The Short-Run and Long-Run Impact of Government Expenditure on Integration Area and Non-Integration Area in Gangwon-Province

Education is always considered as the major determinant for the development of any economy. Enrollment at various levels also shows that how much education is common within the citizens of the country. Considering the importance of enrollment, the current study examines the influence of some macroeconomic variables on various levels i.e. primary, secondary, higher, college, professional and university enrollment in Pakistan. Time series data has been gathered on consumer price index, government revenue, employed labor force, government expenditure, and health expenditure for the period from 1972 to 2010. For long run estimates, Johansen Co integration test is used and short run estimates are taken through error correction model. The results of the study exhibit positive association of employed labor force, government expenditure and health expenditure with primary, secondary, higher, college, professional and university enrollment in Pakistan. On the other side, consumer price index and government revenue have been found to be inversely influencing enrollment at various levels. Short run results are also much favorable for the economy and reveals convergence towards long run equilibrium due to any disturbances in the short run period. At the end study gives some policy implications that government should decrease consumer price index and tax rate and to increase government expenditure in terms of education and health for higher enrollment rates in Pakistan.

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Impact of Exchange Rate Management on the Nigerian Economic Growth: Empirical Validation

American International Journal of Economics and Finance Research ◽

10.46545/aijefr.v1i2.68 ◽

2019 ◽

Vol 1 (2) ◽

pp. 28-35

Author(s):

Friday Osaru Ovenseri Ogbomo ◽

Precious Imuwahen Ajoonu

Keyword(s):

Economic Growth ◽

Exchange Rate ◽

Inflation Rate ◽

Government Expenditure ◽

Least Square ◽

Ordinary Least Square ◽

Exchange Rate Management ◽

Long Run ◽

Short Run ◽

The Impact

This paper examined the impact of Exchange Rate Management on economic growth in Nigeria between 1980 and 2015. The study was set to gauge how the management of exchange rate in Nigeria has impacted the economy. The study employed the Ordinary Least Square (OLS) method in its analysis. Co-integration and Error Correction Techniques were used to establish the Short-run and Long-run relationships between economic growth and other relevant economic indicators. The result revealed that exchange rate management proxy by various exchange rates regimes in Nigeria was not germane to economic growth. Rather, government expenditure, inflation rate, money supply and foreign direct investment significantly impact on economic growth in Nigeria. It is against this backdrop that the Nigerian economy must diversify her export base to create room for more inflow of foreign exchange.

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AID AND GROWTH IN BANGLADESH: A REASSESSMENT

JOURNAL OF EUROPEAN ECONOMY - No 1 (2018) ◽

10.35774/jee2018.04.422 ◽

2018 ◽

pp. 422-440

Author(s):

Sharif Hossain ◽

Rajarshi Mitra ◽

Thasinul Abedin

Keyword(s):

Economic Growth ◽

Foreign Aid ◽

Inflation Rate ◽

Government Expenditure ◽

Real Income ◽

Domestic Investment ◽

Real Gdp ◽

Long Run ◽

Short Run ◽

Per Capita

Although the amount of foreign aid received by Bangladesh as a share of GDP has declined over the years, Bangladesh remains one of the heavily aiddependent countries in Asia. The results of most empirical studies that have examined the effectiveness of foreign aid or other forms of development assistance for economic growth have varied considerably depending on the econometric methodology used and the period of study. As the debate and controversy over aid-effectiveness for economic growth continue to grow, this paper reinvestigates the short-run and long-run effects of foreign aid received on percapita real income of Bangladesh over the period 1972–2015. A vector error correction model is estimated. The results indicate lack of any significant short-run and long-run relation between foreign aid and per-capita real income. Results further indicate short-run unidirectional causalities from per-capita real GDP to domestic investment (in proportion to GDP), from government expenditure (in proportion to GDP) to inflation rate, from inflation rate to domestic investment (in proportion to GDP), and from domestic investment to foreign aid (as percentages of GDP). Short-run bidirectional causality is observed between per-capita electricity consumption and per-capita real GDP, and between per-capita real GDP and government expenditure (in proportion to GDP).

