GDP and Public Expenditure in Education, Health, and Defense. Empirical Research for Greece

Kyriaki Efthalitsidou, Eleni Zafeiriou, Konstantinos Spinthiropoulos, Ioannis Betsas and Nikolaos Sariannidis
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Kyriaki Efthalitsidou: Faculty of Education, School of Early Childhood of Education, University of Western Macedonia, GR57100 Kozani, Greece
Eleni Zafeiriou: Department of Agricultural Development, Democritus University of Thrace, GR68200 Orestiada, Greece
Konstantinos Spinthiropoulos: Department of Management Science and Technology, University of West Macedonia, GR57100 Kozani, Greece
Ioannis Betsas: Faculty of Education, School of Primary Education, Aristotle University of Thessaloniki, GR54124 Thessaloniki, Greece
Nikolaos Sariannidis: Department of Accounting and Finance, University of West Macedonia, GR57100 Kozani, Greece

Mathematics, 2021, vol. 9, issue 18, 1-17

Abstract: Wagner Law and Keynesian approaches are the two fundamental theories of public finance. The aim of this study is to assess empirical evidence for the public spending–national income relationship at a disaggregated level for the time period 1995–2019. The sectoral public expenditures include education, health, and defense. The data employed were derived by EUROSTAT and OECD. Based on our findings, a sole relationship of the variables was validated, while the causality of the relationship provides conflict results depending on whether two-variate or multivariate methodology is employed. In the case of the multivariate framework that outperforms the two-variate approach in terms of information, the causality is directed from government expenses to the GDP level, validating the Keynesian approach in the long run as well as in the short run. On the other hand, the results validate Wagner Law based on the results of Granger causality pairwise test. A potential interpreatation for the results found is related to the measures imposed by the Memorandum, since the disproportionate cuts of the public expenses in the period of crisis have determined the evolution of national income. The scientific value of the presents study stands on the suggestion of potential effective measures aiming at the limitation of national income shrinkage in periods of severe economic crises worldwide.

Keywords: public; expenditure; GDP; education; defense; health; economic growth; research; econometrics (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2021
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