Japan GDP growth will rely on exports and wage rises

2017 ◽  
Keyword(s):  
Economic Growth ◽  
Government Spending ◽  
Labour Force ◽  
Oil Prices ◽  
Household Consumption ◽  
Sales Tax ◽  
Gdp Growth ◽  
Content Type ◽  
The Government ◽  
Will Force

Significance Foreign trade accounted for almost the entire increase, more than making up for declines in household consumption and government spending. Impacts The government will claim credit for growth, but voters will see this as theoretical unless incomes rise faster. Strong GDP growth will make it hard to argue against raising the sales tax as scheduled in 2019. Economic growth and a shrinking labour force will force employers to raise compensation eventually. Japan is vulnerable externally if oil prices rise further or the Fed hikes rates too fast.

Government expenditure and economic growth in the European Union countries

2018 ◽  
Vol 45 (2) ◽  
pp. 372-386 ◽  
Author(s):  
Gitana Dudzevičiūtė ◽  
Agnė Šimelytė ◽  
Aušra Liučvaitienė
Keyword(s):  
Economic Growth ◽  
European Union ◽  
Government Spending ◽  
Government Expenditure ◽  
The European Union ◽  
Policy Makers ◽  
Content Type ◽  
Eu Countries ◽  
The Government ◽  
The Relationship

Purpose The purpose of this paper is to provide more reliable estimates of the relationship between government spending and economic growth in the European Union (EU) during the period of 1995-2015. Design/methodology/approach The methodology consisted of several different stages. In the first stage for an assessment of dynamics of government spending and economic growth indicators over two decades, descriptive statistics analysis was employed. Correlation analysis helped to identify the relationships between government expenditures (GEs) and economic growth. In the third stage, for modeling the relationship and the estimation of causality between GE and economic growth, Granger causality testing was applied. Findings The research indicated that eight EU countries have a significant relationship between government spending and economic growth. Research limitations/implications This study has been bounded by general GE and economic growth only. The breakdowns of general GE on the basis of the activities they support have not been considered in this paper, which is the main limitation of the research. Despite the limitation, it might be maintained that the research highlights key relationships in the EU countries. Originality/value These insights might be useful for policy makers. In countries with unidirectional causality running from GE to economic growth, the government can employ expenditure as a factor for growth. The governments should ensure that resources are properly managed and efficiently allocated to accelerate economic growth in the countries with unidirectional causality from GDP to GE.

Chile spending commitments may hamper fiscal prudence

2018 ◽  
Keyword(s):  
Government Spending ◽  
Credit Rating ◽  
Gdp Growth ◽  
Credit Rating Agencies ◽  
Government Budget ◽  
Content Type ◽  
Rating Agencies ◽  
The Government ◽  
Fiscal Prudence

Subject The draft 2019 budget. Significance The government budget for 2019, announced by President Sebastian Pinera on September 29, is the most austere in almost a decade. It aims to restore Chile’s long-standing reputation for exemplary fiscal conduct, which in recent years has been undermined by increases in government spending that outstrip GDP growth, and the resulting increase in borrowing. Impacts Credit rating agencies have indicated that the draft budget is in line with their concerns about Chile’s rising borrowing requirement. The ongoing decline in fiscal revenues from copper underlines Chile’s need to diversify its economy. The government will be hard-pressed to meet its fiscal goals if, as current forecasts suggest, GDP growth weakens through to 2020.

Russian arms procurement faces fiscal constraints

2019 ◽  
Keyword(s):  
Economic Development ◽  
Government Spending ◽  
Economic Activity ◽  
Oil Prices ◽  
Gdp Growth ◽  
Content Type ◽  
Fiscal Constraints ◽  
Defence Spending ◽  
Social And Economic Development ◽  
Russian Military

Subject Russian defence spending and procurement. Significance The recent shift in government spending towards social and economic development is being achieved without upsetting strict budgetary discipline, but defence and security expenditure is declining as a share of GDP. Limited procurement plans make life more challenging for the defence industry than for nearly a decade. Impacts Defence firms will find it hard to export weapon types that the Russian military does not want. The GDP growth boost of 2018 is likely to give way to growth of around 1.0-1.5% in 2019, as tax rises dampen economic activity. Higher-than-projected oil prices might allow some surplus budgetary funds to be used to top up planned defence spending commitments.

