Government Expenditure Growth Research Articles

Government Expenditure and Economic Growth: Does Corruption and Democracy Matter?

Government Expenditure and Economic Growth: Does Corruption and Democracy Matter?

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.

Institutional Quality, Government Expenditure and Economic Growth Nexus in Nigeria

Low economic growth often correlates with the escalation of poverty, deindustrialization,  unemployment, a decline in living standards, inadequate investments in human capital, and heightened social and economic disparities. Therefore, comprehending the factors that contribute to economic growth is essential for steering an economy in the correct direction. The economic literature has identified  institutional quality and government expenditure as factors that drive economic growth. This study specifically examines the impact of  government expenditure and institutional quality on economic growth. The study employed the Dynamic Ordinary Least Squares (DOLS) method to analyse time series data from 1990 to 2022. The findings indicate that government spending has a substantial and favourable  effect on economic growth. Furthermore, the findings demonstrated that the presence of institutions had a substantial and favourable  impact on the economic development of Nigeria. According to these findings, the study suggests that government spending should be  consistently increased, but this should be accompanied with fiscal discipline through the execution of the regulatory framework of the  Nigerian government.                     

Government Expenditure and Economic Growth in Tanzania

This study examines the impact of government expenditure on economic growth, focusing on health, infrastructure, education, and agriculture in Tanzania. The data from 1970–2020 were analysed using the STATA software. Government expenditure on education, health, agriculture, and infrastructure sectors were the independent variables, while GDP was the dependent variable. Wagner’s law of increasing state activity and Keynesian economic theory were used to guide the study. Unit root test and Johansen co-integration test were conducted. The Johansen co-integration test results indicated the absence of a long-run relationship between all explanatory variables and economic growth. However, the ARDL model revealed that government health expenditure had a low effect on economic growth compared to infrastructure, education, and agriculture expenditures; all of which had higher effects. The study recommends that more government resources be spent on substantial infrastructure.

Government Expenditure and Economic Growth Nexus in Ghana

Purpose: Economic growth is widely regarded as a crucial indicator of economic advancement within a nation, as it has significant implications for the provision of state benefits, the improvement of living standards, and the generation of employment opportunities. The present study employed a time series analysis spanning from 1983 to 2018, focusing on Ghana, in order to comprehensively examine the diverse impact of both aggregate and disaggregated government expenditure and debt on the country's economic growth.
 Methodology: The study conducted initial examinations, including unit root tests, cointegration tests, and correlation matrices, to determine the statistical reliability and validity of the data series for the research. The long-run parameters were estimated using the two-stage least square regression method, the autoregressive distributed lag method, and the threshold regression method.
 Findings: Based on our research, it has been determined that government expenditure exerts a positive and statistically significant influence on overall economic growth. However, when examining the disaggregated effects, it becomes evident that consumption expenditure has a positive and significant impact on economic growth, whereas capital expenditure has a negative effect on economic growth.
 Unique Contribution to Theory, Practice and Policy (Recommendations): In relation to the prevailing economic conditions characterised by periods of prosperity or recession, it is evident that the government should prioritise its attention towards external debt rather than domestic debt during times of economic expansion. Moreover, during periods of economic downturn, it is imperative for the government to prioritise foreign direct investment as a means of financing its budget, rather than relying on debt

Analysis Of Factors Affecting Economic Growth In Banten Province

This study aims to identify the factors that drive economic growth in Banten Province.The scope of this survey covers 8 districts in Banten Province.The data used are secondary data and cross sectional data.
 The results of the study indicated that there was a positive and significant relationship between the variables of labor force and government expenditure and economic growth, while unemployment had a significant negative effect on economic growth. The results showed that the variables of labor force, government expenditure and unemployment had a significant effect on economic growth in Banten Province.

Government expenditure, informality, and economic growth: Evidence from Eastern and Southern African countries

AbstractThis study investigates the dynamic linkages among government expenditure, informality, and economic growth in 15 Eastern and Southern African countries over a 25‐year period during 1991–2015. The analysis exploits panel vector autoregressive models to construct the time path of one variable following an orthogonal shock to another variable using impulse response functions. The analysis is complemented by panel quantile regressions to investigate the potential role of informality in the expenditure–economic growth nexus. The findings are threefold. First, both government consumption and investment expenditure have positive and significant effects on real per capita GDP. Second, informality has a direct negative impact on real per capita GDP. Third, the informal sector dampens the impact of government expenditure on real per capita GDP. These results are robust to the inclusion of selected control variables and are unchanged across GDP quantiles. The study's findings suggest that government policies aimed at reducing informality can have direct impacts on economic growth and indirect impacts through improvements in the effectiveness of government expenditure.

