The impact of productive and non-productive government expenditure on economic growth: an empirical analysis in high-income versus low- to middle-income economies

Chu, Thanh Tuan; Hölscher, Jens; McCarthy, Dermot

doi:10.1007/s00181-018-1616-3

Cited by 65 publications

(62 citation statements)

References 39 publications

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“…Government expenditure is a part of government spending as a form of fiscal policy set out in the APBN (Anitasari & Soleh, 2015) .Government spending is allocated productively could have an impact on the economy of a country (Chu, Hölscher, & McCarthy, 2020).Government expenditure that is right on target will affect the progress and welfare of the community, price stability, increase productivity and the growth of job opportunities, so that government spending can have an impact on the rate of economic development.…”

Section: Government Expenditurementioning

confidence: 99%

The Effect of Government Expenditure on Economic Growth in Indonesia

Maulid

Bawono

Sudibyo

2021

EKU

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This study aims to examine and analyze the effect of economic growth classified as personnel expenditure, material expenditure, capital expenditure, interest payments, subsidies and social expenditure in Indonesia. The data in this study are time series data from 2005 to 2019. The hypothesis test uses the multiple linear regression method with SPSS 26. The results of testing government expenditure variables during the period 2005 to 2019 shows that components of central government expenditure include personnel, material, capital, interest payments, subsidies and social expenditure have a significant effect simultaneously on economic growth. There is a significant positive effect on the relationship between the variable personnel expenditure and material expenditure on economic growth. There is a significant negative effect on the relationship between the variable capital expenditure on economic growth. The other three variables, which include debt interest payments, subsidies and social expenditure, do not have a significant effect on economic growth.

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Section: Government Expenditurementioning

confidence: 99%

The Effect of Government Expenditure on Economic Growth in Indonesia

Maulid

Bawono

Sudibyo

2021

EKU

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“…These outcomes contradict the 'a prior expectations' of this study. Studies stressed that human capital development increases output (Chu, Holscher & McCarthy, 2020;Popoola, Alege, Gershon & Asaleye, 2019;Blanchard, 2010, Katema, 2000Glumm & Ravikummar, 1997). NPE, ACAP1 and PVIT are economically significant.…”

Section: Presentation Of the Resultsmentioning

confidence: 99%

“…Consequently, the study by Devarajan, Swaroop and Zou (1996) classified government expenditure into two, namely productive expenditure and non-productive expenditure. A recent study by Chu, Holscher and McCarthy (2020) investigate how productive and non-productive government expenditure affect economic growth in high-income and middle -income economies. The scholars reported that diverting government expenditure from non-productive to productive channels would improve growth both in the short and long-run.…”

Section: Introductionmentioning

confidence: 99%

Implications of Non –productive and Productive Government Expenditure on Output and Employment: Evidence From Nigeria

Asaleye¹,

Maimako²,

Inegbedion³

et al. 2021

RWE

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Nigerian government expenditure has been on an increasing trend over the years, and its contribution to sustainable economic development; promoting long-term output and employment has generated controversial issues in the literature. Against this background, this study analyses the impact of both productive and non-productive government expenditure on output and employment in Nigeria using the Vector Error Correction Model, The long-run equations for output and employment are established. The joint short and long-run causality was also investigated. The study shows a contrary result to theoretical predictions; Nigeria's long-run growth is not promoting by productive government expenditure. Furthermore, there is joint short and long-run causality between employment and government expenditure channels. Evidence from the output equation indicates no joint long and short-run causality. The implication of this result shows that government expenditure either productive or non-productive, has not improved the economy, although there is an increase in employment generation through the non-productive channel, which has not promoted broad-based growth. For the Nigerian government to improve the situation, the study recommends a critical assessment of public expenditure through the cost-benefit approach.

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“…The literature has devoted a great deal of attention to the issue of the relationships between the amount of public expenditure and economic growth at a country level (Modigliani and Sterling 1986;Barro 1990;Butkiewicz and Yanikkaya 2011;Wu et al 2010). Researchers have differentiated between productive and non-productive government expenditure, and have shown how a country can increase its economic growth by changing the mix between these alternative forms of expenditure (Gemmell et al 2015;Chu et al 2018).…”

mentioning

confidence: 99%

Can Local Policies Reduce the Gap between ‘Centers’ and ‘Inner Areas’? The Case of Italian Municipalities’ Expenditure

Romagnoli

Mastronardi

2020

Economies

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This study analyzes the links between Italian inner area municipalities’ expenditure and per capita incomes, considered as a proxy of well-being. Inner areas are territorial contexts characterized by a significant distance from the centers, the main supply poles of essential services. Following a top-down approach, the paper at first demonstrates the existence of a global convergence process in per capita incomes, with a faster rate of convergence in inner areas with respect to centers; then, attention is focused on local administrations’ policies and their impact on incomes in Italian inner areas. The paper gives a twofold contribution to the debate about the implementation of territorial cohesion policies: (a) on one side, public expenditure data are considered for the first time in an econometric model regarding Italian inner areas; (b) on the other side, the reference territorial subdivision is the lowest possible, giving the opportunity to investigate the changes in well-being at the finest scale.

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The impact of productive and non-productive government expenditure on economic growth: an empirical analysis in high-income versus low- to middle-income economies

Cited by 65 publications

References 39 publications

The Effect of Government Expenditure on Economic Growth in Indonesia

The Effect of Government Expenditure on Economic Growth in Indonesia

Implications of Non –productive and Productive Government Expenditure on Output and Employment: Evidence From Nigeria

Can Local Policies Reduce the Gap between ‘Centers’ and ‘Inner Areas’? The Case of Italian Municipalities’ Expenditure

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