Government Expenditures and Economic Growth: A Cointegration Analysis for Thailand under the Floating Exchange Rate Regime

Komain Jiranyakul

MPRA Paper from University Library of Munich, Germany

Abstract: Contributing to the controversial issue of the impact of government spending on economic growth, this paper shows that government spending has a long-run impact in stimulating aggregate output in Thailand during the floating exchange rate regime. The results reveal that the long-run relationship between aggregate output, government expenditures, and private consumption is stable. Based on the quarterly dataset from1997Q3 to 2019Q4, the results suggest that expansionary fiscal policy is effective under the floating exchange rate regime. Furthermore, the traditional version of Wagner’s law is supported since an expansion in aggregate output causes government expenditure to increase. Therefore, the findings in this paper support both the Keynesian hypothesis and Wagner’s law.

Keywords: Government expenditures; real GDP; cointegration; causality (search for similar items in EconPapers)
JEL-codes: E62 (search for similar items in EconPapers)
Date: 2020-05
New Economics Papers: this item is included in nep-fdg, nep-isf, nep-mac and nep-sea
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:109585

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