Ratio Of Government Expenditure Research Articles

Pengaruh Financial Deepening Terhadap Pertumbuhan Ekonomi di Indonesia

The purpose of this study is to determine the effect of Fincial Deepening on Economic Growth in Indonesia. The independent variable in this study is Findepth or the ratio of total loans to Nominal GRDP (X1) and the dependent variable is Economic Growth (Y). In this study also used control variabel, Labor or labor Force Ratio to population (X2) and Govexp variable or Ratio of government expenditure to Nominal GRDP (X3). This research is a descriptive and associative study. The data analysis used in this research is secondary data, the kind of data is panel data from 33 provinces in Indonesia from 2010-2019, the data sourced from the Central Agency for Stastistik, Indonesian Banking Statistics and Website of the Ministry of Finance of the Republic of Indonesia. The data analysis used in this research is descriptive and inductive analysis. In the inductive analysis there are several test, namely (1) Chow Test; (2) Hausman Test; (3) Panel data regression estimation test (FEM); (4) classical assumption test; (5) T test and F test. Based on the research, the result of this study is: (1) Findepth has a positive and significant effect on economic growth; (2) Labor has positive and significant effect on economic growth; (3) Govexp has a positive and significant effect on economic growth.

Role of Government in Promoting Real Sector Development in Sub-Saharan Africa: The Nigerian Experience

This paper investigated the role of government in promoting real sector development in sub-Saharan Africa with a focus on the Nigerian economy. The government’s role was measured using fiscal and monetary policy variables such as total government expenditure, broad money supply and interest rate, while the ratio of manufacturing value added to GDP formed the basis for measuring real sector development. Time series data on the variables were sourced from the Central Bank of Nigeria Statistical Bulletin and analysed using econometrics tools of error correction mechanism (ECM) and Granger causality test. The unit root test results revealed that all the variables are first difference stationary. It was also found from the cointegration test that variables have a long-run relationship. It was found from the parsimonious ECM that broad money supply and rate of interest are statistically insignificant in influencing manufacturing output. The results further reveal that the second and third leg of the government expenditure ratio to GDP significantly impacts manufacturing output. 1 percent increase in the first leg of government expenditure increases manufacturing output by 5.962 percent. Similarly, with a percentage in the second lag of government expenditure, manufacturing output increases by 3.182 percent. Additionally, the pairwise Granger causality test results reveal that unidirectional causality flows from the ratio of government expenditure to manufacturing output. Overall, the results indicate that fiscal policy, especially government expenditure, can be relied upon in predicting changes in manufacturing output. Thus, it is recommended for proper monitoring of fiscal policy measures, especially public expenditures, to ensure they are accounted for holistically and effectively utilised in fostering real sector development.

Optimal fiscal policies and market structures with monopolistic competition

This paper develops a unified imperfectly competitive macroeconomic model, and uses it to analyze optimal fiscal policies in the presence of market imperfections. The salient feature of the model is that it is able to deal with three distinct types of market structure, including constant monopoly firms, endogenous monopoly firms and endogenous overhead costs. Several findings emerge from the analysis. First, the extent of production externalities will vary under the three distinct market structures, and in turn lead the government to implement different labor and capital tax policies to correct the different extents of the distortions. Second, the optimal ratio of government expenditure is determined solely by the extent of productive government spending if the number of firms is constant, while the optimal ratio is related to the internal increasing returns to scale and production specialization if the number of firms is determined endogenously. Finally, free entry in the competitive equilibrium may result in over entry or under entry, depending upon the relative degree between monopoly power and production specialization.

