The Role Of Fiscal Policies On Human Development : An Empirical Approach

Abstract

One of the primary purposes of governments is to sustain human development and economic growth. In this context, the goal of the study is to test the impact of taxes, government expenditures, income and infrastructure (electricity consumption) on the human development empirically in the period of 1998-2007 for 14 OECD countries. Panel unit root, panel cointegration, panel FMOLS, panel DOLS and panel vector error correction based causality methods have been used in the study. According to panel FMOLS results, while taxes have a negative impact on human development, government expenditures and income have a positive impact on it. The coefficient of the electricity consumption is not statistically significant. We also find that government expenditures and electricity consumption have a positive effect on human development according to panel DOLS results, however the coefficients of income and taxes are not statistically significant. Causality test results show that in the long term, there are causality relationships from taxes, government expenditures, electricity consumption and income to human development and from taxes, government expenditures, human development and electricity consumption to income. As a result of these findings we evaluate the government policies that have been implemented in countries that have high human development level and make some policy suggestions in the conclusion section.

Keywords

• -

The Role of Fiscal Policies on Human Development: An Empirical Approach

Abstract

Hükümetlerin öncelikli amaçlarından birisi ekonomik büyüme ile beraber insani gelişimi sürekli kılabilmektir. Bu çerçevede çalışmanın amacı vergilerin, kamu harcamalarının, gelirin ve altyapının (elektrik tüketimi) insani gelişimi üzerindeki etkisini 1998-2007 dönemlerinde 14 OECD ülkesi için ampirik olarak sınamaktır. Çalışmada panel birim kök, panel eşbütünleşme, panel FMOLS, panel DOLS ve panel vektör hata düzeltmeye dayalı nedensellik yöntemleri kullanılmıştır. Panel FMOLS sonuçlarına göre, insani gelişim üzerinde vergilerin negatif, kamu harcamaları ve gelirin pozitif etkisi vardır. Elektrik tüketiminin katsayısı istatistiki olarak anlamlı değildir. Panel DOLS sonuçlarına göre, kamu harcamalarının ve elektrik tüketiminin insani gelişim üzerindeki etkisi pozitifken, vergiler ve gelirin katsayısı istatistiki olarak anlamlı değildir. Nedensellik test sonuçlarına göre; uzun dönemde vergiler, kamu harcamaları, elektrik tüketimi ve gelirden insani gelişime doğru ve insani gelişme, vergiler, kamu harcamaları ve elektrik tüketiminden gelire doğru nedensellik ilişkisi elde edilmiştir. Çalışmanın sonuç kısmında insani gelişim düzeyi yüksek ülkelerde uygulanan kamu politikaları değerlendirilmiş ve çeşitli politika önerilerinde bulunulmuştur

Keywords

• İnsani Gelişme İndeksi, Maliye Politikaları, Panel FMOLs, Panel DOLS

References

1. ALFRANCA, O. and M. A. GALINDO (2003), “Public Expenditure, Income Distribution, and Growth in OECD Countries, International Advances in Economic Research, 9(2), 133- 139.
2. ALI, S. A. , H. RAZA and M. U. YOUSUF (2012), "The Role of Fiscal Policy in Human Development: The Pakistan’s Perspective", The Pakistan Development Review, 51 (4), 381-396.
3. ANAND, S. and SEN, A (1994), “Human Development Index: Methodology and Measurement”, Human Development Report Office Occasional Paper 12, UNDP, New York.
4. ANGELL, O. H. (2011), “Challenges to Equality in the Welfare State: The Norwegian Case of Drammen”, International Beliefs and Values, 3 (1), 41-50.
5. APERGIS, N., PAYNE, J.E., (2009) “Energy Consumption and Economic Growth: Evidence From the Commonwealth of Independent States”, Energy Economics, 31, 641-647.
6. BARRO, R. J. (1991), “Economic Growth in a Cross Section of Countries”, The Quarterly Journal of Economics, 106(2), 407-443.
7. DAVIES, A. (2009), "Human Development and The Optimal Size of Government", The Journal of Socio-Economics, 38 (2), 326-330.
8. DENK, O. (2012), “Tax Reform in Norway: A Focus on Capital Taxation”, OECD Economics Department Working Papers, No. 950, OECD Publishing.