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Do FDI and Public Investment Crowd in/out Domestic Private Investment in the SADC Region

Managing Global Transitions ◽

10.26493/1854-6935.19.3-25 ◽

2021 ◽

Vol 19 (1) ◽

pp. 3-25

Author(s):

Eslon Ngeendepi ◽

Andrew Phiri

Keyword(s):

Capital Expenditure ◽

Public Investment ◽

Trade Openness ◽

Government Expenditure ◽

Private Investment ◽

Policy Implications ◽

Domestic Investment ◽

Government Investment ◽

Long Run ◽

Short Run

Our study examines the crowding-in/out effect of foreign direct investment and government expenditure on private domestic investment for 15 members of the Southern African Development Community (SADC) for the period 1991–2019. The study employed the panel Pool Mean Group (PMG)/ARDL technique in estimating the short-run and long-run cointegration relationships between FDI, government capital expenditure and domestic private investment and adds three more variables for control purposes (interest rate, GDP growth rate and trade openness). For the full sample, FDI crowds-in domestic investment whilst government crowds-out domestic investment. However, in performing a sensitivity analysis, in which the sample was segregated into low and high income economies, both FDI and government investment crowd-in domestic investment whilst government expenditure crowds-out domestic investment in lower income SADC countries with no effect of FDI on domestic investment. Policy implications are discussed.

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Government Size and Economic Growth in Vietnam: A Panel Analysis

Journal of Asian Business and Economic Studies ◽

10.24311/jabes/2014.222.03 ◽

2014 ◽

Vol 222 ◽

pp. 17-39

Author(s):

THÀNH SỬ ĐÌNH

Keyword(s):

Economic Growth ◽

Generalized Method Of Moments ◽

Government Expenditure ◽

Provincial Government ◽

Government Size ◽

Government Revenue ◽

Long Run ◽

Short Run ◽

Per Capita ◽

A Share

The effect of government relative size on economic growth is a contentious issue. This paper is undertaken to test the relationship between government size and economic growth in Vietnam. The study is a panel data investigation, involving 60 provinces over the period 1997–2012. Various measures of government size are defined: provincial government expenditure as a share of gross provincial product (GPP), provincial government revenue as a share of GPP, real provincial government expenditure per capita, and real provincial government revenue per capita. Empirical estimates are employed by conducting Difference Generalized Method of Moments method proposed by Arellano and Bond (1991) and Pooled Mean-Group method by Pesaran, et al. (1999). These tests reveal: (i) provincial government expenditure (revenue) as a share of GPP has a significantly negative effect on economic growth; and (ii) the real government expenditure (revenue) per capita has a significantly positive effect on economic growth. It is also found that the long-run and short-run coefficients of government expenditure size are significant and negative, that the correction mechanism from the short run disequilibrium to the long run equilibrium is not convergent, and that government employment has a negative correlation with economic growth.

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Impact of Public Debt, Deficit and Debt Financing on Private Investment in a Large Country: Evidence from the United States

World Journal of Applied Economics ◽

10.22440/wjae.6.2.3 ◽

2020 ◽

Vol 6 (2) ◽

pp. 139-161

Author(s):

Amir Kia

Keyword(s):

Public Debt ◽

Public Investment ◽

Government Expenditure ◽

Private Investment ◽

Adjustment Costs ◽

The United States ◽

Direct Impact ◽

Large Country ◽

Long Run ◽

Short Run

This paper analyses the direct impact of fiscal variables on private investment. The current literature ignores one or more fiscal variables and, in many cases, the foreign financing of debt. In this paper, an aggregate investment function for an economy in which firms incur adjustment costs in their investment process is developed. The developed model incorporates the direct impact of government expenditure, public debt and investment, deficits and foreign-financed debt on private investment. The model is tested on US data. It is found that public investment does not have any impact on private investment, but government expenditure, deficit, debt and foreign-financed debt crowd out private investment over the long run. However, deficit crowds in the private investment over the short run.

