, the result revealed that government capital expenditures have a positive and insignificant impact on industrial output in Nigeria. However, the government's recurrent expenditure was said to have a positive and significant impact on industrial output in Nigeria. Therefore, the study recommended that government should review the recurrent expenditures to be real sector and industrial output is driven to increase the impact of industrial output in Nigeria. Similarly, the government should design a mechanism to track the government capital expenditures in Nigeria to ensure that projects are industrial driven especially the infrastructural projects for industrial output in Nigeria.

The Anomaly of Leading Indicator

The counter cyclical strategy used to deal with the Covid-19 pandemic is through fiscal policy, government expenditure by refocusing on the health sector and economic recovery. This policy is not only carried out in Indonesia but in other affected countries. In general, government expenditure has made positive impact on GDP, but during the COVID-19 pandemic this affect became negative. Using data from 137 countries, government health expenditure has a negative impact on GDP. If government expenditure policies continue to focus on health care, it will have an impact on other sectors, ultimately negative economic growth. In addition to refocusing on health expenditure, there are also assistance programs for affected communities. Higher aid should affect the GDP, but there is no difference in GDP growth between the two groups of countries based on the percentage of income support. Government expenditure policies in each country certainly aim to maintain the stability of the country, but the policy objectives should be allocated not only curatively but also preventively by taking into account the long-term impact post covid-19 Era.

Vector Auto Regressive Analysis identifying government expenditure policy impact on sustainable economic development

This research investigates the effects of government expenditure in Uganda on infrastructure in promoting sustainable economic. The study used a longitudinal research design using financial records from financial years 1984-85 to 2015-16 as population with a sample size of 32 annual observations. The Johansen cointegration test indicates a long-run association between government expenditure in infrastructure, communication, electricity, and financial development. The Granger- Connection findings shows indirect connection between economic development rate and all the parts of public spending that were used with P-Value 0.04 and lastly, the Vector Auto Regressive (VAR) consequences indicated that public spending on infrastructure, communication, and energy, had a direct effect on economic development rate with P-Value 0.00. The paper recommended that extra spending on substantial infrastructures such as roads, airports, railways, water facilities, electricity, and communication add extensively to the economic development rate by growing the efficiency of the public and private sectors.

Six types of government policies and housing prices in China

This paper investigates six different types of government policies that are frequently used to stabilize the Chinese housing market. Particularly, it identifies which type of government policy has a greater influence on the dynamics of housing prices in China. For these purposes, we develop a dynamic stochastic general equilibrium model, including special aspects of the Chinese housing market such as land ownership and government policy mechanisms. According to the findings, among all the government policies of interest, land policy plays the most important role in influencing housing prices. Although the monetary policy appears to achieve its desired effect over the short term, its overall impact on housing prices is less significant than that of the land policy. Moreover, fiscal policies, including housing subsidy, housing tax, and government expenditure policies, are far less influential than the land policy, while the role of loan-to-value-based macro-prudential policy is borderline negligible. Collectively, these principal findings, which hold for various robustness checks, highlight the importance of the land policy in the Chinese housing market.

The Nexus Between Taxation, Government Expenditure and Economic Growth in South Africa. A fresh evidence from combined cointegration test

The relationship between taxation, government expenditure and economic growth. is a widely debated issue in the literature. The aim of this research is to present a fresh evidence from the nexus of taxation, government expenditure and economic growth in for the period 1991-2018 in South Africa, using recently developed combined co-integration test. Autoregressive Distributed Lag model(ARDL) is utilized to examine coefficients between the variables in the short and long-run The newly advanced Bayer-Hacks (BH) combined co-integration approach is employed so as to verify the ARDL bounds result. The empirical results from ARDL model revealed that there is a positive and significant relationship between government expenditure and economic growth in both short and long run. In addition, the study shows that tax revenue has a significant positive relationship with the economic growth. Therefore, levels of taxation and government expenditure are favorable to the growth of economy in South Africa. The research proposed that decision makers in South Africa should pay more attention on Taxation and government expenditure policies and the gains from economic growth such as channel much of its expenditure towards the manufacturing and agricultural sectors, which have great potentials of increasing the supply of the products. Which in turn leads to reduce prices and increase in the rates of employment. This would, also make the country’s exports prices competitive.