9. DORYAN, E. (2001), “Poverty, Human Development and Public Expenditure: Developing Actions for Government and Civil Society, in Equity and Health: Views from the Pan American Sanitary Bureau” Pan American Health Organization, Washington.
10. FERGANY, N. (2003), “Social Innovation for Human Development an Arab Region Perspective”, FRIDE, Madrid.
11. GOMANEE, K. , O. MORRISSEY, P. MOSLE and VERSCHOO, A (2005), “Aid, Government Expenditure and Aggregate Welfare”, World Development, 33 (3), 355–370.
12. GUPTA, S. , B. CLEMENTS AND E. TIONGSON, (1998), “Public Spending on Human Development”, Finance & Development, 35 (3), 10-13.
13. HAQ, M. (1995), “Reflections of Human Development”, Oxford University Press, New York.
14. HEITGER, B. (2001), “The Scope of Government and Its Impact on Economic Growth in OECD Countries”, (No. 1034), Kieler Arbeitspapiere.
15. HUMAN DEVELOPMENT REPORT 2005, “International Cooperation at a Crossroads, Aid, Trade and Security in an Unegual World”,
16. http://hdr.undp.org/sites/default/files/reports/266/hdr05_complete.pdf,(15.03.2014)
17. HUMAN DEVELOPMENT REPORT 2010, “The Real Wealth of Nations: Pathways to Human Development”, http://hdr.undp.org/sites/default/files/reports/270/hdr_2010_en_complete_reprint.pdf, (15.03.2014).
18. HUMAN DEVELOPMENT REPORT 2013, “The Rise of the South: Human Progress in a Diverse World”, http://hdr.undp.org/sites/default/files/reports/14/hdr2013_en_complete.pdf, (15.03.2014).
19. IM, K.S., Pesaran, M.H., SHIN, Y., (2003), “Testing For Unit Roots in Heterogeneous Panel”, Journal of Econometrics, 115, 53-74.
20. KARAKURT, B. and AKDEMIR, T (2010), “Kurallı Maliye Politikası: Türkiye’de Kurallı Maliye Politikası Örnekleri”, Maliye Dergisi, 158, 226-261.
21. KANAGAWA, M. and T. NAKATA (2008), “Assessment of Access to Electricity and The Socioeconomicimpacts in Rural Areas of Developing Countries, Energy Policy, 36(6), 2016–2029.
22. KELLY, T. (1997), “Public Expenditures and Growth”, The Journal of Development Studies, 34(1), 60-84.
23. LEVIN, A., LIN, C.F., CHU, C.S.J., (2002), “Unit Root Tests in Panel Data: Asymptotic and Finite- Sample Properties”, Journal of Econometrics, 108, 1-24.
24. MARTINEZ, D. and B. EBENHACK (2008), “Understanding The Role of Energy Consumption in Human Development Through The Use of a Saturation Phenomena”, Energy Policy, 36, 1430-1435.
25. MAZUR, A. (2011), “Does Increasing Energy or Electricity Consumption Improve Quality of Life in Industrial Nations?”, Energy Policy, 39(5), 2568–72.
26. LUCAS, R. (1988), “On The Mechanics of Economic Development”, Journal of Monetary Economics, 22(1), 3-42.
27. NWAKANMA, P.C. and K.C. NNAMDI (2013), “Taxation And National Development”, Research Journal of Finance and Accounting, 19 (4), 2222-2847.
28. NIU, S., Y. JIA, W. WANG, R. HE, L. HU and LIU, Y (2013), “Electricity Consumption and Human Development Level: A Comparative Analysis Based on Panel Data for 50 Countries”, International Journal of Electrical Power & Energy Systems, 53, 338-347.
29. PEDRONI, P., (1999), “Critical Values for Cointegration Tests in Heterogeneous Panels With Multiple Regressors”, Oxf. Bull. of Economics and Statistics, 61, 653-670.
30. PEDRONI, P., (2000) “Fully Modified OLS for Heterogeneous Cointegrated Panels”, Advances in Econometrics, 15, 93-130.
31. PEDRONI, P., (2001), “Purchasing Power Parity Tests in Cointegrated Panels”, Rev. of Economics and Statistics, 83, 727-731.
32. PEDRONI, P., (2004), “Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests With An Application to the PPP Hypothesis”, Econometric Theory, 20, 597-625.
33. PRASETYO, A. D. and U. ZUHDI (2013), “The Government Expenditure Efficiency Towards The Human Development”, Procedia Economics and Finance, 5, 615-622.
34. ROMER, P. (1990), “Human Capital and Growth: Theory and Evidence”, Carnegie- Rochester Conference Series on Public Policy, 32, 251-285.
35. SUESCUN, R. (2007), “The Role Of Fiscal Policy In Human Development and Growth”, LAC Regional.
36. THAKUR, S., MICHAEL K., BALAZS H. AND VALERIE C. (2003), “Sweden’s Welfare State”, International Monetary Fund.
37. UNITED NATIONS DEVELOPMENT PROGRAMME, HUMAN DEVELOPMET REPORTS (UNDP),
38. https://data.undp.org/dataset/Table-2-Human-Development-Index-trends/efc4-gjvq (17.01.2014).
39. WALLACE, L. (2004). “People in Economics”, Finance and Development, 41(3), 4–5.
40. WORLD BANK, GDP GROWTH and GINI INDEX,
41. http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG, (02.02.2014).
42. http://data.worldbank.org/indicator/SI.POV.GINI, (02.02.2014).
43. WU, Q., MASLYUK, S., & CLULOW, V. (2010), “Energy Consumption Transition and Human Development”, Monash University, Department of Economics, (No. 43-10).