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Does Government Expenditure Reduce GDP Gap? Evidence from Bangladesh

Journal of Nepalese Business Studies ◽

10.3126/jnbs.v3i1.478 ◽

2007 ◽

Vol 3 (1) ◽

pp. 1-8

Author(s):

M. Rafiqul Islam ◽

A.F.M. Kamrul Hassan

Keyword(s):

Fiscal Policy ◽

Dominant Role ◽

Government Expenditure ◽

Equilibrium Path ◽

Role Of Government ◽

Business Studies ◽

Long Run ◽

Short Run ◽

Gdp Gap ◽

Long Run Equilibrium

In Keynesian macroeconomics fiscal policy plays the dominant role to steer the economy along its long run equilibrium path and also to cure the short run deviation from its long run level. Present paper examines this role of government expenditure, a tool of fiscal policy, in the context of the economy of Bangladesh. The paper employs cointegration and Error Correction Mechanism (ECM) to examine the short and long run relationship between economic growth and government expenditure. Findings of the study indicate that, in the short run, government expenditure does not play any statistically significant role in eliminating the gap between actual and potential output. However, a statistically significant cointegrating relationship is found between government expenditure and long run equilibrium output Journal of Nepalese Business Studies 2006/III/1 pp. 1-8

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The effectiveness of government expenditure on economic growth in Botswana

African Journal of Economic and Management Studies ◽

10.1108/ajems-03-2018-0081 ◽

2019 ◽

Vol 10 (3) ◽

pp. 368-384 ◽

Cited By ~ 1

Author(s):

Kafayat Amusa ◽

Mutiu Abimbola Oyinlola

Keyword(s):

Economic Growth ◽

Government Spending ◽

Negative Impact ◽

Positive Impact ◽

Government Expenditure ◽

Public Spending ◽

Empirical Literature ◽

Content Type ◽

Long Run ◽

Short Run

Purpose The purpose of this paper is to examine the relationship between government expenditure and economic growth in Botswana over the period 1985‒2016. The study employed the auto-regressive distributed lag (ARDL) bounds testing approach in investigating the nexus. The study makes the argument that the effectiveness of public spending should be assessed not only against the amount of the expenditure but also by the type of the expenditure. The empirical findings showed that aggregate expenditure has a negative short-run and positive long-run effect on economic growth. When expenditure is disaggregated, both forms of expenditures have a positive short-run effect on economic growth, whereas only a long-run positive impact of recurrent expenditure is observed. The study suggests the need to prioritize scarce resources in productive recurrent and development spending that enables increased productivity. Design/methodology/approach This study examined the effectiveness of government spending in Botswana, within an ARDL framework from 1985 to 2016. To achieve this, the analysis is carried out on both an aggregate and disaggregated level. Government spending is divided into recurrent and development expenditures. Findings This study examined the effectiveness of government spending in Botswana, within an ARDL framework from 1985 to 2016. To achieve this, the analysis hinged on both the aggregate and disaggregated levels. The results of the aggregate analysis suggest that total public expenditure has a negative impact on economic growth in the short run; however, its impact becomes positive over the long run. On disaggregating government spending, the results show that both recurrent and development expenditures have a significant positive short-run impact on growth; however, in the long run, the significant positive impact is only observed for recurrent expenditure. Practical implications The results provide evidence of the diverse effects of government expenditure in the country. In the period under investigation, 73 percent of total government expenditure in Botswana was recurrent in nature, whereas 23 percent was related to development. From the results, it can be observed that although the recurrent expenditure has contributed to increased growth and must be encouraged, it is also pertinent for the Botswana Government to endeavor to place more emphasis on productive development expenditure in order to enhance short- and long-term growth. Further, there is a need to strengthen the growth-enhancing structures and to prioritize the scarce economic resources toward productive spending and ensuring continued proper governance over such expenditures. Originality/value The study provides empirical evidence on the effectiveness of government spending in a small open, resource-reliant middle-income SSA economy and argues that the effectiveness of public spending must be assessed not only against the amount of the expenditure but also on the type or composition of the expenditure. The study contributes to the scant empirical literature on Botswana by employing the ARDL approach to cointegration technique in estimating the long- and short-run impact of government expenditure on economic growth between 1985 and 2016.

