scholarly journals THE RELATIONSHIP BETWEEN ECONOMIC GROWTH AND GOVERNMENT SPENDING: A CASE STUDY OF OIC COUNTRIES

2015 ◽  
Vol 11 (2) ◽  
pp. 149 ◽  
Author(s):  
Heri Sudarsono
Keyword(s):  
Economic Growth ◽  
Government Spending ◽  
Time Series Data ◽  
Series Data ◽  
Causality Test ◽  
Wagner’S Law ◽  
The Public ◽  
Wagner's Law ◽  
The Relationship

This paper presents the results for testing for causal relationship between economic growth and goverment spending for OIC countries covering the time series data 1970~2006. There are usually two propositions regarding the relation between economic growth and government spending: Wagner’s Law states that as GDP grows, the public sector tends to grow; and the Keynesian framework postulates that public expenditure causes GDP to grow. The primary strength and originality of this paper is that we used aggregate data as well as disaggregate data for Granger causality test. By testing for causality between economic growth and government spending, we find that government spending does cause economic growth in Iran, Nigeria and Tunisia, which are compatible with Keynesian’s theory. However, the economic growth does cause the increase in goverment spending in Algeria, Burkina Faso, Benin, Indonesia, Libya Malaysia, Marocco, and Saudi, which are well-suited with Wagner’s law.

The Nexus between Government Expenditure and Economic Growth: Evidence of the Wagner’s Law in Kuwait

2019 ◽  
Vol 15 (1) ◽  
Author(s):  
Ali Ebaid ◽  
Zakaria Bahari
Keyword(s):  
Economic Growth ◽  
Government Spending ◽  
Time Series Data ◽  
Government Expenditure ◽  
Policy Instrument ◽  
Series Data ◽  
Causality Test ◽  
Wagner’S Law ◽  
Per Capita ◽  
Wagner's Law

Abstract This study is the first attempt to examine the validity of the Wagner’s law hypothesis by employing time-series data over the period from 1970 to 2015 in Kuwait. In this paper, the causal relationship between government expenditure and economic growth is tested by conducting the Granger non-causality test developed by (Toda, H. Y., and T. Yamamoto. 1995. “Statistical Inference in Vector Autoregressions with Possibly Integrated Processes.” Journal of Econometrics 66 (1): 225–250.) and (Dolado, J. J., and H. Lütkepohl. 1996. “Making Wald Tests Work for Cointegrated VAR Systems.” Econometric Reviews 15 (4): 369–386.). The empirical results support the unidirectional causality running from government spending to economic growth. This occurs only when real government expenditure per capita is a proxy for state activity and real gross domestic product (GDP) per capita is a measure of economic growth. This implies that Wagner’s law does not apply for Kuwait’s economy, and the Keynesian proposition of government spending as a policy instrument that encourages and leads economic growth is supported by the data used.

scholarly journals The Reform in Government Expenditure and the Standard of Living in Bahrain

2021 ◽  
Author(s):  
Fatema Alaali
Keyword(s):  
Economic Growth ◽  
Government Spending ◽  
Time Series Data ◽  
Government Expenditure ◽  
Standard Of Living ◽  
Series Data ◽  
Vector Error Correction ◽  
Education And Health ◽  
Oil Revenues ◽  
The Relationship

The drop of oil prices since the second half of 2014 have affected the credit risk and liquidity situation in Bahrain. Therefore, Bahrain have implemented substantial economic diversification in the economic structure including manufacturing, refining, tourism, trade and finance. With the recognition of the importance of governments expenditure restructuring, Bahrain government introduced number of initiatives such as streamlining government expenditure, increasing revenues, and redirecting government subsidies towards eligible citizens. Understanding the relationship between revenues, government spending and economic growth is an essential perception in evaluating the efficiency of government’s strategy in managing its resources and the impact on the standard of living in any country. This chapter examines the relationship between total government expenditure as well as sectoral government spending (specifically education and health sectors), oil revenues and the economic growth of Bahrain using time series data over the period 1989–2015. To achieve this aim, the vector error correction model (VECM) is employed. In order to ensure the sustainability of resources and maintain economic growth, Bahrain should continue managing its expenditure, by cutting down expenses on certain sectors through privatization, and increasing spending on health and education sectors.

scholarly journals An Econometric Analysis on Remittance and Economic Growth in Bangladesh

2020 ◽  
pp. 214-218
Author(s):  
Md Shafiul Islam
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Granger Causality ◽  
Time Series Data ◽  
Granger Causality Test ◽  
Causal Link ◽  
Series Data ◽  
Causality Test ◽  
External Finance ◽  
The Relationship

