The relationship between government expenditure and economic growth in ASEAN-5 countries

Abdikarim Bashir Jama, Siti Nurazira Mohd Daud, Sabri Nayan

Article ID: 4329
Vol 8, Issue 7, 2024

VIEWS - 181 (Abstract) 136 (PDF)

Abstract


This study investigates the influence of government expenditure on the economic growth of the ASEAN-5 countries from 2000 to 2021. The study employs the Pooled Mean Group (PMG) ARDL model and robust least squares method. The importance of the current study lies in its analysis of the short and long-run impact of government expenditure on economic growth in ASEAN-5. The empirical findings demonstrate a positive relationship between government expenditure and economic growth in the long run. These results align with the Keynesian perspective, asserting that government expenditure stimulates economic growth. The study also confirms one-way causality from government expenditure to economic growth, supporting the Keynesian hypothesis. These insights hold significance for policymakers in the ASEAN-5, highlighting the necessity for policies promoting the effective allocation of productive government expenditure. Moreover, it is important to enhance systems that promote economic growth and efficiently allocated economic resources toward productive expenditures while also maintaining effective governance over such expenditures.


Keywords


government expenditure; economic growth; labor force; gross capital formation; PMG ARDL model; ASEAN-5

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DOI: https://doi.org/10.24294/jipd.v8i7.4329

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