Investigating the non-linear Wagner’s hypothesis in South Africa

2017 ◽  
Vol 8 (4) ◽  
pp. 462-473 ◽  
Author(s):  
Temitope Lydia A. Leshoro
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Government Spending ◽  
Time Series Data ◽  
Series Data ◽  
Unique Contribution ◽  
Content Type ◽  
Non Linear ◽  
Regression Error ◽  
The Government

Purpose The commonly adopted view of the relationship between government spending and economic growth follows the Keynesian approach, in which government spending is considered to determine economic growth. However, there is another theory, which suggests that economic growth in fact determines government spending. This is Wagner’s hypothesis. The purpose of this paper is to investigate which of the two approaches applies to South Africa, and further observes the level of non-linearity between the two variables. Design/methodology/approach This study was carried out using quarterly time series data from 1980Q1 to 2015Q1. Granger causality technique was used to observe the direction of causality between the two variables, while regression error specification test (RESET) was employed to determine whether the variables exhibit linear or non-linear behaviour. This was followed by observing the threshold band, using two techniques, namely, sample splitting threshold regression and quadratic generalised method of moments. Findings The causality result shows that South Africa follows Wagner’s law, whereby government spending is determined by economic growth, supporting Odhiambo (2015). The RESET result shows that the variables depict a non-linear relationship, thus the government spending economic growth model is non-linear. It was found that if positive economic development is to be achieved, economic growth should preferably be kept within the −1.69 and 3.0 per cent band, and specifically above 1 per cent band. Originality/value The unique contribution of this study is that no previous study has attempted the non-linear government spending-economic growth nexus whether within the Keynesian or Wagner law for South Africa.

scholarly journals Impact of the government size on economic growth in the Western Balkan countries

2022 ◽  
Vol 11 (1) ◽  
pp. 55-63
Author(s):  
Roberta Bajrami ◽  
Adelina Gashi ◽  
Kosovare Ukshini ◽  
Donat Rexha
Keyword(s):  
Economic Growth ◽  
Government Spending ◽  
Economic Freedom ◽  
Ordinary Least Squares ◽  
Government Size ◽  
Gdp Growth ◽  
Government Consumption ◽  
Per Capita ◽  
The Government ◽  
The Impact

The Keynesian theory states that economic growth is positively affected by government spending, while Classical theory states that economic growth is negatively affected by government spending, as is stated by neoclassical public choice theorists (Nyasha & Odhiambo, 2019). Based on these theories, many authors have carried out research on the impact of economic freedom on economic growth by analyzing various empirical cases. Bergh and Karlsson (2010) with the findings from his paper confirmed that the countries with the highest government size have an elevated growth in the globalization index of KOF and the Fraser Institute’s economic freedom index. The main aim of this paper is to analyze the government size impact on the growth of the economy in the Western Balkan in the time period 2000–2017 according to Fraser Institute’s data, incorporating the following econometric models: fixed and random effects, pooled ordinary least squares (OLS), and Hausman-Taylor IV. With these models, this paper analyzes a government size and its components: government enterprises and investment, government consumption, transfers, and subsidies. The results illustrate a relationship between the size of the government and the growth of the economy in the Western Balkans that is positive. 1% increase in government size affects 0.29% gross domestic product (GDP) growth per capita. According to the Hausman-Taylor instrumental variable, 1% growth of government consumption is affected by 0.69% the decline in GDP per capita. The growth rate of transfers and subsidies affects 0.17% of GDP growth per capita and 1% of government enterprises and investment affects 0.54% GDP growth per capita.

Iran budget signals caution over sanctions relief

2015 ◽  
Keyword(s):  
Government Spending ◽  
Political System ◽  
Oil Prices ◽  
External Pressure ◽  
Fiscal Year ◽  
Content Type ◽  
Spending Patterns ◽  
International Dispute ◽  
The Government ◽  
Oil Revenues

Subject Iranian budget. Significance The government negotiated the 2015-16 budget, which will come into effect at the start of the fiscal year on March 21, against the backdrop of two major uncertainties -- the outlook for global oil prices and talks to resolve the international dispute over Iran's nuclear programme. As legislated, the budget reins in spending and assumes the continuation of the sanctions regime and significantly lower oil revenues. However, there are serious questions over whether the budget's projections, including higher revenues from taxation and privatisation, and lower spending on cash grants, will be met. Impacts Even with a nuclear agreement, the government's budget balancing act this year will be a challenging one. Parliament's smooth passing of the budget shows that Iran's political system can operate on consensus even under external pressure. Removal of sanctions and increased oil revenues could lead to a return of undisciplined government spending patterns.