The Impact of Human Capital Development on Economic Growth in Ethiopia

The importance of human capital accumulation as an engine of economic growth and development has been widely recognized in theoretical and empirical studies. No country has achieved sustained economic development without substantial investment in human capital. In accordance with this, Ethiopia has made some movements to create skilled and competent citizens through designing different education and health policies and implementing them. This study investigates the impact of human capital on economic growth in Ethiopia over the period 1980-2018. The model was estimated using the Co-integrated VAR approach. The result of this study showed that in the long run both ratios of government expenditure on health and education to GDP, Labor force and policy change dummies have positive impact on Ethiopian economy. In other words, the result reveals that economic performance can be improved significantly when the variables increase. However, Gross primary school enrollment shows a negative relationship with economic growth during the study period. The estimated short-run model revealed that gross primary school enrollment is the main contributor to real GDP. But, unlike its long run significant impact, Ratio of government expenditure on education has no significant short run impact on the economy. In addition, ratios of government expenditure on health and labor force have negative significant impact on the economy.

Effects of Variations in Government Fiscal Expenditure on Real Exchange Rate in Korea: ARDL-EC Model Estimation

The aim of this study is to investigate effects of changes in government expenditure on real exchange rate for Korea during the period of 1998. I - 2016. IV. We use Error Correction model based on Pesaran, Shin and Smith (2001)’s ARDL bounds test to estimate long run and short run relationship between changes in government expenditure and real exchange rate. The results show that changes in government expenditure during the period had a significant positive effect on real exchange rate in Korea. The long run response of real exchange rate was more than twice larger than the short run response. To be more specific, one percent increase of the ratio of government expenditure to GDP raised the real exchange rate by 0.99% in the short run while the same change raised the real exchange rate by more than 2.55% over the long run. The positive empirical effect of government expenditure increase on the real exchange rate found by the present study is broadly in line with many other previous studies. Theoretically, this result is in line with the assertion that an expansionary government expenditure would raise relative price of non-tradable goods when the government expenditure has a home bias and so a positive effect on the real exchange rate.

INŠTITUCIONÁLNE A MAKROEKONOMICKÉ PROSTREDIE FIRIEM

With respect to the occurrence of economic crises it may be observed that economic performance of countries is determined by the quality of its institutions. It is the corporate governance failure that is said, in line with the new institutional economic theory, to be among reasons for the recent international financial and economic crisis. This study has the goal of confirming, by empirical analysis, the existence of correlation between, on one hand, the quality of the institutional environment expressed by index of economic freedom and by its selected subindexes, and, on the other hand, the macroeconomic environment for corporates - as characterised by selected macroeconomic indicators. In result, countries with higher foreign direct investments influx and higher per capita GDP show higher levels of index of economic freedom. Countries with higher level of property rights protection and lower corruption level achieve higher GDP per capita. Countries with higher ratio of government expenditure on GDP reach lower levels of index of economic freedom, this being interpreted as a substitution of private business entities and entrepreneurial initiative by a government.

INŠTITUCIONÁLNE A MAKROEKONOMICKÉ PROSTREDIE FIRIEM

With respect to the occurrence of economic crises it may be observed that economic performance of countries is determined by the quality of its institutions. It is the corporate governance failure that is said, in line with the new institutional economic theory, to be among reasons for the recent international financial and economic crisis. This study has the goal of confirming, by empirical analysis, the existence of correlation between, on one hand, the quality of the institutional environment expressed by index of economic freedom and by its selected subindexes, and, on the other hand, the macroeconomic environment for corporates - as characterised by selected macroeconomic indicators. In result, countries with higher foreign direct investments influx and higher per capita GDP show higher levels of index of economic freedom. Countries with higher level of property rights protection and lower corruption level achieve higher GDP per capita. Countries with higher ratio of government expenditure on GDP reach lower levels of index of economic freedom, this being interpreted as a substitution of private business entities and entrepreneurial initiative by a government.

Fiscal policy and stock market returns volatility: the case of Indonesia

This paper separately studies the impact of different kind of fiscal policy on the stock return stabilisation in the case of Indonesia. Using quarterly data over the period 2001-2013, we obtained that the discretionary and automatic stabilisation fiscal policy tend to induce the stock returns volatility. While the credible debt rule policy leads to decrease the volatility of stock returns, the deficit rule policy is found to be non-credible and does not have any effect. Accordingly, the lower ratio of government expenditure to GDP along with improving commitment tightly to the planned deficit ratio is a good signal for stabilising financial market.