Government Expenditure and Economic growth Nexus: Empirical Evidence from Nigerian Economy.

Government Expenditure and Economic growth Nexus: Empirical Evidence from Nigerian Economy.

Education and Economic Growth in Nepal: An ARDL Approach

Education increases the quality and the quantity of human capital stock. The endogenous growth theory emphasizes the role of education in the economic growth. This study investigates the relationship between education and economic growth in Nepal using time series data from 1986 to 2022 in ARDL model. This study considers GDP growth as the dependent variable and growth in gross fixed capital formation, change in total population of ages 15 to 64, growth in government expenditure on education, school enrollment in secondary level, school enrollment in tertiary level and inflation rate as independent variables. The results show the existence of a long-run relationship between gross fixed capital formation and GDP positively and significantly. The government expenditure on education, school enrollment in secondary level, and inflation have insignificant and negative relation with GDP growth. Total population and school enrollment in tertiary level have positive and insignificant relation with GDP growth. In short run, total population have dynamic effects in Nepalese economy. This study suggests that there should be more studies considering other proxies to support the unavoidable evidence of education as the backbone of any economy.

Government Expenditure and Economic Growth: A Cross-Country Analysis

This paper empirically analyses the relationship between Economic Growth measured in terms of GDP Growth and Government Expenditure, GDP and Population. It employs annual cross-section time series data of the concerned variable of 117 countries from 2001 to 2021. Random Effect model was used for the analysis. The pool-ability of data is tested by the Breusch and Pagan LM test which confirmed that Pooled OLS is not appropriate for the model. The Hausman Specification Test was then conducted for choosing between the Fixed Effect or Random Effect model. The Hausman Specification Test for the Model suggests the Random effect model is appropriate for the analysis of the data. Thus, Random effect regression is used to find the consequences of explanatory and the control variables on the dependent variable. Government Expenditure as an explanatory variable has a positive relationship with the Economic Growth, even in the case of controlling for Population and the Trade Openness. Both the control variable is depicted to have positive relationship with the Economic Growth.

Influence of Government Expenditure and Regional Economic Growth on The Human Development Index in Districts and Cities In Jambi Province 2019-2021

This research aims to analyze how much influence regional government spending and economic growth have on the human development index in districts and cities in Jambi Province. The data used is Time Series data for the 2019-2021 period. This research was conducted using quantitative methods using panel data regression analysis. The data came studied from 11 regional governments (districts and cities) located in Jambi Province over a period of 3 years (2019-2021). This data was obtained from the district and city Central Statistics Agency and from several related agencies. The data was then analyzed using the multiple regression method. Data calculations in this research used the SPSS program. The research results show that the regional government expenditure variable (X1) does not have a positive and significant effect on the human development index in districts and cities in Jambi province. Meanwhile, the economic growth variable (X2) also does not have a positive effect on the district and city human development index in Jambi province.

Government expenditure and economic growth nexus: How valid is Wagner’s law in the Nigeria situation?

This study specifically aims at verifying if Wagner’s law is consistent with the Nigerian situation by adopting the ARDL method. Findings from the estimation prove that Wagner’s law is a fallacy in Nigerian experience. In contrast, the Keynesian theory of national income is applicable to the economy of Nigeria, as demonstrated by the strong positive impact of government expenditure on economic growth. Equally important, FDI inflows demonstrate a strong positive relationship with the economic growth of Nigeria. Note that Nigeria went into recession recently and is now going through the recovery stage. This, in line with the findings, calls for the adoption of an expansionary fiscal policy in order to stimulate aggregate demand and, by implication, improve output performance in the economy. Most importantly, the increased government spending should be tailored toward the viable sectors with close monitoring to avoid diversion of resources through corruption. Efforts should also be made toward attracting foreign companies to invest in the economy.

Effect of government experience on education and health: Implications on economic growth of Nigeria 1981-2021

This study analyzed government expenditure and economic growth of Nigeria for the period 1981-2021. Government expenditure was proxied with expenditure on education, health, social and community services while government total investment and net foreign trade were included as the intervening variables. Economic growth was proxied with gross domestic product. The data were analyzed using econometric procedures particularly the Auto regressive Distributed Lag (ARDL) model. The results showed that in the short run, government health expenditure exerted positive relationship with GDP which was not significant while education expenditure exerted significantly negative effect on the economy. The long run analysis revealed that government education expenditure had negative significant effect on GDP while health expenditure had positive significant effect on GDP. The intervening effects of social and community services expenditure and investment were positive but not significant while net foreign trade exerted negative effect in the model. The study concluded that government expenditure have not been appropriately channeled towards the education sector despite the amount spent on recurrent and capital expenditures to education whereas health expenditure increased growth in the economy significantly. It was recommended that government should increase budget allocations to education sector and also encourage private stake holders to invest in the education sector as well as engaging in foreign partnership in funding the health sector.