Is the selfish life-cycle model more applicable in Japan and, if so, why? A literature survey

The selfish life-cycle model or hypothesis is, together with the dynasty or altruism model, the most widely used theoretical model of household behavior in economics, but does this model apply in the case of a country like Japan, which is said to have closer family ties than other countries? In this paper, we first provide a brief exposition of the simplest version of the selfish life-cycle model and then survey the literature on household saving and bequest behavior in Japan in order to answer this question. The paper finds that almost all of the available evidence suggests that the selfish life-cycle model applies to at least some extent in all countries but that there is more consistent support for this model in Japan than in the United States and other countries. It then explores possible explanations for why the life-cycle model is more consistently supported in Japan than in other countries, attributing this finding to government policies, institutional factors, economic factors, demographic factors, and cultural factors. Finally, it shows that the findings of the paper have many important implications for economic modeling and for government tax and expenditure policies.

Behavioral Economics and Government Purchases – Some Insights into the Fiscal Psychology of Public Expenditure

Behavioral economics has obtained increased acceptance in the field of public finance, thus challenging the neoclassical approach to human decision-making. However, so far the fundamental results of behavioral economics on cognitive heuristics, illusions, and biases with respect to human information processes, judgments and choices were primarily applied to the analysis of taxation and public debt. In contrast, up to now comparable examinations of public expenditure are not very common. To address this shortcoming, the paper offers a review of the existing behavioral economic research on public spending and government expenditure policy.

The Dialectics of Disasters and the Theory of Public Finance in the Digital Age

Disasters are caused by natural forces or by humans. Disasters are sudden and unplanned. It is difficult to predict when, where, how and to whom they are going to happen. This study investigated eight news stories about disasters that occurred in Thailand and in other countries in 2011. The data was then analyzed and synthesized using Hegel’s Dialectics and the theory of public finance and public administration introduced by Richard Musgrave. The findings reveal that the eight disaster news stories can be explained with reference to an externality approach. Some aspects of the news stories are related to other theories such as the public goods theory in the case of the government budget in infrastructure rebuilding and repair or the public choice theory for a multi-organisation collaboration in providing information for disaster preparedness. It is found that 75% of the news stories employed a positive/ predictive approach using empirical evidence such as numerical data to support the report. Interestingly, a normative approach, which seeks to provide a framework of “what ought to be”, is rarely found in the analysis or suggestion section of the news story. Seven of the news stories (87.5%) use fiscal theory in the analysis. It is evident that disaster management is proved to be a mammoth task which cannot be handled by the citizens, the private sector, and the voluntary sector alone. The government, both central and local, takes main responsibility for disaster preparedness, response and recovery. Government expenditure and spending policy is used to reconstruct or repair the community infrastructure. In addition, cutting-edge technology in the digital age has been introduced in disaster response. For example, in Australia a drone is used to save people from drowning. It is noted that disaster victims shall seek speedy recovery from the effects of the disaster with a strong focus and determination by adhering to self-reliance and community resilience to prepare for inevitable future disasters.

The regional and personal impact of the fiscal policies of a limited franchise government: Italy immediately after unification

For 15 years after its inception, Italy was governed by the Historical Right coalition. The electoral franchise was very limited: registered voters were less than 2 per cent of the population and their actual numbers were further eroded by absenteeism. The achievements of the first governments were impressive, though one can disagree on the merit of the policies, as many did. Most of the policies imposed a lot of hardship: individuals had to pay high taxes; they were drafted into the army for long periods; and they were sent to fight civil and regular wars. The very limited access to the vote led the ruling class to perceive that, in the short term, its actions were insulated against the unpopularity of its policies. Therefore, it pursued the mission of aggrandising the country and creating what it believed to be a viable and modern government system. The regional allocation of budget resources became the most disputed issue as the government coalition was accused of discriminating against southern regions. The article explores these themes empirically by constructing the so-called balance sheet of federations, leading to an estimate for each region of the net impact (the fiscal residuum) of national government tax and expenditure policies. The article also provides an estimate of the impact of tax and expenditure policies on poor agricultural families located in different areas. Both statistical exercises provide an original, though limited, contribution to the literature on the economic and social impact of the unification process in Italy. The analyses reveal that no redistribution was made, and regional discrimination did not emerge.

