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What is Happening with the Government Expenditure of Developing Countries - A Panel Data Study

Abu Shonchoy ()

No 2, Proceedings of the German Development Economics Conference, Hannover 2010 from Verein für Socialpolitik, Research Committee Development Economics

Abstract: The paper focuses on the recent pattern of government expenditure for developing countries and estimates the determinants which may have influenced government expenditure. Using a panel data set for 111 developing countries from 1984 to 2004, this study finds evidence that political and institutional variables as well as governance variables significantly influence government expenditure. Among other results, the paper finds new evidence of Wagner's law which states that peoples' demand for service and willingness to pay is income-elastic hence the expansion of public economy is influenced by the greater economic influence of a nation Cameron (1978). Corruption is found to be influential in explaining the public expenditure of developing countries. On the contrary, size of the economy and linguistic fractionalization is found to have significant negative association over government expenditure. The study finds that military governments are more conservative in terms of large public expenditure other than spending on defence equipments.

Keywords: Government expenditure; Panel data; Corruption; Fractionalization; Governance. (search for similar items in EconPapers)
JEL-codes: E01 E02 E61 E62 H2 H4 H5 H6 O11 O5 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-dev and nep-pol
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Citations: View citations in EconPapers (4) Track citations by RSS feed

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