Ecuador unlikely to scrap dollarisation

2015 ◽  
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Oil Prices ◽  
The State ◽  
Content Type ◽  
Severe Strain ◽  
The Future ◽  
The Government ◽  
The Right ◽  
Oil Revenues

Subject The future of dollarisation in a context of low oil prices. Significance Oil revenues have underpinned the popularity of President Rafael Correa's government by enabling spending on welfare, infrastructure and development that has boosted economic growth. The collapse of world oil prices has placed the dollar-denominated economy under severe strain and raised doubts about the future of dollarisation in Ecuador. Impacts The fiscal challenges the government is facing will provide the opposition with an opportunity to strengthen in 2015. The right will play on concerns over the management of the economy, the scale of public debt and the size of the state. The left will attack the government for failing to reduce Ecuador's reliance on oil and undertake wider and deeper reforms.

Gas price crash will compound Bolivia’s economic woes

2020 ◽  
Keyword(s):  
Oil Prices ◽  
Gdp Growth ◽  
Santa Cruz ◽  
Content Type ◽  
Export Prices ◽  
The Government ◽  
Remittance Flows ◽  
Gas Price ◽  
Bail Out ◽  
Gas Pressures

Subject Gas pressures. Significance The fall in world oil prices, on which Bolivia’s natural gas export prices are predicated, further exacerbates the challenges facing an economy already affected badly by the COVID-19 lockdown and a reduction in likely remittance flows. The administration of interim President Jeanine Anez is looking for increased assistance from multilateral credit agencies, but this can only partly mitigate what promises to be a severe downturn in GDP growth. Impacts The COVID-19 shutdown will only gradually be lifted, starting later this month. The government will be unable to bail out companies likely to go bankrupt in the hydrocarbons sector. Santa Cruz will be the department hardest hit by the combination of COVID-19, lower oil prices and fewer remittances.

Pakistan's energy crisis will trim 2015 growth

2015 ◽  
Keyword(s):  
Energy Sector ◽  
Sales Tax ◽  
Public Image ◽  
Energy Crisis ◽  
Gdp Growth ◽  
Energy Infrastructure ◽  
Content Type ◽  
Fuel Prices ◽  
The Government ◽  
Holding Back

Significance The government is trying to transfer the benefits of low international crude prices to customers without jeopardising the finances of Pakistan's oil marketing firm. It hopes that its moves will restore its public image after a debilitating petrol crisis in January. However, this may prove optimistic: the January crisis exposed the government's continued failure to reform the energy sector, despite power and fuel shortages holding back overall GDP growth. Impacts The IMF will transfer the next tranche of around 560 million dollars to Islamabad, despite insufficient reform. Inflation will decline with the fall in fuel prices, although the sales tax rise will be a partial offset. The cash-strapped government will not invest in upgrading energy infrastructure; private enthusiasm is likely to be limited.

Hungarian economic stimulus measures will leave gaps

2016 ◽  
Keyword(s):  
Economic Growth ◽  
Public Sector ◽  
Unemployment Rate ◽  
Value Added ◽  
The State ◽  
Gdp Growth ◽  
State Budget ◽  
Content Type ◽  
The Third ◽  
The Government

Subject The series of tax-related measures that the Fidesz government hopes will boost competitiveness and support GDP by reducing labour shortages. Significance Following disappointing economic growth of just 2.2% on an unadjusted basis in the third quarter, owing to a larger-than-expected drop in investment, Fidesz’s latest tax-related measures are well-timed, since the economy is expected to slow in the final quarter of 2016. The government insists no amendments will be needed in the state budget, and is now forecasting 3.1% GDP growth in 2017, after 2.5% this year. Impacts Value-added tax cuts and rises in public-sector minimum wages will cause inflation to rise faster in 2017, as deflationary trends disappear. The unemployment rate is expected to bottom out as workers return from neighbouring countries. The government will need to make complementary reforms in education and privatising the state-dominated energy and telecoms sectors. If it does not, competitiveness as measured by wage growth and productivity will remain subdued.

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