Government Expenditure Financing, Growth, and Factor Intensity

<span lang="EN-US">By shedding light on the factor intensity, this paper incorporates the Romer (1986)-type knowledge spillover technology into the Uzawa (1961, 1963) two-sector model of consumption and investment goods and studies the effect of the ratio of government expenditure to total output on the economic growth rate under three types of tax financing schemes: lump-sum tax financing, income tax financing, and consumption tax financing. We find that a rise in government expenditure with lump-sum tax financing has an ambiguous effect on the balanced growth rate depending on the factor intensity between the sectors. The balanced growth rate decreases (increases) with a rise in government spending if the consumption (investment) goods sector is capital-intensive. Moreover, the result of consumption tax financing is equivalent to lump-sum tax financing, while an increase in the government expenditure with income tax financing reduces the balanced growth rate. Our two-sector model with lump-sum tax or consumption tax financing seems to be able to provide a channel through which to explain the mixed empirical findings.</span>

Foreign aid and government expansion: Evidence from low and middle income countries

Foreign aid is an important source of revenue for most developing countries of the world, this is because it helps in public sector planning and implementation of projects. Another major argument in favor of foreign aid is that helps to bridge the gap created by the savings and investment relation. Similarly, it enhance the pace and nature of economic growth. It is further argued that foreign aid serves as take-off plans towards sustainable growth by developing countries, hitherto constrained by resource. However, as good as foreign aid is, it can also lead to the aid fungibility and this remains a gap to be filled in the literature for developing and emerging economies. The study used panel data technique for a sample of 65 low and middle income countries. Annual data sourced from the World Development Indicators were used and the variables are the ratio of government expenditure to the GDP, aid as a percentage of GNI, aid as a percentage of government expenditure, aid as a percentage of imports, the log of population, dependency ratio measured as a percentage of the population that is 65 years and above, trade openness as a percentage of GDP, per capita GDP measured in constant U.S. dollars, government revenue expressed as a percentage of the GDP, and the ratio of debt service to exports. The research covers the period of forty two years, from 1970 to 2012 which spans major economic cycles for in the lives of the countries, since attaining political independence in the 1960s. Using a fixed effect panel estimation technique that accounts for heteroskedasticity, results show aid as a percentage of Gross National Income (GNI), aid as a percentage of government expenditure, and aid as a percentage of imports have a statistically significant relationship with government spending. In addition, changes in trade openness as a percentage of GDP and changes in population are all positive and statistically significant, while per capita GNP, dependency ratio and debt service to imports all have no significant relationship Policy implications: Government should try to make judiciously use foreign aid and have institutions that will avoid aid fungibility. Government should try to diversify her economy towards import substitution and export promotion strategies.

The Credibility of Fiscal Rules Policy and Business Cycle Volatility

The aim of this paper is two-fold; first, it studies the impact of the credibility of fiscal rule policy on the stability of output growth; second, it compares the effectiveness of fiscal rule policy to discretionary and automatic stabilizer fiscal policies to address the fluctuation of output growth. Employing quarterly data over the period 2001-2013 in the case of Indonesia, we obtain that the credible debt rule leads to a decrease in the volatility of output growth while the non-credible deficit rule does not have any effect. Both unsystematic and systematic components of discretionary fiscal policy have a stabilizing function. Interestingly, the automatic stabilization tends to induce the volatility of output growth. Given those results, we infer that government spending is not a good automatic stabilizer. It seems that the lower ratio of government expenditure to GDP along with improving credibility of deficit rule policy has a smoother effect on the economy. Therefore, they implicitly support expenditure cuts when implementing fiscal adjustment with the purpose of reaching fiscal sustainability in the short-run and a stable economic growth in the long-run.

