Threshold Impacts of Public Expenditure on Economic Growth: Insights from India Utilizing Panel Threshold Regression Model

Neelam Sharma, Sakshi Khanna and Amit Srivastava

Asian Journal of Applied Economics, 2024, vol. 31, issue 01

Abstract: This research examines the impact of public expenditure dynamics on economic growth in India and its six distinct regions (North-Eastern, Northern, Western, Southern, Eastern, and Central) using Hansen's panel threshold regression model. Spanning from 1999–2000 to 2018–19, the analysis reveals significant inter-regional variations in the relationship between public expenditure and economic growth. The Northern, Western, and North-Eastern regions exhibit a singular threshold impact, indicating that exceeding this threshold level may not positively influence economic growth and could lead to fiscal imbalances. In contrast, the Central, Eastern, and Southern regions illustrate no threshold effect. Furthermore, the study identifies that the optimal expenditure threshold is higher for the North-eastern region (81.9%) compared to the Northern (60.5%) and Western regions (50.7%), reflecting higher expenditure requirements. Conversely, when considering India as a whole, no threshold effect is observed, indicating a consistent impact across all regions. The findings underscore the importance of policymakers' attention to optimal expenditure, crucial for addressing long-term budgetary imbalances and fostering inclusive growth.

Keywords: Agricultural Finance; Financial Economics (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/344198/files/Neelam%20Sharma.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:thkase:344198

DOI: 10.22004/ag.econ.344198

Access Statistics for this article

More articles in Asian Journal of Applied Economics from Kasetsart University, Center for Applied Economics Research Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().