Does Fiscal Policy Stance Affect Public Expenditure: Evidence from Kenya
The purpose of this paper is to examine the effect of fiscal policy stance on public expenditure in Kenya while underpinned by the theory of fiscal policy, Peacock-Wiseman hypothesis, and Wagner's Law of increasing state activities. The methodology used was time series modelling involving the f...
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| Format: | Article |
| Language: | English |
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International Public Finance Conference/Turkey
2020-12-01
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| Series: | International Journal of Public Finance |
| Subjects: | |
| Online Access: | https://dergipark.org.tr/tr/download/article-file/1088821 |
| _version_ | 1797916785589092352 |
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| author | James M. Gatauwa |
| author_facet | James M. Gatauwa |
| author_sort | James M. Gatauwa |
| collection | DOAJ |
| description | The purpose of this paper is to examine the effect of fiscal policy stance on public expenditure in Kenya while underpinned by the theory of fiscal policy, Peacock-Wiseman hypothesis, and Wagner's Law of increasing state activities. The methodology used was time series modelling involving the following steps; firstly, employing descriptive statistic analysis. Secondly, diagnostic testing involving stationarity test, cointegration test, and Granger causality tests. Thirdly, time series modelling was done using VECM and VAR models. Finally, post-diagnostic tests involving serial correlation test and heteroscedasticity test. The research indicates a negative relationship between fiscal policy stance (a budget deficit) and public expenditure, but fiscal stance through tax has a positive relationship with public expenditure. Fiscal policy stance and public expenditure are cointegrated, as shown by the Johansen cointegration test. Still, there is no short run causality between them as indicated by the Wald test statistics. The study is limited to fiscal policy stance and public expenditure in Kenya while considering selected macroeconomic factors. The research findings are vital to policymakers. Fiscal policy stance indirectly affects public expenditure through economic growth and macroeconomic factors. This implies that fiscal policy stance does not substantially affect public expenditure as supported by the theory of fiscal policy that contends that policymakers could have a lower incentive to pursue public interests compared to their interests. |
| first_indexed | 2024-04-10T13:02:55Z |
| format | Article |
| id | doaj.art-9c8daac1e02740be9c4fb94fc8d53430 |
| institution | Directory Open Access Journal |
| issn | 2548-0499 2548-0499 |
| language | English |
| last_indexed | 2024-04-10T13:02:55Z |
| publishDate | 2020-12-01 |
| publisher | International Public Finance Conference/Turkey |
| record_format | Article |
| series | International Journal of Public Finance |
| spelling | doaj.art-9c8daac1e02740be9c4fb94fc8d534302023-02-15T16:13:05ZengInternational Public Finance Conference/TurkeyInternational Journal of Public Finance2548-04992548-04992020-12-015229531010.30927/ijpf.732676Does Fiscal Policy Stance Affect Public Expenditure: Evidence from KenyaJames M. Gatauwa0https://orcid.org/0000-0002-2804-5070 Kenyatta UniversityThe purpose of this paper is to examine the effect of fiscal policy stance on public expenditure in Kenya while underpinned by the theory of fiscal policy, Peacock-Wiseman hypothesis, and Wagner's Law of increasing state activities. The methodology used was time series modelling involving the following steps; firstly, employing descriptive statistic analysis. Secondly, diagnostic testing involving stationarity test, cointegration test, and Granger causality tests. Thirdly, time series modelling was done using VECM and VAR models. Finally, post-diagnostic tests involving serial correlation test and heteroscedasticity test. The research indicates a negative relationship between fiscal policy stance (a budget deficit) and public expenditure, but fiscal stance through tax has a positive relationship with public expenditure. Fiscal policy stance and public expenditure are cointegrated, as shown by the Johansen cointegration test. Still, there is no short run causality between them as indicated by the Wald test statistics. The study is limited to fiscal policy stance and public expenditure in Kenya while considering selected macroeconomic factors. The research findings are vital to policymakers. Fiscal policy stance indirectly affects public expenditure through economic growth and macroeconomic factors. This implies that fiscal policy stance does not substantially affect public expenditure as supported by the theory of fiscal policy that contends that policymakers could have a lower incentive to pursue public interests compared to their interests.https://dergipark.org.tr/tr/download/article-file/1088821fiscal policy stanceeconomic growthmacroeconomic factorspublic expenditure |
| spellingShingle | James M. Gatauwa Does Fiscal Policy Stance Affect Public Expenditure: Evidence from Kenya International Journal of Public Finance fiscal policy stance economic growth macroeconomic factors public expenditure |
| title | Does Fiscal Policy Stance Affect Public Expenditure: Evidence from Kenya |
| title_full | Does Fiscal Policy Stance Affect Public Expenditure: Evidence from Kenya |
| title_fullStr | Does Fiscal Policy Stance Affect Public Expenditure: Evidence from Kenya |
| title_full_unstemmed | Does Fiscal Policy Stance Affect Public Expenditure: Evidence from Kenya |
| title_short | Does Fiscal Policy Stance Affect Public Expenditure: Evidence from Kenya |
| title_sort | does fiscal policy stance affect public expenditure evidence from kenya |
| topic | fiscal policy stance economic growth macroeconomic factors public expenditure |
| url | https://dergipark.org.tr/tr/download/article-file/1088821 |
| work_keys_str_mv | AT jamesmgatauwa doesfiscalpolicystanceaffectpublicexpenditureevidencefromkenya |