ANALISIS BELANJA PEMERINTAH DAERAH KOTA BENGKULU

Ahmad Soleh; Local Government Expenditure Analysis of Bengkulu. This study aims to analyze the expenditure in terms of spending growth, harmony expenditure and expenditure to GRDP ratio Bengkulu 2010-2013. This study uses secondary data from the Budget Realization Report from the local government of Bengkulu city and Bengkulu city's economy is sourced from the Badan Pusat Statistik (BPS) Bengkulu city. Data analysis techniques such as quantitative analysis by using the formula of growth and expenditure ratio. The analysis showed that local government spending in 2011-2013 Bengkulu city fluctuated with an average growth of 11.76% per year, this is not in line with the growth in revenue realization that tends to increase in each year. The ratio of operating expenditure to total expenditure tends to increase by an average of 85.20% per year and is the ratio of total expenditure dominates the area while the ratio of capital expenditure to total expenditure tends to decrease with an average of 14.78% per year. The ratio of government expenditure to GDP local area Bengkulu years 2010-2013 tends to increase with the average ratio of 27.04% per year. The value of this ratio is also influenced by the value of the growth of GDP and total expenditure. The growth of total government expenditure Bengkulu area is relatively higher when compared with GDP growth. Kata Kunci: Pertumbuhan Belanja, Keserasian Belanja, Rasio Belanja, Kota Bengkulu

The Impact of Government Expenditure on the Agricultural Sector in Jamaica: 1962-2011

Agriculture is an important component in the socio-economic landscape of Jamaica, but its performance since independence, measured in terms of its contribution to the gross domestic product, has registered a downward slide, moving from 13.5 per cent in 1962 to 6.4 per cent in 2011. Attempts have been made by the government to stem the downward slide, yet the sector continues to produce at sub-optimal levels in relation to the available natural resources. The objective of this paper is to estimate the link between the contribution of agriculture to GDP and the ratio of government expenditure to total budgetary expenditure, using a VAR model. The empirical evidence shows that government expenditure policy and the rate of inflation have a positive impact on the performance of the agriculture sector in terms of its contribution to GDP. The size of the coefficient for agriculture expenditure is 0.042, while it is 0.0017 for inflation.

English

The objective of this paper is to examine the relationship between macroeconomic variables and poverty alleviation in Sub-Saharan Africa, by applying descriptive illustration and weighted least square (WLS) regression econometric analysis using the multidimensional poverty index (MPI) taken from the oxford poverty and human development initiative (OPHI) as dependent variable. Furthermore, principal component analysis (PCA) was performed to avoid multicollinearity problems and to improve the estimation power of the regression. Long-term annual gross domestic product (GDP) growth trends were analysed by dividing countries into four groupings, namely upper income, lower middle income, lower income and conflict countries. The results show that post-conflict nations experience good progress in economic growth. With the exception of the ratio of government expenditure to GDP (GEXPGDP), foreign direct investment, net inflows (% of GDP) (INFGDP), agriculture, value added (% of GDP) (AGR.GDP) and the Gini coefficient (GINICOEF) (not significant and not reported), all other variables were found to be statistically significant at the specified significance level. Furthermore, population growth (annual %) (POPGRWTH) holds greater positive magnitude, and shows that economic growth is moving at a slower pace compared to population growth, which complicates the economic development agenda on this continent. The major factors limiting growth are restrictive fiscal policy, contractionary monetary policy in most countries, and balance of payments constraints. Furthermore, it is important to improve local capabilities and inter-firm linkages, thus achieving well-managed privatisation, while it is equally important to have subsidies reaching the poor.   Key words: Sub-Saharan Africa, multidimensional poverty index (MPI), macroeconomic variables, poverty alleviation.

Fiscal Rules and Government Size in the European Union

This paper studies the impact of national fiscal rules on government size as measured by the ratio of government expenditures to gross domestic product. We develop a model of the budgetary process and show that a common pool problem may arise which can be mitigated through fiscal rules. We test the model’s predictions using a novel time-series cross-section dataset of 27 European Union members for the period between 1990 and 2011. Corroborating the model, we find that fiscal rules have a negative impact on government size. Contrasting the model, their impact becomes smaller as the number of ministers increases.

