The effect of government expenditure on economic growth has attracted attention of economist for long time. In this context, this paper aims to understand that government expenditure subjects to whether constant, decreasing or increasing yield.
For this reason, countries were classified as with low government expenditure, medium government expenditure and high government expenditure, and were added into empirical analysis in the paper. The number of countries included in the analysis is 138 and the analysis covers the period between years 1980 and 2016.
In this context, empirical analysis consists of fixed effect model, random effect model, hausman test and unbalanced panel data technique was applied.
According to results of analysis, when government expenditure increases as quantitative, it’s effect on economic growth decreases but it still affects economic growth positively. To make public expenditures lately subject to law of diminishing returns, it may come into question that public expenditures is canalized to technology intensive areas.
In order to increase productivity in the public expenditures and to shift out diminishing returns, level of spendings on human capital can be increased.
Has Exports Promoted Transformation of Economic Growth Mode? An Empirical Analysis Based on Multinational Cross-Panel Data
