The Relationship Between Public Expenditure and Economic Growth In Kosovo: Findings from a Johansen Co-Integrated Test and a Granger Causality Test
In the scientific literature, there are two opposing views on the relationship between public expenditure and economic growth. The Keynesian view states that public expenditure is an exogenous factor that influences economic growth and can be used as a policy instrument. This point of view is in con...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Vilnius University Press
2018-07-01
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| Series: | Ekonomika |
| Subjects: | |
| Online Access: | https://www.journals.vu.lt/ekonomika/article/view/11698 |
| _version_ | 1811275726349926400 |
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| author | Leke Pula Alban Elshani |
| author_facet | Leke Pula Alban Elshani |
| author_sort | Leke Pula |
| collection | DOAJ |
| description | In the scientific literature, there are two opposing views on the relationship between public expenditure and economic growth. The Keynesian view states that public expenditure is an exogenous factor that influences economic growth and can be used as a policy instrument. This point of view is in contrast to the Wagner view that the public expenditure is seen as an endogenous factor or an outcome, not a cause, of economic growth. The primary objective of this study is to test the views of Keynes’s versus Wagner’s in the case of Kosovo by using Public Expenditure (G), Gross Domestic Product and three other components of GDP: Foreign Direct Investment (FDI), Export (EXP) and Total Budget Revenue (TRtax); the variables used in this analysis are quarterly time series data spanning from 2004–2016. To accomplish the set objectives, the Johansen co-integrated technique is used to investigate the long-run relationship between public expenditure and economic growth, while the Granger causality test is used to know the direction of flow between variables. This study discovers that there is a unidirectional causality between government expenditures and economic growth in Kosovo. It is also found that there is a bidirectional causality between total budget revenue and public expenditure. On the other hand, results also provide evidence that there is a bidirectional causality between export and economic growth. Moreover, the results for Kosovo indicate that data for the period considered support the Keynesian view. |
| first_indexed | 2024-04-12T23:44:02Z |
| format | Article |
| id | doaj.art-b8e34fcff0584cddae668bc3cd2cdf78 |
| institution | Directory Open Access Journal |
| issn | 1392-1258 2424-6166 |
| language | English |
| last_indexed | 2024-04-12T23:44:02Z |
| publishDate | 2018-07-01 |
| publisher | Vilnius University Press |
| record_format | Article |
| series | Ekonomika |
| spelling | doaj.art-b8e34fcff0584cddae668bc3cd2cdf782022-12-22T03:11:55ZengVilnius University PressEkonomika1392-12582424-61662018-07-0197110.15388/Ekon.2018.1.11778The Relationship Between Public Expenditure and Economic Growth In Kosovo: Findings from a Johansen Co-Integrated Test and a Granger Causality TestLeke Pula0Alban Elshani1University of Prishtina “Hasan Prishtina”, KosovoUniversity of Prishtina “Hasan Prishtina”, KosovoIn the scientific literature, there are two opposing views on the relationship between public expenditure and economic growth. The Keynesian view states that public expenditure is an exogenous factor that influences economic growth and can be used as a policy instrument. This point of view is in contrast to the Wagner view that the public expenditure is seen as an endogenous factor or an outcome, not a cause, of economic growth. The primary objective of this study is to test the views of Keynes’s versus Wagner’s in the case of Kosovo by using Public Expenditure (G), Gross Domestic Product and three other components of GDP: Foreign Direct Investment (FDI), Export (EXP) and Total Budget Revenue (TRtax); the variables used in this analysis are quarterly time series data spanning from 2004–2016. To accomplish the set objectives, the Johansen co-integrated technique is used to investigate the long-run relationship between public expenditure and economic growth, while the Granger causality test is used to know the direction of flow between variables. This study discovers that there is a unidirectional causality between government expenditures and economic growth in Kosovo. It is also found that there is a bidirectional causality between total budget revenue and public expenditure. On the other hand, results also provide evidence that there is a bidirectional causality between export and economic growth. Moreover, the results for Kosovo indicate that data for the period considered support the Keynesian view.https://www.journals.vu.lt/ekonomika/article/view/11698public expenditure, economics growth, co-integration, causality, Kosovo |
| spellingShingle | Leke Pula Alban Elshani The Relationship Between Public Expenditure and Economic Growth In Kosovo: Findings from a Johansen Co-Integrated Test and a Granger Causality Test Ekonomika public expenditure, economics growth, co-integration, causality, Kosovo |
| title | The Relationship Between Public Expenditure and Economic Growth In Kosovo: Findings from a Johansen Co-Integrated Test and a Granger Causality Test |
| title_full | The Relationship Between Public Expenditure and Economic Growth In Kosovo: Findings from a Johansen Co-Integrated Test and a Granger Causality Test |
| title_fullStr | The Relationship Between Public Expenditure and Economic Growth In Kosovo: Findings from a Johansen Co-Integrated Test and a Granger Causality Test |
| title_full_unstemmed | The Relationship Between Public Expenditure and Economic Growth In Kosovo: Findings from a Johansen Co-Integrated Test and a Granger Causality Test |
| title_short | The Relationship Between Public Expenditure and Economic Growth In Kosovo: Findings from a Johansen Co-Integrated Test and a Granger Causality Test |
| title_sort | relationship between public expenditure and economic growth in kosovo findings from a johansen co integrated test and a granger causality test |
| topic | public expenditure, economics growth, co-integration, causality, Kosovo |
| url | https://www.journals.vu.lt/ekonomika/article/view/11698 |
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