Cointegration and Causality between Public Expenditure and Economic Growth: Case of Kyrgyzstan
Abstract
According to
Wagner’s law there is unidirectional relationship from economic growth to
public expenditure. Wagner’s states that increase of national income leads to
faster growth of public expenditure. In other words, out of economic and social
development in the country, people will demand more public goods and it will
increase public expenditure at a faster rate than national income.
This study is analyzing the long term and causality
relationship between public expenditure and economic growth in Kyrgyzstan and
tests the validity of Wagner's law in Kyrgyz economy by using an ARDL and Error
Correction models over the period 1995 to 2014. Empirical results showed that
there is an unidirectional causality relationship between economic growth and
public expenditure in long term. Empirical evidence is support the validity of
Wagner’s law in Kyrgyz economy.
Keywords
References
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