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Government expenditure and economic growth in Zimbabwe: an ARDL-bounds testing approach

Author

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  • Kunofiwa Tsaurai
  • Nicholas M. Odhiambo

Abstract

In this study, we examine the causal relationship between government expenditure and economic growth - using the recently developed ARDL-bounds testing approach. The causal relationship between government expenditure and economic growth has been a subject of extensive debate in recent years. Currently, there exist three views regarding the relationship between government expenditure and economic growth. The first view maintains that it is government expenditure that drives economic growth. The second view argues that it is economic growth that spurs government expenditure. The third view maintains that both government expenditure and economic growth promote one another. The results of our study show that there is a unidirectional causal flow from economic growth to government expenditure. This applies both in the short run and in the long run. The causal flow from government expenditure to economic growth, however, could only be detected in the short run.

Suggested Citation

  • Kunofiwa Tsaurai & Nicholas M. Odhiambo, 2013. "Government expenditure and economic growth in Zimbabwe: an ARDL-bounds testing approach," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 6(1), pages 78-90.
    • Handle: RePEc:ids:ijepee:v:6:y:2013:i:1:p:78-90
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    Cited by:

    1. William Mbanyele, 2019. "Public Expenditure and Economic Growth Causal Linkage: Disaggregated Empirical Analysis for Zimbabwe," Asian Development Policy Review, Asian Economic and Social Society, vol. 7(4), pages 239-252, December.
    2. Kunofiwa Tsaurai, 2017. "Savings Mobilization and Financial Development during the Multicurrency Regime Period in Zimbabwe," Journal of Economics and Behavioral Studies, AMH International, vol. 9(3), pages 152-162.
    3. Omoshoro-Jones, Oyeyinka Sunday, 2016. "A Cointegration and Causality Test on Government Expenditure –Economic Growth Nexus: Empirical Evidence from a South African Province," MPRA Paper 102085, University Library of Munich, Germany, revised 17 Oct 2017.

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