In Bangladesh, migrant worker’s remittances constitute one of the most significant sources of external finance. This paper investigates the existence of relation between remittance inflow and GDP and the causal link between them in Bangladesh by employing the Granger causality test under a VECM framework. Using time series data over a 38 year period, we found that growth in remittances does lead to economic growth in Bangladesh. In addition to the relationship, this paper also points out some issues that are working as impediments in getting remittance and give some recommendations to overcome those impediments.

scholarly journals The Relationship Between Public Expenditure and Economic Growth In Kosovo: Findings from a Johansen Co-Integrated Test and a Granger Causality Test

Ekonomika ◽  
2018 ◽  
Vol 97 (1) ◽  
pp. 47-62 ◽  
Author(s):  
Leke Pula ◽  
Alban Elshani
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Public Expenditure ◽  
Time Series Data ◽  
Granger Causality Test ◽  
Series Data ◽  
Causality Test ◽  
Total Budget ◽  
The Relationship ◽  
Budget Revenue

In the scientific literature, there are two opposing views on the relationship between public expenditure and economic growth. The Keynesian view states that public expenditure is an exogenous factor that influences economic growth and can be used as a policy instrument. This point of view is in contrast to the Wagner view that the public expenditure is seen as an endogenous factor or an outcome, not a cause, of economic growth. The primary objective of this study is to test the views of Keynes’s versus Wagner’s in the case of Kosovo by using Public Expenditure (G), Gross Domestic Product and three other components of GDP: Foreign Direct Investment (FDI), Export (EXP) and Total Budget Revenue (TRtax); the variables used in this analysis are quarterly time series data spanning from 2004–2016. To accomplish the set objectives, the Johansen co-integrated technique is used to investigate the long-run relationship between public expenditure and economic growth, while the Granger causality test is used to know the direction of flow between variables. This study discovers that there is a unidirectional causality between government expenditures and economic growth in Kosovo. It is also found that there is a bidirectional causality between total budget revenue and public expenditure. On the other hand, results also provide evidence that there is a bidirectional causality between export and economic growth. Moreover, the results for Kosovo indicate that data for the period considered support the Keynesian view.

scholarly journals Exploring the linkages of Foreign Direct Investment in Spain since 1970’s: an ARDL approach

2020 ◽  
Vol 33 (1) ◽  
pp. 39-54
Author(s):  
Verónica Cañal Fernández ◽  
Julio Tascón Fernández ◽  
María Gómez Martín
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Granger Causality ◽  
Direct Investment ◽  
Time Series Data ◽  
Series Data ◽  
Bounds Testing ◽  
Causality Test ◽  
Long Run ◽  
The Relationship

This paper analyzes the relationship between foreign direct investment (FDI), exports and economic growth in Spain using annual time series data for the period 1970 to 2016. To examine these linkages the autoregressive distributed lag (ARDL) bounds testing approach to cointegration for the long-run is applied. The results confirm a long-run relationship among the examined variables. The Granger causality test indicates a strong unidirectional causality between FDI and exports with direction from FDI to exports. Besides, the results for the relationship between FDI and economic growth are interesting and indicate that there is no significant Granger causality from FDI to economic growth and vice-versa.

scholarly journals Non-bank financial institutions and economic growth: Evidence from Africa’s three largest economies

2017 ◽  
Vol 20 (1) ◽  
Author(s):  
Ronald Rateiwa ◽  
Meshach J. Aziakpono
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Financial Institutions ◽  
Time Series Data ◽  
Bank Lending ◽  
Series Data ◽  
The Sustainable Development ◽  
Long Run ◽  
The Relationship

Background: In order for the post-2015 world development agenda – termed the sustainable development goals (SDGs) – to succeed, there is a pronounced need to ensure that available resources are used more effectively and additional financing is accessed from the private sector. Given that traditional bank lending has slowed down, the development of non-bank financing has become imperative. To this end, this article intends to empirically test the role of non-bank financial institutions (NBFIs) in stimulating economic growth.Aim: The aim of this article is to empirically test the existence of a long-run equilibrium relationship between economic growth and the development of NBFIs, and the causality thereof.Setting: The empirical assessment uses time-series data from Africa’s three largest economies, namely, Egypt, Nigeria and South Africa, over the period 1971–2013.Methods: This article uses the Johansen cointegration and vector error correction model within a country-specific setting.Results: The results showed that the long-run relationship between NBFI development and economic growth is relatively stronger in Egypt and South Africa, than in Nigeria. Evidence in respect of Nigeria shows that such a relationship is weak. The nature of the relationship between NBFI development and economic growth in Egypt is positive and significant, and predominantly bidirectional. This suggests that a virtuous relationship between NBFIs and economic growth exists in Egypt. In South Africa, the relationship is positive and significant and predominantly runs from NBFI development to economic growth, implying a supply-leading phenomenon. In Nigeria, the results are weak and mixed.Conclusion: The study concludes that in countries with more developed financial systems, the role of NBFIs and their importance to the economic growth process are more pronounced. Thus, there is need for developing policies targeted at developing the NBFI sector, given their potential to contribute to economic growth.

