Nexus between Public Expenditure and Economic Growth in Nepal

Shah, Rajendra Kumar; Bhusal, Tara Prasad

doi:10.3126/ejon.v40i1-4.35946

Cited by 10 publications

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“…Using the ARDL approach to cointegration has several benefits in comparison to other cointegration methods such as Engle-Granger (1987), Johansen (1988, and Johansen and Julius (1990) procedures (Shah and Bhusal, 2017). This technique is also considered a statistically more significant approach to ascertain the cointegrating relation in a small sample size too.…”

Section: Ardl Approach To Cointegrationmentioning

confidence: 99%

Government Capital Expenditure and Economic Growth in Nepal

Mahara

2023

Mega J.

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This paper explores the short-run and long-run causal relationship between government expenditure, labor force, gross investment, aggregate consumption, and economic growth of Nepal. The gross domestic product (Y), capital expenditure (K), population (L), gross investment (GI), and aggregate consumption (CO) have been used to find the causal relationship between government expenditure, and economic growth. The ARDL cointegration technique confirms a long-run association among the variables. The study revealed that capital expenditure, labor force participation, gross investment, and aggregate consumption all are the long-run driver of the economic growth of Nepal. These findings tell that efficient and timely allocation and use of capital expenditure, expansion of public as well private investment, and increased aggregate consumption matters for economic growth. The study also shows the existence of unidirectional causation from capital expenditure to growth and bidirectional relationship between other variables. The findings support Keynesian thought of government expenditure and economic growth. The regulatory and policymakers should focus on expansionary fiscal policy to stimulate capital formation, efficient productive investment, boost effective demand, and enhance long-run economic growth in Nepal.

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Section: Ardl Approach To Cointegrationmentioning

confidence: 99%

Government Capital Expenditure and Economic Growth in Nepal

Mahara

2023

Mega J.

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“…This, in turn, will decrease economic growth (Ejigayehu, 2013). Shah and Bhusal (2017) used ARDL bound test to identify the relationship between public growth and economic growth in Nepal from 1975 to 2016. The bound test and error correction terms clearly show a long-run relationship between government expenditure and economic development in the Nepalese economy.…”

Section: Published Bymentioning

confidence: 99%

Deficit Budget and Economic Growth in Nepal

Kadel

2021

Management Dynamics

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This article attempts to identify the relationship between budget deficit and economic growth in Nepal. A deficit budget is associated with the role of government in the economy. On employing the ARDL bounds test on the data set from 1990 to 2020, it is found that there is a long-run relationship between the budget deficit and economic growth. The bound test and error correction term specify a long-run relationship between the Nepalese economy’s budget deficit and economic growth. According to the empirical study, the budget deficit significantly impacts real GDP, a proxy for economic growth.

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“…One of the extensively used and most appropriate approaches to examine the causal relationship between the underlying variables regardless of whether the variables are integrated of order zero (I 0 ), one (I 1 ), or mutually integrated is the ARDL model developed by Pesaran and Shin (1999) and Pesaran et al (2001). This model has several benefits in comparison to other cointegration methods such as Engle-Granger (1987), Johansen (1988, and Johansen and Julius (1990) procedures (Shah & Bhusal, 2017). This technique is also considered a statistically more significant approach to ascertain the cointegrating relation in a small sample size too.…”

Section: Econometric Analysismentioning

confidence: 99%

An Empirical Investigation Between Money Supply, Inflation, Capital Expenditure and Economic Growth in Nepal

Mahara¹

2021

QJMSS

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Background: Money supply, inflation, and capital expenditure along with others are major issues of consideration for policymakers in developing countries given the need to spark internal demand and to encounter the government’s massive fiscal obligations to alleviate poverty and achieve sustainable economic growth. Like other economies, the economic performance of Nepal is also based on these macroeconomic variables. Objective: The principal objective of the study is to explore the association between money supply, inflation, capital expenditure, and economic growth in Nepal. Method: The study applies the ARDL approach to co-integration to check the relationship between selected variables. The bound test is carried out to see the relationship between variables. Result: The empirical findings of the study show that there is a significant long-run positive relationship between money supply, capital expenditure, and growth. There is a unidirectional causation from money supply and capital expenditure to real economic growth in Nepal. Conclusion: The study concludes that an increase in money supply, capital expenditure, and controlling inflation help to increase the long-run real economic growth of Nepal. Nepal Rastra Bank has to emphasize monetary policy instruments that help to increase the money supply in the long run and the Ministry of Finance (MoF) should be encouraged to increase spending on capital overheads to broaden and enhance the growth of the economy.

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Nexus between Public Expenditure and Economic Growth in Nepal

Cited by 10 publications

References 0 publications

Government Capital Expenditure and Economic Growth in Nepal

Government Capital Expenditure and Economic Growth in Nepal

Deficit Budget and Economic Growth in Nepal

An Empirical Investigation Between Money Supply, Inflation, Capital Expenditure and Economic Growth in Nepal

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