The nonlinear impact of government consumption expenditure on economic growth: Evidence from low and low-middle income countries

Hajamini, Mehdi; Falahi, Mohammad Ali

doi:10.1080/23322039.2014.948122

Cited by 29 publications

(18 citation statements)

References 36 publications

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“…Also, it permits us to wonder if government expenditure on education influences economic growth through another variable like human capital. Besides, like the work of (Hajamini et al 2014), this study shows a negative impact of government consumption on the growth rate of per capita GDP.…”

Section: Discussionsupporting

confidence: 60%

Public Spending, Income Inequality and Economic Growth in Asian Countries: A Panel GMM Approach

Gnangoin

Assamoi

et al. 2019

Economies

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This paper offers an empirical examination of the relationship between government spending’s, income inequality, and economic growth by using the case of 19 Asian countries from 2002 to 2017. For this purpose, the paper uses robust difference-GMM estimation and panel granger causality test. We found that gross domestic investment and regulatory quality are the main variables that contribute to these countries' economic growth. While current government consumption reduces economic growth. Also, government expenditure on education and regulatory quality granger cause economic growth in these countries. However, the effect of government expenditure on education on economic growth is not significant. So, to increase their economic growth, this study recommends these countries' governments to encourage gross domestic investment, maintain regulatory quality and reduce their current consumption. This study also concludes that income inequality has no impact on these countries' economic growth for this period.

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Section: Discussionsupporting

confidence: 60%

Public Spending, Income Inequality and Economic Growth in Asian Countries: A Panel GMM Approach

Gnangoin

Assamoi

et al. 2019

Economies

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“…Moreover, the estimates of Asimakopoulos and Karavias (2015) clearly indicate that the threshold levels are very similar for developing and developed countries. This is also the case for the results reported by Hajamani and Falahi (2014) for low and low-middle income countries. However, Thanh and Hoai (2014) highlight that their results greatly differ from that of Chiou-Wei et al (2010).…”

Section: Literature Reviewmentioning

confidence: 47%

Government Size and Economic Growth in Turkey: A Threshold Regression Analysis

İyidoğan¹,

Turan²

2017

Prague Economic Papers

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We examine the relationship between the government size and economic growth by using threshold regression model and quarterly data over the period 1998:1-2015:1 for Turkey. Our results provide a strong evidence for the existence of a non-linear relationship. The estimated threshold levels, as a percentage of GDP, are 16.5 for the government total expenditures, 12.6 for consumption expenditures and 3.9 for investment expenditures. We find that an increase in the government size leads to a significant rise (decline) in economic growth rate when the government size is below (above) the threshold level, confirming the predictions of Armey curve. Our findings have a clear policy implication: since the realized government consumption and total expenditures are well above the estimated threshold levels, a reduction in the government size would boost the growth rate.

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“…However, it does not give us information about how the changes in the level of spending affect the relationship between government spending and economic growth. This indicates the existence of a nonlinear relation between economic growth and government spending [44]. The TAR model is one of the approaches used in estimating a nonlinear relationship.…”

Section: Econometric Methodologymentioning

confidence: 99%

The Analysis of Visible Hand of Government: The Threshold Effect of Government Spending on Economic Growth

Aydın¹,

Akıncı²,

Yilmaz³

2016

IJTEF

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In this study, the role of government expenditures threshold value in the relationship between government spending and economic growth has been investigated for Turkish economy in period 1998:Q2-2015:Q2. At the first stage, government expenditures threshold value has been detected and after that government spending-economic growth relation has been examined using threshold autoregressive (TAR) model. The finding of this study is that, under the first regime which is below the threshold level, low government spending has significantly negative impact on economic growth. On the other hand, under the second regime which is above the threshold level, government spending has significantly positive effect on economic growth. This finding shows that rising government spending is an important factor to faster the economic growth process. Due to this effect, Turkey should follow a determined strategy to raise spending level above threshold value. Besides, the result of the study emphasizes that politicians and decision makers must take into account for this effect.

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The nonlinear impact of government consumption expenditure on economic growth: Evidence from low and low-middle income countries

Cited by 29 publications

References 36 publications

Public Spending, Income Inequality and Economic Growth in Asian Countries: A Panel GMM Approach

Public Spending, Income Inequality and Economic Growth in Asian Countries: A Panel GMM Approach

Government Size and Economic Growth in Turkey: A Threshold Regression Analysis

The Analysis of Visible Hand of Government: The Threshold Effect of Government Spending on Economic Growth

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