Government Spending And Economic Growth Nexus In Sub-Saharan Africa: An Econometric Analysis

Proponents of larger governments argue that government programmes provide essential public goods like education and infrastructure, which, in turn, stimulate the economy. On the other hand, individuals who advocate for more limited government assert that an increase in public spending will be detrimental to economic expansion due to the fact that many functions of government are inefficient and not in the public interest. Secondary data from World development indicator variables spanning from 1985 to 2021 were analysed. The dependent variable for the study was GDP per capita and the independent variables were institutional quality, government expenditure, capital stock and trade openness. The model used for the study are Pearson correlation, Pesaran's , Friedman's and Frees' cross sectional dependency test, IPS and CIPS unit root test, Pooled Mean Group and Dynamic Fixed Effect regression to test for the long-run cointegration and short-run relationship in 32 African countries. The results of the study suggest that there exists a long-run and short-run relationship between government expenditure and economic growth. Additionally, the study emphasises the importance of institutional quality as a significant determinant of this relationship. Therefore, it is recommended that all accessible government funds be allocated towards the objective of establishing durable and self-sufficient infrastructure.

The Laffer curve and the growth maximizing tax rate analysis in achieving optimal economic growth

The Laffer curve and the growth maximizing tax rate (GMTR) can create optimal economic growth, which is very important in preparing the state revenue and expenditure budget and economic development. The implementation of economic development requires financing so that government expenditure growth often exceeds gross domestic product (GDP) growth. The size of the government is a measure of the ratio of total government spending to GDP. The amount of government spending is something that often happens in almost all countries in the world, especially in countries that are in the process of development. The problem is how the government can finance these increasing expenditures. There are two options available, namely on receipts from abroad in the form of foreign loans or on receipts from within the country. The tax sector is the determining sector that provides the largest contribution to domestic revenues. The size of this contribution requires that tax revenues continue to be increased, which can be seen from the tax ratio. The tax ratio is the ratio of total tax revenue to GDP. Several international multilevel studies have obtained in-depth analysis of this problem from the Laffer curve and GMTR approaches. This study convinces that the Laffer curve and GMTR can be applied to create the optimal economic growth.

An empirical investigation of the relationship between government revenue, expenditure, and economic growth in selected EMEs

Purpose ─ This article explores the relationship between government revenue, government expenditure, and economic growth for nine emerging market economies using annual data from 1991-92 to 2019-20. Method ─ This paper distinguishes itself from the existing literature through the application of co-integration tests, vector error correction, DOLS and FMOLS for an empirical investigation of a unique panel data set of select emerging economies across Asia, Africa, Europe and Latin America. A bi-directional causal long-run relationship between economic growth and government expenditure, as well as between government expenditure and government revenue, was found using standard panel co-integration tests. Findings ─ The long-run elasticities computed using VECM were confirmed from DOLS as well as FMOLS estimates. A one per cent increase in expenditure and revenue, in the long run, would result in an increase in GDP by 0.94 and 0.90 per cent, respectively. Similarly, an increase in GDP by one per cent would lead to an increase in government expenditure by 1.1 per cent. On the other hand, an increase in government revenue by one per cent would cause a corresponding increase in government expenditure by nearly one per cent. The findings of this research point to a positive association between government revenue, expenditure, and economic growth, which will be valuable to policymakers. Contribution ─ Our combination of country selection covering economies from different continents is a first of its kind to the best of our knowledge. Another contribution is the application of panel cointegration and panel error correction techniques to fully use the panel data set, while most previous studies utilised the typical time series modelling with individual time series data.

Triggering economic growth to ensure financial stability: case study of Northern Cyprus

This study questions the importance of public debt in stable growth between 1980 and 2018, specifically, the Ricardian equivalence hypothesis and Keynesian view are questioned. This study used data obtained from the Northern Cyprus State Planning Office. A restricted vector autoregressive model is used to test the causal relationships between this model and public debt, government expenditure, total capital, consumption, investment, employment, net exports, exchange rate, and gross domestic product growth rate. To ensure financial stability, the variables that trigger economic growth through increased interactions were evaluated. Accordingly, unlike other studies, the Wald test results reveal that public debt does not have a direct effect on the gross national product but indirectly affects total capital, consumption, investment, and public expenditure, all of which influence real gross domestic product (RGDP). It has been observed that employment affects RGDP, consumption, government spending, and investment. There is also bidirectional causality between consumption, government spending, and RGDP. The estimates of the Ricardian equivalent hypothesis are important. However, today's changing economic policies, declining real incomes, and consumer behavior in the face of ever-increasing inflation require that the theory be redesigned. Therefore, contrary to theoretical predictions, consumers are concerned about maintaining their standard of living rather than directing tax deductions to savings. Contrary to the claims of Keynesian researchers, no causal relationship is observed between public debt and growth in this study. However, public debt directly affects total capital, consumption, government spending, and investment, which are important for sustainable economic policy.

