Investigating Validation of Armey Curve Hypothesis for G7 Countries using ARDL Model

Öz

The effect of the government size on economic growth still keeps its unclear status despite the works in this field. According to the Armey Hypothesis 1995 , which one of the studies developed for the volume of government size in economy, the increase in the public volume in economy will increase economic growth up to a certain level, and when the maximum level is reached, the increase in public volume will cause decreases in economic growth. In this study, the issues of whether the Armey Hypothesis is valid or not for G7 countries has been investigated, and the optimum public volume has been determined for G7 countries. In testing Armey Curve hypothesis, we use ARDL cointegration procedure. The results of empirical findings argue that the Armey Hypothesis is valid for US, and Canada, and France when it is invalid for other G7 countries.

Anahtar Kelimeler

• Armey Curve, Government Size, Economic Growth, Cointegration.

G7 Ülkeleri için Armey Eğrisi Hipotezinin ARDL Modeli ile İncelenmesi

Öz

Kamu büyüklüğünün ekonomik büyüme üzerindeki etkisi, literatür genelindeki çalışmalara rağmen belirsizliğini korumaktadır. Armey Hipotezi'ne 1995 göre, kamu hacmindeki artış, belli bir seviyeye kadar ekonomik büyümeyi pozitif olarak etkilerken belli bir maksimum düzeyenden sonra kamu hacmindeki artış ekonomik büyümede düşüşe neden olmaktadır. Bu çalışmada, Armey Hipotezinin G7 ülkeleri için geçerli olup olmadığı konusu araştırılmış ve G7 ülkeleri için optimum kamu hacmi belirlenmiştir. Armey Curve hipotezini test edilmesinde, ARDL eşbütünleşme modeli kullanılmıştır. Ampirik bulgulara göre, Armey Hipotezinin ABD, Kanada ve Fransa için geçerli iken diğer G7 ülkelerinde geçerli olmadığı tespit edilmiştir

Anahtar Kelimeler

• Armey Eğrisi, Kamu Büyüklüğü, Ekonomik Büyüme, Eşbütünleşme

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