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Journal of Applied Economics >
Volume 08, Number 1, May 2005 >
Please use this identifier to cite or link to this item:
http://purl.umn.edu/37515
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| Title: | Government Expenditure and Economic Growth: Evidence from Trivariate Causality Testing |
| Authors: | Loizides, John
Vamvoukas, George |
| Keywords: | public sector growth
economic growth
bivariate and trivariate causality tests
error correction modeling |
| JEL Codes: | H21 |
| Issue Date: | 2005-05 |
| Abstract: | This paper seeks to examine if the relative size of government (measured as the share of total expenditure in GNP can be determined to Granger cause the rate of economic growth, or if the rate of economic growth can be determined to Granger cause the relative size of government. For this purpose, we first use a bivariate error correction model within a Granger causality framework, as well as adding unemployment and inflation (separately) as explanatory variables, creating a simple ‘trivariate’ analysis for each of these two variables. The combined analysis of bivariate and trivariate tests offers a rich menu of possible causal patterns. Using data on Greece, UK and Ireland, the analysis shows: i) government size Granger causes economic growth in all countries of the sample in the short run and in the long run for Ireland and the UK; ii) economic growth Granger causes increases in the relative size of government in Greece, and, when inflation is included, in the UK. |
| URI: | http://purl.umn.edu/37515 |
| Identifiers: | Print ISSN 1514-0326
Online ISSN 1667-6726 |
| Institution/Association: | Journal of Applied Economics>Volume 8, Number 01, May 2005 |
| Total Pages: | 28 |
| From Page: | 125 |
| To Page: | 152 |
| Collections: | Volume 08, Number 1, May 2005
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| loizides.pdf | | 101Kb | PDF | View/Open |
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