Government Capital Expenditure and Economic Growth in Nepal

This paper explores the short-run and long-run causal relationship between government expenditure, labor force, gross investment, aggregate consumption, and economic growth of Nepal. The gross domestic product (Y), capital expenditure (K), population (L), gross investment (GI), and aggregate consumption (CO) have been used to find the causal relationship between government expenditure, and economic growth. The ARDL cointegration technique confirms a long-run association among the variables. The study revealed that capital expenditure, labor force participation, gross investment, and aggregate consumption all are the long-run driver of the economic growth of Nepal. These findings tell that efficient and timely allocation and use of capital expenditure, expansion of public as well private investment, and increased aggregate consumption matters for economic growth. The study also shows the existence of unidirectional causation from capital expenditure to growth and bidirectional relationship between other variables. The findings support Keynesian thought of government expenditure and economic growth. The regulatory and policymakers should focus on expansionary fiscal policy to stimulate capital formation, efficient productive investment, boost effective demand, and enhance long-run economic growth in Nepal.

The Growth Effect of Government Expenditure in Jammu & Kashmir

Purpose : The paper examined the growth impact of aggregate government expenditure and its various components in Jammu & Kashmir using time series data from 1981–2020. At the disintegrated level, the study assessed the growth impact of government expenditure on three different types of services, namely, economic, social, and general. Methodology : The autoregressive distributed lag (ARDL) or bounds cointegration technique was used to explore the long-run relationship (cointegration) between total government expenditure and economic growth. The growth impact of government expenditure on economic, social, and general services was investigated using the regression model. Findings : The study found a cointegrating relationship between aggregate government expenditure and economic growth in the erstwhile state of Jammu & Kashmir. The ARDL estimates showed that total government expenditure impacted Jammu & Kashmir’s economic growth positively and significantly in the short and long run. Furthermore, the estimated regression coefficients revealed that government expenditure on social services impacted economic growth positively and significantly. In contrast, government expenditure on economic and general services had a negative but insignificant growth impact. Practical Implications : The study’s findings would assist the policymakers in prioritizing Jammu & Kashmir’s limited resources for developing sectors with the potential to raise economic growth. The study recommended that government expenditure on social services should be increased to enhance growth in the erstwhile state of Jammu & Kashmir. A compositional change in government expenditure favoring social services from general and economic services would stimulate economic growth in the former state of Jammu & Kashmir. The study’s main limitation is that the other potential growth determinants were not considered explanatory/control variables. Originality : The study provided empirical evidence of the growth effect of total government expenditure and its various types in one of India’s least developed, slow-growing, and resource-deficit states (now Union Territory). To the best of my knowledge, the growth impact of government expenditure on three different types of services (economic, social, and general) were not investigated empirically in Jammu & Kashmir for the period from 1981–2020. The study contributed to the scant empirical literature on the growth impact of government expenditure at the sub-national (state level).

The Effect of Government Expenditure on Sectoral Performance In Malawi

The relationship between government expenditure and economic growth has always been debated among scholars. While the Keynesian school of thought postulates a positive causal relationship, the Neo-classical school argues that the relationship is negative. A rather neutral view is associated with the Ricardian school, which postulates that the relationship is non-existent. Recently, the Malawi Government launched its long-term development plan for the country, the Malawi 2063. As has been the tradition with all the other policies that Malawi has been implementing, the agriculture, education, and health sectors have been highly prioritized in terms of public resource allocations. However, the performance response of these sectors to the increased government expenditure has not been established. Using data from 2002 to 2020, we employed the Fully Modified Ordinary Least Squares (FMOLS) technique to estimate this effect. We find a significantly positive relationship between government expenditure and the growth rates of the three sectors. Holding all other factors constant, a K1 billion increase in the Government’s total expenditure to each of the three sectors heads to a 0.24 percentage point increase in sectoral growth. Moreover, this effect is markedly higher for development expenditure (0.34 percentage points) than for recurrent expenditure (O.26 percentage points). The results point to the need for the government to continue allocating more resources to the three sectors, especially for capital investment rather than consumption expenditure. There is also a need to control inflation and encourage measures that curb corruption as the two retard the growth of the three sectors. Keywords: Government expenditure, sectoral performance, fully modified OLS DOI: 10.7176/JESD/14-4-07 Publication date: February 28 th 2023