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The composition of public expenditures and economic growth: evidence from Pakistan

Author

Listed:
  • Shahid Ali
  • Fazli Rabbi
  • Umar Hayat
  • Naveed Ali

Abstract

Purpose - – This study is an attempt to examine the role of sub categories of government expenditures under democratic and military regimes in Pakistan for the period of 1972-2009. Design/methodology/approach - – This study exercised autoregressive distributed lag (ARDL) model. Findings - – The results show that contractionary fiscal expansion occurs in Pakistan. Moreover, the coefficient of development expenditure positively affects economic growth. It supports the public capital hypothesis that states that public and private investments are complements to each other. The results also show that current expenditure does not contribute to economic growth. Practical implications - – The study recommends that for the purpose of macroeconomic stability, government should reduce its unproductive expenditure and should enhance its resource mobilization. Originality/value - – This study is an attempt to examine the dynamic relationship between the composition of government expenditures and economic growth for Pakistan over the period of 1972-2009. The work is different from already existing literature in Pakistan. The authors' investigated the impact of different categories of government expenditures on economic growth, which has not been studied previously. Moreover, this study included a set of control variables by performing sensitivity analysis which is a significant contribution to the existing literature.

Suggested Citation

  • Shahid Ali & Fazli Rabbi & Umar Hayat & Naveed Ali, 2013. "The composition of public expenditures and economic growth: evidence from Pakistan," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 40(11), pages 1010-1022, October.
    • Handle: RePEc:eme:ijsepp:v:40:y:2013:i:11:p:1010-1022
    DOI: 10.1108/IJSE-05-2012-0081
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    Citations

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    Cited by:

    1. Ibrar Hussain & Jawad Hussain & Arshad Ali & Shabir Ahmad, 2021. "A Dynamic Analysis of the Impact of Fiscal Adjustment on Economic Growth: Evidence From Pakistan," SAGE Open, , vol. 11(2), pages 21582440211, June.
    2. Elham Mohammad Alhaj Yousef, 2022. "The Long-Run Relationship between Disaggregated Government Expenditure and Economic Growth in Jordan," International Journal of Economics and Financial Issues, Econjournals, vol. 12(5), pages 1-9, September.
    3. Nyasha Sheilla & Odhiambo Nicholas M., 2019. "The Impact of Public Expenditure on Economic Growth: A Review of International Literature," Folia Oeconomica Stetinensia, Sciendo, vol. 19(2), pages 81-101, December.
    4. Khatai Aliyev & Ceyhun Mikayilov, 2016. "Does the Budget Expenditure Composition Matter for Long-Run Economic Growth in a Resource Rich Country? Evidence from Azerbaijan," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 2(2), pages 147-168, June.

    More about this item

    Keywords

    Development; Political economics;

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