Government expenditure on human capital and growth in Namibia: a time series analysis

An attempt is made in this paper to examine the impacts of government spending on human capital on human development indicators like healthcare outcomes, education achievements and increase in national income in Namibia using time series data from 1980 to 2015. The analysis reveals a significant long-run inverse relationship of government spending on healthcare with fertility rate, infant mortality rate and under-5 mortality rate. However, no co-integration is observed between government spending on healthcare and life-expectancy or adult mortality rate. Also, the findings reveal a significant long-run positive relationship of government spending on education with literacy rate, net primary and gross tertiary enrolment rate. Whereas, no co-integration between government spending on education and gross enrolment rate at primary and secondary level is observed. The vector auto-regression analysis revealed significant impacts of expenditure on healthcare and education on the GDP growth in the long run through improved human resources. The results are thus in favour of continuation of expansionary government expenditure policy to achieve faster economic growth in Namibia. However, drastic changes should be adopted to improve basic education and primary healthcare in the country.

Is the Selfish Life-Cycle Model More Applicable in Japan and, If so, Why? A Literature Survey

The selfish life-cycle model or hypothesis is, together with the dynasty or altruism model, the most widely used theoretical model of household behavior in economics, but does this model apply in the case of a country like Japan, which is said to have closer family ties than other countries? In this paper, we first provide a brief exposition of the simplest version of the selfish life-cycle model and then survey the literature on household saving and bequest behavior in Japan in order to answer this question. The paper finds that almost all of the available evidence suggests that the selfish life-cycle model applies to at least some extent in all countries but that there is more consistent support for this model in Japan than in the United States and other countries. It then explores possible explanations for why the life-cycle model is more consistently supported in Japan than in other countries, attributing this finding to government policies, institutional factors, economic factors, demographic factors, and cultural factors. Finally, it shows that the findings of the paper have many important implications for economic modeling and for government tax and expenditure policies.

Is the Selfish Life-Cycle Model More Applicable in Japan and, If So, Why? A Literature Survey

The selfish life-cycle model or hypothesis is, together with the dynasty or altruism model, the most widely used theoretical model of household behavior in economics, but does this model apply in the case of a country like Japan, which is said to have closer family ties than other countries? In this paper, we first provide a brief exposition of the simplest version of the selfish life-cycle model and then survey the literature on household saving and bequest behavior in Japan in order to answer this question. The paper finds that almost all of the available evidence suggests that the selfish life-cycle model applies to at least some extent in all countries but that there is more consistent support for this model in Japan than in the United States and other countries. It then explores possible explanations for why the life-cycle model is more consistently supported in Japan than in other countries, attributing this finding to government policies, institutional factors, economic factors, demographic factors, and cultural factors. Finally, it shows that the findings of the paper have many important implications for economic modeling and for government tax and expenditure policies.

Social Sector Expenditure and India's Development: An Empirical Assessment During 2001–02 to 2015–16

Issues relating to linkages of social sector with economic growth have been in much attention by researchers in recent times. Sustained and equitable economic growth is a major objective of government expenditure policy and as such, it is obligatory of any government to improve the quality of life of people which is mainly carried out by incurring public expenditure in areas such as health, education, and other social services.The term social sector is often used to refer to Education, Health and Nutrition sectors.In theory there appears to be a positive relationship between social sector expenditure and economic growth, which the paper aims to examine using empirical data. The present research paper evaluates the effectiveness of social sector expenditure policy’ from an economic development perspective by undertaking a regression analysis of Economic Development (GDP) as dependent variable and social sector expenditure components are independent variables. The time period consider for this study is span of 15 years from 2001-02 to 2015-16 and the secondary data obtained from RBI database. From the results, it can be found that public expenditure on Education, Sports, Art and Culture; Medical and Public Health; Water Supply and Sanitation; Housing; Urban Development; Nutrition and Rural Development is found a positive impact on economic development while public expenditure on Social Security and Family Welfare is observed negative impact on economic growth during the study period.

Оценка мультипликатора государственных расходов в Республике Армения

The purpose of this article is to estimate government expenditure multiplier in the Republic of Armenia via a SVAR model. The model is evaluated using the data over the period from 2004 to 2017 and accounts for a structural break, which occurred in the year 2009. In addition, it controls for the dynamics of copper prices and output of the Russian Federation. The results indicate that the response of output to the government expenditure shock is quite strong right after the discretionary change of fiscal policy. The multiplier reaches its peak on impact with the estimated value about 3. However, there is a substantial uncertainty regarding the exact value of the multiplier and the 95 % lower bound estimate is only 0.8. Moreover, the value of the government expenditure multiplier decreases over time rather quickly. In the medium term the impact of the government expenditure shock on output is negligible. Overall, the authors conclude that government expenditure policy can be used successfully to stabilize the dynamics of output in the event of substantial recession or boom. Estimates obtained in this study do not contradict the results of previous researches dedicated to the evaluation of fiscal multipliers in the Republic of Armenia.