CAUSAL RELATIONSHIP OF ENERGY CONSUMPTION AND ECONOMIC GROWTH – A CASE STUDY OF PAKISTAN

2021 ◽  
Vol 9 (1) ◽  
pp. 139-164
Author(s):  
Saddam Hussain ◽  
Chunjiao Yu
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Energy Consumption ◽  
Causal Relationship ◽  
Inflation Rate ◽  
Time Series Data ◽  
Consumer Price Index ◽  
Series Data ◽  
Relationship Of

This paper explores the causal relationship between energy consumption and economic growth in Pakistan, applying techniques of co-integration and Hsiao’s version of Granger causality, using time series data over the period 1965-2019. Time series data of macroeconomic determi-nants – i.e. energy growth, Foreign Direct Investment (FDI) growth and population growth shows a positive correlation with economic growth while there is no correlation founded be-tween economic growth and inflation rate or Consumer Price Index (CPI). The general conclu-sion of empirical results is that economic growth causes energy consumption.

scholarly journals PENGARUH KORUPSI, DEMOKRASI DAN POLITIK TERHADAP KEMISKINAN DI DELAPAN NEGARA ASEAN DENGAN PERTUMBUHAN EKONOMI SEBAGAI VARIABEL MODERASI

2019 ◽  
Vol 1 (3) ◽  
pp. 845
Author(s):  
Yolanda Yolanda
Keyword(s):  
Economic Growth ◽  
Time Series Data ◽  
Predictor Variable ◽  
Combination Method ◽  
Annual Reports ◽  
Series Data ◽  
Transparency International ◽  
Negative Effect ◽  
Asean Countries ◽  
The Relationship

This study aims the influence of corruption, democracy and politics on poverty in ASEAN countries with economic growth as a moderating variable. The method used is using the panel regression model. This data uses a combination method between time series data from 2013 - 2016 and a cross section consisting of 8 countries. Data obtained from World Bank annual reports, Transparency International and Freedom House. The results of this study indicate that (1) Corruption Perception Index (CPI) has a significant and negative effect on poverty, meaning that if the CPI increases then poverty will decrease (2) Democracy has no significant and negative effect on poverty. This means that if democracy increases, poverty will decrease (3) Politics has a significant and negative effect on poverty, meaning that if politics increases, poverty will decrease (4) Economic growth has a significant and positive effect on poverty, meaning if economic growth increases then poverty will decline (3) Economic growth unable to moderate the relationship between corruption, democracy and politics towards poverty in 8 ASEAN countries. Economic growth as an interaction variable is a predictor variable (Predictor Moderate Variable), which means that economic growth is only an independent variable.

scholarly journals The Nexus between Export and Economic Growth in Tanzania

2019 ◽  
Vol 1 (2) ◽  
pp. p95
Author(s):  
Romanus L. Dimoso (PhD, Economics) ◽  
UTONGA, Dickson (MSc. Economics)
Keyword(s):  
Economic Growth ◽  
Time Series Data ◽  
Series Data ◽  
Test Results ◽  
Causality Test ◽  
Goods And Services ◽  
Long Run ◽  
Causality Tests ◽  
The Government ◽  
Econometrics Analysis

This study explored the causal relationship between exports and economic growth in Tanzania. It analyzed time series data for the period of 1980 to 2015. Economic growth is measured in terms of growth per cent while exports are measured in percentage change of goods and services sold abroad. Econometrics analysis was employed in the due course. Such procedures as testing for the presence of unit root, co-integration and causality were done. Furthermore, the Johansen co-integration and Granger causality tests were employed to examine the long-run relationship among variables. The results of co-integration indicate the existence of one co-integrating equation. The causality test results exhibited causality which runs from economic growth to exports. The results conclude that, in the long run, there is a relationship between exports and economic growth in Tanzania. This study recommends the Government to make efforts to improve exports and eventually, in the long-run, rejuvenating the economy.

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