Public Spending in Selected Caribbean Countries

This study examines the relationship between the ratio of government expenditure to gross domestic product and economic activity by investigating the empirical validity of Wagner’s law in selected Caribbean countries. Additionally, the study tests the ratchet hypothesis by searching for evidence of asymmetry in public spending over the business cycle. It narrows a gap in the Caribbean literature by (1) explicitly considering population structure in the empirical investigation of Wagner’s Law and (2) utilizing advanced econometrics techniques that incorporate nonlinearity in testing causality. The study finds no empirical support for Wagner’s Law, with and without population structure taken into account. However, the ratchet hypothesis is validated. The findings provide useful information for policy makers that can help broaden their understanding of the relationship between government spending and national income, which could aid policy formulation.

Government spending and growth in second-best economies

This paper extends public spending-based growth theory along three directions: we assume a logistic trajectory for the ratio of government expenditure to aggregate income, self-limiting population change, and exogenous technological progress. By focusing on the choices of a benevolent social planner we find that, if the inverse of the intertemporal elasticity of substitution in consumption is sufficiently high, the ratio of consumption to private physical capital converges towards zero when time goes to infinity. Depending on the form of the underlying aggregate production function and on whether, for given production function, technological progress equals zero or a positive constant, our model may or may not yield an asymptotically balanced growth path (ABGP) equilibrium. When there is no exogenous technological progress, an equilibrium where population size, the ratio of government spending to aggregate income and the ratio of consumption to private physical capital are all constant does exist and the equilibrium is a saddle point. In case of positive technological progress numerical simulations show that the model still exhibits an ABGP equilibrium.

Country-Specific Dynamic Optimal Capital Income Tax Rate

The empirical tax rate on capital income ranges between 0.4 and 0.6 in OECD countries. This paper presents the optimal taxation problem in an one-sector dynamic general equilibrium model where the government is confronted with fiscal constraint (the ratio of government expenditure to GDP is exogenously given) while households and firms do not recognize the fiscal constraint. We derive analytically the positive optimal tax rates on capital income. Under the fiscal constraint, the optimal tax rate on capital income depends on the discount rate, the rate of capital depreciation, and the ratio of government spending to GDP. Our model can generate the country-specific optimal tax rate on capital income (0.2 to 0.4). Thus, this paper insists that the empirical data of tax rates in OECD countries are higher than the results predicted by our model.

부패와 정부지출의 변동성

Using cross-section of 83 countries, this paper empirically examines the relationship between corruption and government expenditure volatility. A country`s corruption is denoted by either control of corruption, compiled by Kaufmann et al. (2008), or corruption perceptions index, provided by Transparency International. In addition, a country`s government expenditure volatility is measured by the standard deviation of the change ratio of government expenditure from 1990 to 2005. Regression results suggest that a country`s control of corruption and corruption perceptions index (higher ratings signifying more transparency) are significantly and negatively associated with the volatility of government expenditure. However, the estimated coefficients of corruption perceptions index show somewhat reduced statistical significances. The results are robust to the sub-sample of countries excluding European OECD countries. Therefore, the regression results suggest corrupt bureaucrats are able to periodically change economic rules of the game, which results in the possibility of a higher variance in government expenditure.

Government Size And The International Mobility Of Capital

This paper examines how government size impacts on the degree of capital mobility among 23 industrial countries by estimating saving-investment correlations using an error-correction model, with random coefficients, from data for the 1970-2006 period. The error-correction approach allows us to integrate both short-run and long-run behaviour within a single model. This is important if the model is to be given a capital mobility interpretation, because the saving-investment correlation relevant for assessing capital mobility is a long run one. Further, a model with random coefficients is a more general way of incorporating unmeasured differences between countries. Our sample is classified into five groups according to government size, which is measured by the ratio of government expenditures to GDP, and the model is estimated for each group separately using the random coefficients estimator. Our results find some support for the view that countries with larger governments also have lower capital mobility.