Impact of Selected Types of Public Spending on Economic Growth

Bojka Hamernikova (), Alena Maaytova (), Jaroslav Vostatek () and Stanislav Klazar
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Bojka Hamernikova: University of Finance and Administration
Alena Maaytova: University of Economics, Prague
Jaroslav Vostatek: University of Finance and Administration

ACTA VSFS, 2009, vol. 3, issue 2, 90-105

Abstract: At present as the financial crisis impacts most countries and sectors – the question of the effect of fiscal policy is arguably of paramount importance. Public finance influences on growth could be assessed via relations between public expenditures, taxation and growth; via the effectiveness of the institutional framework; or via their contribution to macro economic stability. We were specialized on analysis of influence of selected types of public expenditures on economic growth. We have used Czech Republic, Ireland, Sweden and Finland data for the comparison. This selection was made according to specific results in the area of the economic growth, support of research and development, structure and amount of public expenditure. Data comparison of selected countries could shoe the presence or absence of impacts of these types of public expenditures. The other types of public expenditures, as for example government investments, will be involved in the next phase of the research. In the contribution, the causality between the development of public spending (with the use of COFOG classification) and the development of GDP with various time delays was being determined. The performed analysis points to certain trends in the given area and to certain macro-economic links. It seems the GDP per capita is positively related to the per capita expenditures on Education and Defense. Number of population has also positive impact on GDP. The only positive effect of relative public expenditure variables have relative share of economics affairs, social protection and health variable. The effect of explanatory variables on GDP annual growth is in most cases negative. Only the per capita expenditures on Recreation, culture and religion and Health have positive effect on GDP growth. Similar objectives could be also found by public expenditures.

Keywords: public spending; economic growth; Granger causality; GFS methodology (search for similar items in EconPapers)
JEL-codes: E6 H5 (search for similar items in EconPapers)
Date: 2009
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