R&D in a post centrally-planned economy: The macroeconomic effects in Poland

Half a century of centrally planned policy in the Central and Eastern European countries resulted in outdated technologies, inefficient allocation of resources and low productivity. Following the end of communism there was a fifteen year process of transition which ended in 2004 with eight post-communist countries joining the European Union (EU) of which Poland was the largest. As part of the EU these countries now face the challenge of the common EU strategy Europe 2020, which has set the target of achieving R&D expenditure to GDP ratio (called the R&D intensity) of 3% by 2020 for the Union as a whole in an effort to increase the competitiveness of the region. Poland, like the other post-communist countries, faces a lower target of R&D intensity, set at 1.7%. Nevertheless, the challenge is immense, since the country is still at only half that level and has little experience in developing policies to help achieve it. In this paper we tested two possible policy options to achieve the target: (1) to increase government expenditures on R&D and; (2) to provide tax relief on R&D to businesses. The method applied to assess the options is a recursive dynamic computable general equilibrium (CGE) model for Poland with an explicit link between productivity and R&D stock. The results show that achieving the R&D intensity target via the use of tax relief is 2.5 times more costly to the government budget, but it has a greater impact on the economy in terms of a higher GDP growth. Tax relief proved efficient in the short run while in the long run the government expenditure policy provides better value for money.

Impacts of Government and Household Expenditure on Human Development Index

The objective of this reseach are to: (1) analyze the factors affecting human development index and household expenditures for health, education and others, (2) predict the impacts of government expenditure policy in the field of education, health, and infrastructure on human development index in Central Java. The model was built using econometric approach in the form of a system of simultaneous equations, including five blocks i.e. government's revenue, expenditures, input, output, and performance. The system of simultaneous equations consisted of 26 equations (19 structural equations and 7 identity equations). The estimation method used Two Stage Least Squares with SYSLIN procedure. Prediction simulation used the stepwise Autoregressive method. The model simulation used Newton's method and SIMNLIN procedure. The results of policy simulation concludes that the combination of the increase in government expenditure for education and infrastructure lead to better performance in increasing income per capita, disposable income and HDI compared to the combination of the policy of the increase in government expenditure for education and in both municipalities and district, but municipalities receive greatest impact compared to the district.

Fiscal Sustainability and Debt in Small Open Economies: An Application to the Caribbean

The adverse impact of sovereign debt defaults on the international financial system has occasioned intense interest in methodologies for assessing sovereign debt risk. This is manifest in an outpouring of studies, research which has uncovered the fact that the riskiness of sovereign debt is determined in each case by a complex interaction of factors, including government tax, expenditure and financial policies over time, and the state of domestic and international financial markets. There is therefore a need to distinguish between fiscal strategies that are not sustainable - those that will fail or dissolve into crisis if continued - and those which should be altered in the interest of economic and social development. This study provides an objective measure for small open economies, of the risk that fiscal policy may render it impossible for government to fully service its debt obligations. This study is remarkable because it is a model for the future of Caribbean integration; contributors are from across the region, from Suriname in the east to Belize in the west, and from The Bahamas in the north to Trinidad and Tobago in the south.

Analysis of Inflation Management Model Factors as Regards Supply and Demand

This article analyses the demand and supply aspects of the determinants of CPI inflation in Lithuania in 1998–2008. Content analysis was used to identify and group significant demand and supply inflation factors and using RGT, objectively assess and generalize the results. Pair linear correlation analysis confirmed the significance for CPI inflation of the factors identified through content analysis, and both research methods reliably and effectively helped to identify factors for regression models of inflation. Content analysis revealed that the causes of inflation most often mentioned and traditionally regarded as significant in the economic literature are factors such as money and wages, capital, competition and monopolies, and so on. Pair correlation research showed the significance for inflation of supply and demand factors such as income distribution, income levels, taxes, saving, human capital and labour productivity as well as exports and imports – things which content analysis gave only average or little mention. Regression models confirmed and helped to concretize the significance for inflation of the identified demand and supply factors. The results of the research show that inconsistent monetary and general government expenditure policies reinforce private consumption and capital shocks. Note that human capital and employment, which changed little during the analysed period, did not show the large significance for inflation that they are commonly thought to have.