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The force of globalization reshaping the local institutions: evidence from the Organization of Islamic Cooperation member countries

International Journal of Emerging Markets ◽

10.1108/ijoem-10-2019-0794 ◽

2020 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Nahla Samargandi ◽

Kazi Sohag ◽

Ali Kutan ◽

Maha Alandejani

Keyword(s):

Government Expenditure ◽

Policy Implications ◽

Institutional Setting ◽

Cross Sectional ◽

Policy Makers ◽

Content Type ◽

Long Run ◽

Short Run ◽

Nonlinear Relation ◽

Political Globalization

PurposeThe authors reinforce the existing literature on the effect of overall globalization on institutional quality (IQ), while incorporating the effects of economic, political and social aspects of globalization, human capital, government expenditure and population growth. To this end, the authors estimate panel data models for a sample of 36 member countries of the Organization of Islamic Cooperation (OIC) during 1984–2016.Design/methodology/approachThe authors employ the cross-sectional autoregressive distributed lags (CS-ARDL) approach.FindingsThe study’s investigation affirms the presence of an inverted U-shaped (nonlinear) relation between overall globalization and IQ indexes for the sample countries, which suggests no additional room for improvement in IQ. It also underpins the existence of an inverted-U-shaped (nonlinear) relation between political globalization and IQ. In contrast, economic and social globalizations have a U-shaped relation with IQ, implying more scope for improvement.Research limitations/implicationsThe findings have key policy implications. First, policy makers should consider a long-run approach for improving IQ and globalization over time. Second, quick reforms in the short run may not improve IQ.Practical implicationsThe results suggest that policy makers should approach the globalization process from a long-run perspective as well by designing appropriate strategies to provide a continuous but gradual increase in globalization so as to systematically monitor the threshold limits to IQ from improving globalizationOriginality/valueTo the best of the authors’ knowledge, this work is the first to empirically investigate the overall role of globalization in promoting IQ under the conditions of short-run heterogeneity and long-run homogeneity. The authors focus on the member countries of the OIC, many of which are ruled by authoritarian regimes and suffer from a poor domestic institutional setting.

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The Asymmetric Influence of Financial Development on Economic Growth in Kenya: Evidence From NARDL

SAGE Open ◽

10.1177/2158244019894071 ◽

2020 ◽

Vol 10 (1) ◽

pp. 215824401989407 ◽

Cited By ~ 1

Author(s):

Hao Chen ◽

Duncan O. Hongo ◽

Max William Ssali ◽

Maurice Simiyu Nyaranga ◽

Consolata Wairimu Nderitu

Keyword(s):

Economic Growth ◽

Financial Development ◽

Government Spending ◽

Capital Accumulation ◽

Research Question ◽

Government Expenditure ◽

Model Specification ◽

Long Run ◽

Short Run ◽

Auto Regressive

This study analyzed the asymmetric effects of financial development on economic growth using a model augmented with inflation and government expenditure asymmetries to inform model specification. The research question used entails, Do their asymmetry changes significantly influence growth? Using the nonlinear auto-regressive distributive lag (NARDL), the most significant results posit that positive shocks in financial development in the short run and its negative shocks in the long run increase and decrease economic growth, respectively. Regarding inflation, its positive (negative) shocks in both runs, respectively, reduce (increase) economic growth. In comparison, positive shocks in financial development that spur growth in the short run and negative shocks in financial development (government expenditure) that increase (reduce) growth are the most domineering effects as the rest of the shocks insignificantly affect growth. Results clearly demonstrate to an environment steered by stable and sustainable inflation that regulated government expenditure and comprehensive financial system deepening would positively cause economic growth. Therefore, appropriate policies that favor low inflation and reduced government spending, expansion of feasibly reformed financial institutions, capital accumulation, and increased resource mobilization should be instituted if real growth is to positively happen.

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