Building a Model of Government Spending Using Autoregressive Distributed Lag (ARDL) Analysis from 2001 to 2019: A Case Study of Jordan

Ateyah Mohammad Alawneh

International Journal of Business and Management, 2023, vol. 16, issue 2, 30

Abstract: The study aims to build a model of government spending in Jordan using ARDL analysis through the use of an E-views program by determining the relationships between government spending and variables, such as the gross domestic product (GDP), government revenues, economic openness (OP), inflation rate, unemployment, population growth rate, and public debt. The statistical analysis showed a significant positive relationship between government spending and (GDP) and government revenues. It revealed significant positive relationships between government spending and) OP (and inflation. It found the statistically significant negative effect of the unemployment rate and the population growth rate on government spending. A negative relationship was found between government spending lag (1) and current government spending. Public debt was found to have a positive but not statistically significant effect on government spending. The relationships between the dependent variable and independent variables of government spending were consistent with unrestricted ARDL analysis in the long term. The analysis showed a statistically significant positive relationship between government spending and GDP at a short-term level but a statistically significant negative relationship between government spending and independent variables, such as population growth rate, inflation rate, and unemployment rate at a short-term level. One of the most important recommendations of the study was working to increase government spending in a way that is compatible with the increasing population growth. The study recommends government intervention to bring in more revenue through income-generating economic activities. Contribution / Originality- This will be one of the few studies to build a model of government spending using Autonomous Distributed Regression (ARDL). The study also provides a scientific addition in the field of financial and economic sciences from a scientific point of view through the use of different statistical methods using ARDL analysis on the long and short levels to assist the government in preparing the state's general budget. The study also helps the government to develop in the field of public finances and prepare an unconventional general budget.

Date: 2023
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